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Estonia's incumbent national carrier is Nordic Aviation Group (d/b/a Nordica), following the suspension of AS Estonian Air in Nov-2015. Lennart Meri Tallinn Airport or Ülemiste Airport is the largest airport in Estonia located in Tallinn. Airest, Enimex and FlyLaL Charters Estonia operate scheduled and chartered services in Estonia.
Airports in Estonia
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Air Lituanica launched services at the end of Jun-2013, making it the first scheduled Lithuanian carrier since the collapse of FlyLAL in 2009 and Star1 Airlines in 2010. Air Lituanica will see Lithuania once again connected to other key European countries through a home-based carrier.
As the largest of the three Baltic states with a land area of 65,300km2, Lithuania has a population of about three million and had a GDP in 2012 of about USD42 billion, according to World Bank data. The country currently has four airports in Vilnius, Kaunas, Palanga and Šiauliai which are served by about 20 foreign carriers.
Aside from Air Lituanica, there are currently five other Lithuanian airlines including five charter carriers (Aurela, Avion Express, DOT LT, Grand Cru Airlines and Small Planet Airlines) and one cargo carrier (Aviavilsa). There have been no domestic services in the country since the demise of FlyLAL.
Estonia’s national carrier has dropped its ambitions to develop extensive hub operations at Tallinn Airport and appointed Jan Palmér as the new CEO to scale down the airline’s network and halt mounting losses. The small regional carrier in 2011 adopted a new network model, shifting its traditional focus on point-to-point markets to a network strategy based around feeding transfer traffic within Europe and to and from the Commonwealth of Independent States (CIS) region. The core goal was twofold: to increase the number of destinations and frequencies from Estonia, and to do so with a sustainable profit in the medium term.
To underpin Estonian Air’s new strategy, the Estonian government in Dec-2011 decided to invest an additional EUR30 million in the airline, increasing its ownership from 90% to 97.34%. It also endorsed the revamp of the carrier’s entire fleet of narrowbody and regional jets with Embraer E-Jets.
International Airlines Group (IAG), formed by the merger of British Airways (BA) and Iberia in Jan-2011, is facing increased Spanish headwinds as its largest single shareholder is in need of a massive bailout from the Spanish Government. Bankia’s parent company Banco Financiero y de Ahorros (BFA) holds 12.09% of the share capital of IAG and has asked the Spanish Government for a EUR23.5 billion rescue to cover exposures to real estate, deteriorating loans and accounting discrepancies. The embattled banking conglomerate has already announced it will divest several assets and its IAG shareholding is one of the assets being considered for sale.
At the closing the London Stock Exchange on 30-May-2012 IAG’s market capitalisation was GBP2.6 billion (EUR3.2 billion), valuing the BFA-Bankia stake in the airline group at GBP312 million (EUR390 million).
airBaltic’s restructuring plan fittingly dubbed 'ReShape' is in full swing now, but the loss-making Latvian national carrier is facing increasing competition from its northern counterpart Estonian Air, which is copying airBaltic’s model. The tactic is not surprising as Estonian Air’s president and CEO Tero Taskila was airBaltic’s former CCO and helped implement the carrier’s shift from point-to-point operator to a network airline based around feeding transfer traffic between Western Europe and markets in Eastern Europe, the Nordic region, Russia, the Commonwealth of Independent States (CIS) and the Middle East.
Ironically, airBaltic is currently moving away from a stringent focus on transfer traffic over its “North Hub Riga” at Riga International Airport to a more point-to-point approach as part of its drive to return to profitability and build a sustainable long-term business. Too much transfer traffic and a testing public dispute between the airline’s two main shareholders, which resulted in a decline in customer loyalty, brought airBaltic uncomfortably close to bankruptcy last year.
The Baltic States of Estonia, Latvia and Lithuania are seeing rapid low-cost carrier growth, especially in their key market of Scandinavia. The very small or non-existent domestic markets in the Baltic nations means the local carriers are reliant almost entirely on international operations, where they must compete against foreign carriers. Like the rest of Europe, the most pronounced competition comes from LCCs.
Estonian Air and airBaltic are the key carriers of the region but foreign budget carriers such as Ryanair, Wizz Jet and Flybe are increasing their presence in the Baltic market in order to tap into the burgeoning traffic volumes.
There are few subjects that Europe’s airlines can agree on, but the lamentable state of the European air traffic control system is one of them. This week, industry bodies representing all sectors of the European air transport market blasted the efforts of European member states and their air navigation service providers (ANSPs) on reducing costs and increasing efficiency for falling short of where they should be.
Air traffic inefficiency and the high costs associated with Europe’s patchwork air traffic management (ATM) system are estimated to cost the European aviation industry between EUR4 billion and EUR5 billion p/a. The delays and inefficient routings punish both passengers and airlines, increasing flight times and distances and driving up fuel burn and greenhouse gas emissions, a particularly galling situation given the entry of aviation into the EU Emissions Trading Scheme next year.