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airBaltic is the Latvian national carrier (80% state ownership) and a hybrid-LCC. It is the first national flag carrier airline to market itself as an LCC. The carrier is based in the Latvian capital Riga and also operates bases in the other Baltic capitals of Vilnius (Lithuania) and Tallinn (Estonia). The airline has also moved away from offering mostly point-to-point services in the Baltic region, and now pursues a network strategy, with Riga International the main hub. Until Jan-2009, airBaltic was 47.2% owned by Scandinavian flag SAS, which Air Baltic Corporation purchased. airBaltic maintains close links with SAS, operating frequent services to the latter's hubs in Copenhagen, Oslo and Stockholm thereby operating a ‘dual hub’ system with Riga. The airline operates scheduled services to destinations in Europe, the Middle East and the CIS. Following a share capital increase, the Latvian State holds an 80% in airBaltic, with the remaining stake of approximately 20% owned by Aircraft Leasing 1 SIA (which is owned by Danish entrepreneur Lars Thuesen). airBaltic is the launch customer of the CS300.
Location of airBaltic main hub (Riga International Airport)
LCCs will continue to evolve into hybrids of the original core model. CAPA and OAG consider airBaltic fits the LCC profile and it is included in our reporting on this basis. Please note: when reporting for an airline is changed from or to LCC the historical data is not affected and it can lead to a distortion in the current reported data. Contact us if you have any queries.
30 total articles
For Latvia's national airline, 2016 was a pivotal year. Riga-based airBaltic completed a multi year restructuring programme, increased its passenger numbers for the first time in five years, secured a capital increase and a private investor, and became the launch customer for the Bombardier CS300. On 28-Mar-2016 it further celebrated its successes by announcing a return to positive EBIT, alongside a net profit, for last year.
It has achieved its turnaround in the face of strong competition from foreign LCCs, justifying its positioning as a "hybrid LCC". Data provided to CAPA confirm that its unit cost level is also broadly consistent with the LCC tag. It is now seeking further investment from a strategic investor – preferably another airline. It also faces a decision about the replacement of its Dash 8 turboprop fleet.
AirBaltic CEO Martin Gauss told CAPA that the airline plans for passenger growth to accelerate from 12% in the past year to 16% in 2017, taking traffic levels back above 3 million passengers. For an airline based in a country inhabited by only 2 million people, this suggests that airBaltic has been making some judicious network decisions.
On 28-Nov-2016 airBaltic took delivery of the world's first Bombardier CS300 for commercial service, which will begin on 14-Dec-2016 with a flight from Riga to Amsterdam. It will receive a further 19 of the aircraft variant by 2019.
Just five years ago airBaltic was heavily loss-making and close to bankruptcy. Under CEO Martin Gauss Latvia's national airline has negotiated a successful restructuring programme, established a track record of growing profits, secured a private investor alongside the national government, made significant load factor gains, and is now returning to capacity growth.
The new CSeries order should allow airBaltic to build on these achievements by replacing its ageing Boeing 737s with one of the most modern and efficient narrowbodies aircraft in the world, while also providing additional growth capacity. Together with its Dash-8 turboprop aircraft this purchase should give it a fleet well adapted to the niche needs of a hybrid regional hub airline based in northern Europe's smaller markets.
CAPA Airlines in Transition. How FSCs can regain short haul share from LCCs Part 1: at the coal face
From the time when the penny finally dropped for full service airlines – that LCCs were not in fact going away – full service airlines have sought many ways, usually without great success, to counter the erosion of their short haul operations by the new entrant, lower-cost, specialist point-to-point airlines. The impact has been not only on their regional operations, but usually also on their global network, since short haul services feed into their hubs, fattening long haul loads.
This was more or less tolerable while the competition on long haul transferring over their hub was stable and their alliances, global and bilateral, were able to protect them. Then the super connectors (Gulf airlines and Turkish) came along disturbing the comfortable equilibrium, and in turn placing renewed importance on short haul.
At the CAPA Airlines in Transition conference in Dublin on 10 and 11-Mar-2016, a "Board" under the chairmanship of Professor Rigas Doganis considered how a full service airline's board should respond to the loss of short haul share. Their deliberations were then voted on by delegates. This is the first part of two reports on the issues raised.
There are few countries where an outright charter carrier is the de facto national flag carrier.
But that is the case in Lithuania where a succession of failed scheduled carriers contrasts with a relatively new airline that sells seats exclusively to tour operators, in several countries across continents, is expanding almost exponentially, has one of the lowest CASKs in Europe, isn't highly leveraged, and is profitable.
That is far from the only surprising thing about Lithuania though, a country that is privatising its airports without really privatising them and which, is only just beginning to wake up to its tourism potential.
airBaltic settles into Etihad partnership for Africa, Middle East & Asia – North America may be next
airBaltic is quietly pleased with initial performance from its partnership with Etihad Airways, under which airBaltic commenced Riga-Abu Dhabi service in Dec-2013. Less than three months on, airBaltic is still observing trends in the proportion of local versus connecting traffic, but Bangkok is an early popular onward destination. CEO Martin Gauss told CAPA that Latvia's growing portfolio of air service agreements can expand the number of codeshares it can place on Etihad flights, enabling airBaltic to sell flights from Riga to the Middle East, Africa and Asia – a potentially huge area it previously had no access to, with its local market base instead using competing airlines.
As Etihad rapidly digests its Darwin Airline and Jet Airways equity stakes and evaluates Alitalia, speculation has mounted on airBaltic being a potential equity partner. Mr Gauss says the first priority for the airline is growing the codeshare – which so far is more important to airBaltic than Etihad – but he does not rule out any possibilities. More concretely in the medium term is gaining better access to North America, with airBaltic considering if a North American carrier can serve Riga and partner with airBaltic, or if airBaltic should serve North America with its own metal. The trans-Atlantic market is appealing but also competitive with joint ventures, and Mr Gauss is not rushing to enter.
AirBaltic commenced a new codeshare with Etihad Airways on 16-Dec-2013, launching a four times weekly A319 service and linking its Riga hub with Etihad’s in Abu Dhabi. Riga is the Baltic region’s principal transfer point – the airport says that 33% of passengers in 2013 are transit/transfer traffic – and Abu Dhabi is rapidly emerging as an important hub for travellers flying between Europe and Asia.
Following airBaltic’s near bankruptcy in 2011 and its subsequent renationalisation and investment from the Latvian Government, the state has been on the look out for a private sector investor. Meanwhile, CEO Martin Gauss has been focusing on the carrier’s restructuring programme and expects to restore profitability in 2014 after achieving better than expected results for 9M2013.
An EU investigation into state aid received in 2011 is ongoing and could potentially lead to the carrier having to repay the funds received from the state. This would increase the pressure to secure fresh investment. Some observers have suggested that the Etihad partnership could be a stepping stone to a future equity relationship. The codeshare attests to some meeting of minds already.