Air Malta chief executive Peter Davies says the strategies of Europe’s regional airlines need to change radically if they are to reverse their fortunes in the face of intense competition from low-cost carriers and adverse market conditions.
"There has to be a paradigm shift, or we’ll keep going from one disaster to another," Davies said at the European Regions Airline Association’s 2013 general assembly in Salzburg, Austria.
While "fuel is being quite kind to us [airlines] at the moment", a lot of regional airlines could struggle if prices rise significantly, warns Davies.
At the recent World Low Cost Airlines Congress in London, IAG chief executive Willie Walsh suggested that a number of European carriers are poised to fail. Davies says he agrees to an extent. "Why should small airlines, state-owned or not, be supported by taxpayers money?" he asks.
However, he disagrees with Walsh's view that many of Europe’s small regional airline are heading towards collapse. “I believe if they’re managed in a different way there’s no reason they can’t secure good profitability,” says Davies.
He argues that the culture change he implemented at Air Malta as part of a turnaround strategy is being vindicated by improvement in its financial results. It halved operating losses in the three months ending 30 June, lifting revenues nearly 10%.
"I’ve always said we will never get down to the CASK [cost per available seat-kilometre] rates of Ryanair," says Davies. "There will inevitably be a difference in what we charge and what they charge. So we have to make a demonstrable difference in the service we offer.”
He adds that as a destination carrier, Air Malta must focus on “selling the country. That’s why we changed the brand. We wanted to demonstrate that Malta was demonstrably different to what the previous brand showed”.