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Who is that virtual airline?
So far, many details about the future company are not disclosed. The ministry explainsthat a virtual airline is a company that buys flight hours and, according to its decisions, can also buy other services related to the activities of the airline, such as ticketing, from another airline, but that provides services under its own brand in the market.
Or, as S. Bartkus explained, the established company would hire other airlines in the market, actually pay for them on charter flights, and then sell tickets for these flights. All commercial risk on the flights would be borne by the state and not by the operating airlines, emphasized the marketing manager of Swiss aviation data collection and analysis company Ch-Aviation.
Lukas Balandus / 15min photo / Simonas Bartkus
How much can it cost?
The company is expected to be established before the end of this year or the beginning of next. Its establishment would be financed from the state budget.
The Ministry of Transport and Communications has not yet revealed how much will be allocated for the establishment of the company, how much is planned to allocate funds to it each year. S. Bartkus said he could not evaluate it, because the scope of the company’s activities is not known, nor how many directions would be flown or what would be.
“It can probably be assumed that the activity will not be profitable, especially in the short term, as the airline is likely to fly in directions where commercial airlines do not fly.” Would this benefit Lithuania as a state? All the studies, as many as have been done, show that the benefits of flying are sometimes greater than the loss, “said S. Bartkus.
The ministry is not yet talking about future directions. What they could be is a difficult question even for an aviation expert, as the consequences of the current aviation crisis are still unclear. “We are now in the recovery phase and we still do not know if all those flights that left Lithuania before the COVID-19 pandemic will really return.” In my opinion, not everyone will return, “said Ch-Aviation’s chief marketing officer.
Photo by Ernesta Čičiurkaitė / 15min.
Is now the right time?
It is due to the current crisis that now is a good time to start creating such a company, considered S. Bartkus.
“It is one thing for domestic carriers, in whatever form, to reap the greatest benefits during crises,” he explained. When the weather is good, there are many airlines that tend to fly for commercial reasons. But in a time of deeper crisis (such as the current one facing the aviation sector), it is the national airline that has nowhere to retire, but still maintains flights. “
Now aviation services can be bought cheaper than ever, – said S. Bartkus.
The second reason is that prices in the sector are currently falling due to the difficult financial situation of the airlines and the stagnation of air traffic. “There are free planes, all crew shortage issues have been solved. From this point of view, the time is also right, because now services can be purchased at a lower price than ever, the aviation expert said. – If, for example, they were bought in 2019. summer, the prices would be much higher. “
What are the advantages of a virtual airline?
According to the ministry, this airline model is offered because of its advantages: significantly lower costs to establish a company, much more flexible possibilities to change the scope of operations and aircraft, as well as a more operational start-up.
S.Bartkus also agrees that such an option is probably better for Lithuania than another attempt to create complete airlines. “First, the size of the investment for a virtual operator would certainly be smaller, regardless of size. A fully operational company would need its own aircraft, flight licenses, etc.,” said Ch-Aviation’s chief marketing officer.
Photo from 123RF.com/Airplane
Speed is also an important issue at the moment. “The fact that the holes created during this traffic crisis will have to be plugged very quickly. It is possible to create a virtual airline much faster than creating a fully fledged one,” said S. Bartkus.
What is the risk?
So both price and speed, according to the expert, are on the side of the virtual national airline. However, the greatest risk remains political will.
“The political risks are even greater than the commercial ones” 15 minutes S. Bartkus said. “In any case, the state is capable of implementing such projects, the only question is how to manage political risks, if the government would be firmly involved.”
He recalled that the project could also be affected by parliamentary elections in the fall, after which, if there is a change of government, the attitude towards the establishment of a national airline may also change. “Such projects are always very sensitive to political risks,” said S. Bartkus.
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