A MAGAZINE FOR EXECUTIVES 2009 Issue No. 2

Taking your airline to new heights Happy Jetting A Conversation With … Dave Barger, President And Chief Executive Officer, JetBlue Airways, Page 14.

11 Air makes big changes across 20 Global carriers take various steps to remain 46 Planning departments follow industry best entire organizations in the black practices to compete

© 2009 Sabre Inc. All rights reserved. [email protected] Small Airline,

Air MaltaBig recognized the need for changeFuture … big change. To ensure long-term success, the carrier placed every aspect of its organization under the microscope — from flight operations to human resources and everywhere in between — and began implementing change that would secure its future.

Lynne Clark | Ascend Staff

ascend 11 Photo courtesy of Air of courtesy Photo ir Malta wants the world to know it’s almost always summertime in the AMaltese Islands, and the airline is more prepared than ever to fly travelers to its main destination — a tiny Mediterranean archipel- ago that boasts of superbly sunny weather, expansive beaches and 7,000 years of intriguing history.

profile Consisting of the three islands of Malta, Gozo and Comino, the island chain lies virtually in the middle of the Mediterranean, with Malta 93 kilometers south of Sicily and 288 kilome- ters north of Africa. Best of all, Malta is more or less a two-and-a-half-hour flight from most major European urban centers including , Rome, , Geneva, Madrid and Athens. Founded in 1973, Air Malta discovered at the age of 30 that it needed a facelift. The car- rier, Malta’s national airline based in , faced increased competition, needed a revamped infrastructure, and encountered rising fuel prices and an overdependence on seasonal package holiday traffic. On the positive side, however, it had taken advantage of the post Sept. 11 slump in aircraft orders and had leased a brand new fleet of and A320 aircraft, finally moving away from a hybrid fleet of aircraft. After meeting with employees’ unions and signing a rescue pact agreement, Air Malta began a recovery process that continues today. Every aspect of its business has been under the microscope including flight operations, commercial operations, technology and human resources. “In 2003, Air Malta was losing money from its core operation — the transportation of passengers and cargo to and from Malta,” said As part of its aggressive restructuring initiative, Air Malta executives and union members Joe Cappello, Air Malta chief executive officer. worked together to save €30 million in costs. In doing so, unions agreed to a moratorium “The situation was not sustainable, and we on wages and, in turn, management vowed to significant cost savings in areas other than embarked on an ambitious project to return the human resources. airline to profitability within three years.” The carrier’s diligent restructuring began with a meeting with employees’ unions. capable of facing today’s challenges,” he said. By 2006, Air Malta’s executives took note “We agreed to a moratorium on wages “We’re not out of the woods yet as we still of the boom in the number of Europeans taking for the term of the agreement as well as greatly need to reduce our costs and increase revenue short holidays. They realized that the airline had enhanced flexibility and, in turn, we agreed to and return the airline to sustainable profitability.” a unique niche within two-and-a-half hours of its not make anyone redundant,” said Cappello. base hub at Malta International Airport. “Management also committed to substantialLEAP Prepared For Short Trips “With increased spending power and cost savings in areas other than human resourc- One of the areas in which the company decreased air fares, people started taking more es. Together, management and the unions hon- agreed to restructure was flight operations. than one short holiday each year, in addition to ored the agreement, and Air Malta managed to The result is a refocused route network strat- their summer vacations,” Friesen said. “This save €30 million in costs. egy that maximizes the Islands’ proximity and booming segment travels year round, gener- “We began focusing on our core opera- caters to short holiday vacationers. ally avoiding summer peaks. Capturing this tion and divested ourselves from other invest- “Previously, Air Malta flew to as many segment requires frequent flights at convenient ments and subsidiary companies like hotels, points as possible once or twice per week in times. Hence, our network has fewer points, which were no longer necessary as the Island’s response to charter and tour operator oppor- but more daily and double daily services to rich tourism infrastructure had become sophisticated tunities,” said Brock Friesen, chief commercial markets. enough not to need the airline’s investment in officer for Air Malta. “This worked well for “The focus on two-and-a-half-hour seg- this sector,” Cappello said. “We also outsourced long-stay vacationers until the late 1990s when ments or less is driven by cost,” Friesen said. our cabin cleaning, IT and in-flight entertainment it became apparent that the summer vacation “Short-holiday travelers are only willing to pay operations. In addition, we launched a new market was no longer growing. By Moreover, Shawn itMechelke so much | Ascend for their Contributor airfare and are indifferent portal and booking engine and invested heavily became apparent that the airline could not whether the flight is one or three hours. At in international marketing. sustain itself mainly on summer peak travels prevailing fare levels and current oil prices, few “All these initiatives have contributed and new sources of year-round traffic were routes are sustainable if they are over a two- toward making Air Malta a stronger organization needed.” and-one-half-hour flight to Malta.”

12 ascend Photo courtesy of Air of courtesy Photo profile

Six years ago, when it began losing money from its core business of transporting passengers and cargo, Air Malta executives implemented a strategic recovery plan with the goal of returning the airline to profitability within three years.

The reasoning has led to a growth strategy “Research shows that customers love baggage transfer,” said Friesen. “More than 60 focused on nearby large urban populations with transparency and self service, and we have percent of our operated services are now code- more flights to existing points served such as worked hard to lead in both,” he said. “In fact, the shared, and more are expected. The connectivity Zurich and Munich and opening new destinations European Union has been complementary of our we have gives travelers multiple flight options such as Paris. Internet booking engine and has given us a clean each day from virtually everywhere in Malta. For “We are also interested in growing our ‘bill of health’ in a recent audit of all ticket and example, we sell more tickets from Stockholm network from Catania, Italy, where we already airline Web sites selling flights within .” via Munich, Zurich and than we ever serve London, Geneva and Munich in addition to That’s not to say Air Malta is ignoring the did operating two nonstop flights per week from Malta,” Friesen said. more traditional travel agent channel. Cappello Malta. Travelers want to fly on the days and at said the carrier is aggressively pursuing European the times they want to fly … not just on the days Prepared Technologically travel agents and expects the channel, together that we fly.” The drive to reduce costs while enhancing with the Internet, to more than fully offset declin- passenger experience has led Air Malta to make ing tour operator traffic, previously the airline’s Prepared For The Future significant strides in technology systems. The primary distribution channel. Air Malta has made numerous strategic carrier has worked with Sabre Airline Solutions® “Tour operators have been hurt badly by changes — such as simplifying its fleet, working on a number of upgrades including state-of-the-art low-cost carriers and the Internet,” Cappello said. in harmony with employees, codesharing with network planning, flight scheduling and revenue “However, they remain especially important not several global carriers, outsourcing certain areas management systems as well as new Web only in emerging markets, but also in established of its operation, investing in advanced information check-in and e-ticketing solutions to enhance markets. We are investing heavily in automation technology — to weather tough times and secure customer service. to make it easier for them to book on Air Malta at the carrier’s future and that of its employees. Other technological advancements include attractive prices while curbing the waste that goes Air Malta’s effective leadership combined a more robust, user-friendly Internet presence. with manual processes that have undermined our with its top-notch employees and continuing Since 2007, bookings through airmalta.com have revenue management.” methodical adjustments across its organization grown tenfold, from 3 percent to almost 30 per- has positioned the carrier to remain Malta’s main cent. The carrier hopes to increase Internet sales Expanding Together carrier, presenting the most extensive options for to 60 percent in two years. Currently, Air Malta has codeshare air transportation to and from the Islands. a “This year, the Internet channel is boom- agreements with 10 , thus extending its ing,” said Cappello. “Average fares on the Internet point-to-point reach to that of a global carrier. now equal those of the system overall, indicating Partners include bmi, , , By Shawn Mechelke | Ascend Contributor that the channel attracts more than just bargain Lufthansa Italia, Swiss International Air Lines and seekers. Interestingly, we are selling more and . more connecting flights on our partners via the “Our partners connect Malta to virtually Internet, and we are increasing the display of every country in the world, offering seamless ser- Lynne Clark can be contacted at alternative routes. vice through check-in, airport lounge facilities and [email protected].

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