Short cuts: the little island becoming Europe’s aviation hotspot

Wizz Air has announced plans to set up a subsidiary in Malta, underscoring the emergence of the tiny island nation (population just over 500,000) as Europe’s unlikeliest new aviation powerhouse.

The fast-growing Budapest-based airline, which was founded in 2003 and now operates a fleet of 153 aircraft, hopes to have its Maltese business up and running by October. Chief executive József Váradi says the move will support further expansion and that he is exploring options to set up more subsidiaries and bases in Europe and beyond.

The airline’s arrival in Malta is part of a much larger trend. The country, 55 miles off the south coast of Sicily, is the world’s 10th smallest and only has seasonal tourist traffic, yet more than 500 aircraft are registered there, according to KPMG calculations. That leaves it with more aircraft than hotels. 

Ryanair subsidiaries Malta Air and Lauda Europe were set up on the island in 2019 and 2020 respectively and together now operate more than 170 aircraft. Earlier this year, Lufthansa’s Eurowings Europe announced plans to move to the country, which is already home to private jet companies such as VistaJet and Luxwing.

The weather may be good and the location helpful to link up parts of southern Europe, but the aviation industry’s sudden rush to Malta is based on pure economics.

“Malta is seen as attractive for airlines with lower aircraft registration costs and a favourable tax regime,” says Mark Simpson, an aviation analyst at Goodbody. According to tax advisory firm EMD, one of the most attractive incentives for airlines is that income from operations outside Malta is exempt from taxation in the country.

Other tax breaks include incentives on aircraft parts and lease payments, and there is a personal tax rate of only 15 per cent for people working in aviation. Meanwhile, the country is part of the EU, and flight operations come under European Aviation Safety Agency jurisdiction, making it straightforward to operate across the continent.

But has the influx of airlines helped if you actually want to get to Malta? Don’t count on it. Many Maltese-registered planes will only rarely visit the island. On a typical day this week, 150 flights landed or took off from the country, roughly the same number as in Latvia, Lithuania or Albania, and 3 per cent of the number going to the UK or Germany.

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