Some flights to Lithuania will not return: will the country’s airline idea work?

Although flight reports have begun to return to the airport’s information panels when Lithuania opens its borders, some of the previous flights are likely not to be recovered. Last year, flights from Lithuania were operated in 92 directions. We were able to reach 29 states directly.

With fog still looming over the effects of the pandemic and the risk of a second wave of the pandemic, Transport Minister Jaroslav Narkevich announced last week that he was proposing to the government to establish a national airline, a virtual airline. It is expected to be operational by the end of this year or the beginning of next.

A virtual airline would allow him to buy flight hours and operate flights under his own brand, but he would not have his own plane, the crews would buy services from other airlines.

After Lithuania’s failed efforts to have its own airline, the country wants to be proud again, and perhaps just ensure flights that private airlines will no longer want to take after the pandemic. Furthermore, neighboring countries can still maintain their airlines: Latvia with airBaltic, Poland with LOT Polish Airlines, or Belarus with Belavia.

Some addresses may be lost

Smiling pilots and stewardesses, comfortable seats, free snacks, no headaches due to luggage and airline plans – millions of revenue. Thus, seven years ago, the plane of the airline Air Lituanica established by the Vilnius city municipality went to the skies for the first time. Unfortunately, the airlines bearing the Artūras Zuokas name, decorated with a red mark, were forced to fold their wings just a couple of years later. 2015 May 22 The company announced the cessation of all flights. In the initial stage alone, 10 million were invested in the project. litas, and the beautiful idea became another fiasco.

The “Responsible Approach” is interested in knowing if the recently announced plans to create virtual airlines are not just another attempt to get to the same point, but at the same time ask aviation experts and entrepreneurs what the future of aviation has in store for them. in Lithuania.

Lithuanian airports estimate that 6.5 million passengers were served in the country last year. passengers According to aviation expert Simonas Bartkus, it will be necessary to wait for these figures again in the annual reports.

“Many experts predict that passenger traffic may return to last year’s level only in 2023. The recovery rate in the Lithuanian market is likely to be slower than in neighboring countries precisely because, in the absence of a market-linked base airline , foreign commercial airlines can reduce the number of flights. So far, there is no clear and official information on which directions may disappear from the map, but we see that Ryanair, for example, plans to offer only around 35% in July. 55 percent in August, “he said.

Furthermore, according to S. Bartkus, several destinations will be returned only at the end of October, and in some destinations the tickets will no longer be sold, which allows us to conclude that the number of destinations will decrease.

“Wizz Air has fired some of the employees working at the Vilnius base, and the foreign press reports that it plans to reduce the number of planes stored at the Vilnius base from three to two.” This probably means the termination of some directions, “the aviation expert argued. Austrian Airlines also does not promise to return the flight from Vienna in the near future. Therefore, the future is foggy and still full of uncertainty.

Expect the number to return as soon as next year.

The Lithuanian airports that operate the Vilnius, Kaunas and Palanga airports are a bit more optimistic. Aurimas Stikliūnas, Head of the Department of Aviation Services, predicts that last year’s level of flights and passengers at Lithuanian airports will be reached in the second half of next year.

“The entire aviation sector depends on the ways and speed with which countries can succeed in opening pandemic closed borders to passengers. The European Union is already talking about introducing an even freer movement within Union countries. From the point of view of passenger aviation, this is quite positive, “he said.

The interlocutor said that some of the important routes for the country have already been returned, and another part of the permits to resume flights will be issued in the coming weeks. We remind you that we have already resumed flights to some German cities, Scandinavian directions, we will soon be able to easily reach Paris, Amsterdam, Berlin, Billund and Copenhagen again. July is expected to be very active when even more directions return. Flight frequencies are also expected to increase.

“These are the instructions that allow us to expect a quick enough recovery if other conditions that depend on state-imposed restrictions are removed.” Probably one of the essential conditions for increased passenger flow is permission for passengers to enter the country for tourism purposes, several European countries are already moving towards this solution and opening up to tourists, “said A. Stikliūnas.

The representative of the Lithuanian airports assured that when communicating with the airlines, it can be assumed that after the restoration of free movement in European countries, it would be possible to expect 60-70% of traffic this fall. flights and have air connections with 90%. have directions.

“However, the situation is still very uncertain, there are unknowns on which not only the aviation sector depends, but the entire economy depends. Suppose that if the situation in the context of a pandemic worsened again at the end of the year, the countries would be closed again and airlines could not fly.
the recovery of passenger traffic would go even further in the future, “warned the interlocutor.

National carriers – straw during the crisis

If the beautiful plans to retrieve all directions to Lithuanian airports after the pandemic could not be successful, the aforementioned Lithuanian virtual airline could serve here. But isn’t his birth slated for another sad ending?

Aviation expert S. Bartkus stated that Lithuania has so far not been able to own or maintain national airlines due to lack of determination at the state level.

“Looking at the examples of neighboring countries (Poland, Latvia, Estonia), we see that the forms of activity differ, but the states follow a consistent strategy to maintain their national carriers,” he said.

When asked how the interlocutor evaluated the plans to establish a Lithuanian airline, S. Bartkus said that arguments could be found that supported and rejected the idea.

“However, I think creating a virtual airline would definitely be a better solution than creating a complete new airline.” The establishment of a virtual operator would be much faster, which is important in this context of post-pandemic rerouting, would require less initial investment, would have fewer project management risks, “said the expert.

Furthermore, it is likely that due to intense competition and recession in the market, the necessary air traffic services can now be purchased at a very low price.

The aviation expert also added that it is during the crisis that the main benefits for national carriers can be seen, when private carriers reduce the number of flights and routes.

“We can remember 2009. For example, when flyLAL was suspended for a good couple of years, many of the routes they left were not restored,” he stressed. S. Bartkus sees the risk of receiving directions from Lithuania even now. During a crisis, Private companies tend to aggressively reduce route networks, shift capacity to more profitable markets in the short term, and increase the influence of base carriers on transport.

Winter: the traditional model would be scheduled for losses

Gediminas Žiemelis, Chairman of the Board of the Avia Solutions Group, who has spent many years in aviation, said that when it comes to domestic airlines, the most important thing is to understand what their goals are.

“National airlines do not have almost all of them after 2000. countries admitted to the European Union (EU). The reason is clear: Europe’s single market, open skies and airlines of any country can build their bases and fly almost indefinitely Only flights from EU cities to non-EU cities are restricted: they can be operated in the country from which the airlines operate, “explained the businessman.

Therefore, according to him, 70 percent. Intra-European flights can be operated by any European airline, large or small. And there are more than 500 companies in Europe with this state.

“The traditional model of establishing an airline, assembling a team, leasing planes, de facto be scheduled for loss. I think an airplane would generate around 2 million in a competitive environment under normal market conditions. euros per year, – commented G. Žiemelis. “Another very important reason: Lithuania has not yet taken the path that would allow it to have a strong national airline.”

According to the businessman, Lithuania has four international airports with 2.8 million. population market when aviation theory says an airline with less than 5 million. population served with 25 thousand. eur / liv. GDP doomed to loss.

“Today, therefore, Lithuanian airports are” passenger pick-up stations “for Frankfurt, Copenhagen, London and others. hub’ams. Or they are an almost free infrastructure for low-cost airlines to destinations where there is enough natural traffic. These destinations with almost free airports are profitable, so they will remain and will not need subsidies; low-cost airlines will fly there, “said the businessman.

At that time, according to G. Žiemelis, before the accession of new countries to the EU, England and England had developed a practice in which national carriers from old European countries developed routes for many years by defending open competition when operating terminals at airports that can only be used by specific carriers. .

“In other words, there is no open competition in established markets. As a result, we will never see airBaltic flying from Frankfurt to London Heathrow Airport, despite the fact that the route is very profitable. Therefore, my conclusion would be that an adventure would be scheduled to create a traditional national airline, “he said.

Offers to build aviation uber

On the other hand, when it comes to developing a Lithuanian virtual airline, G. Žiemelis sees an exceptional opportunity here.

“Air Lituanica has been a complete carrier with a license, long-term leases and high fixed costs, which is considered inefficient in the modern world. The Lithuanian state could not maintain such a company in accordance with the legal acts of the However, today Lithuania has a unique opportunity, “said the interlocutor.

While there aren’t many details on how the Lithuanian virtual airline should work, the businessman offers to consider the idea from a new angle.

“A small local market that can compete outside the country, fast decisions, fast growing social literacy and an incredible young generation. All this can sting the old aviation chains. It is necessary to create an IT platform, which Lithuania is really capable of creating. The platform would post electronic purchases where seats would be purchased on one plane, the entire plane for, for example, the summer season. This would be a type of ‘aviation uber’ that would involve all European airlines and allow them to compete for flights.

“However, here is an important element: what benefits does Lithuania want from direct addresses? If you ask me: expensive tourists, expensive conferences, consumption and taxes on the national budget. Iceland with only 364 thousand. The population is 5 million per year, foreign tourists, Lithuania with 2.8 million population – 1.8 million tourists In this case, the financing of the instructions should be logical, “shared the businessman.

G. Žiemelis himself would see the benefits for Lithuania by financing the connection of secondary airports in Tel Aviv, Sweden, Austria and Finland with Palanga. Also the Vilnius connection to London City Airport. That, he said, would be a good solution for business.

“However, so that the process does not end with just one flight, it is necessary to involve the event organizers, organize annual events at the state level and develop the country’s attractions. After all, for example, Oktoberfest with 5 million. Visitors is a state project with great benefits for Germany ”, assured the interlocutor.

Žiemelis is convinced that the moment when the world of aviation has almost stopped turning is a unique opportunity not to be missed.

“It is forecast that next year around 10 thousand. Aircraft. Consequently, competition in electronic contracting will be high and subsidies may be minimal. This would allow routes to be launched at the lowest cost and without any long-term commitment. The airlines in Europe they still face the challenge of seasonality and the airline could not lease for 5-6 months, leaving “risk” to the airlines but not to the virtual airline. You can fully compare it to a taxi: when there are no passengers, Bold or Uber they don’t have to pay the car rent, ”said the businessman.

AirBaltic CEO: We are committed to responding flexibly

Responsible Approach also asked Martin Gauss, head of the Latvian airline airBaltic, how he assesses the need for the countries’ airlines and the news about plans to establish virtual airlines in Lithuania.

“Domestic airlines are vital to states that believe they need to maintain more air travel and support the economy. If we look at Lithuania, it has three main airlines that claim direct flights and several airlines that fly to bases. If Lithuania wants to improve communication from This should be done in the country by establishing airlines with a base and using a radio model, which requires costly investments. Aviation is currently full of challenges, which would make it more difficult and expensive to establish new airlines, “he said. The radio center model allows you to plan routes from remote points to a central base.

At the same time, M. Gauss added that airBaltic has been strengthening its determination to establish itself in the Lithuanian market for some time: “We would like to emphasize our determination to operate in Lithuania by offering connections to the most important markets in Europe through Riga and directly . We will continue to strive to become the choice of passengers between Lithuanian residents and foreigners traveling to Lithuania. We are determined to provide a more flexible response to the new needs of the Lithuanian aviation market. “

Furthermore, the head of the Latvian airline emphasized that the company is preparing to return all flights and directions from Vilnius and Palanga, as they were before the pandemic, as soon as the situation regarding free movement in Europe is finally resolved. .

Without flights we lose due to new investments

What will Lithuanian airport markers look like after quarantine? Not only residents who long for a vacation abroad, but businesses are waiting too. Business flights are necessary not only for meetings, partner searches or product guarantees, but also to attract new investments.

Rolandas Valiūnas, Chairman of the Board of the Investor Forum, an association that unites investors in Lithuania, confirms that the country’s accessibility has a significant impact on its attractiveness to investors.

“The ability to enter the country on convenient scheduled flights from major metropolitan, commercial and financial centers is often highlighted as an important factor in choosing a country for business and investment. Therefore, by not having a sufficient number of such flights, Lithuania loses a share of investors not only to neighboring Poland and Latvia, whose politicians have a completely different view of the importance of flights, but also to other countries. In particular, Latvia’s approach to the importance of airlines is quite opposite to that of Lithuania: its neighbors support airBaltic by all means, including financial ones, the interlocutor said.

R. Valiūnas said he understood that the arguments of the airline’s opponents that the company would not pay could be correct, but he sees a similar situation with the constant repair of the Vilnius-Klaipėda highway, but no one doubts that it is necessary.

“It is just as small for our economy and for Vilnius airport, which is not open to British Airways, Air France, Alitalia or many other companies that like to fly to Prague, Warsaw, Budapest and other places. It is important to consider to airlines not as a business but as an infrastructure object. Then there will be an awareness that recovery comes through many other channels. Only an additional service center contributes tens of millions of euros to the budget only through taxes on employee income, not to mention new jobs and higher wages. By investing that money in airlines, we could fly directly to New York as well, “he continued. According to him, although EU rules provide for a number of restrictions on the State aid, if there is a political will to have basic airlines, solutions will also be found to harmonize state aid.

“Therefore, we are confident that it is important for Lithuania to have a basic airline. Of course, travel is still very limited at the moment, but the relevance of this issue has not decreased and the importance of Lithuania’s accessibility only will grow in the future ”, is convinced the representative of the investors association.

Which flights do investors most expect?

When asked which addresses are most needed by investors, R. Valiūnas named Paris, Frankfurt, and Munich, as well as Stuttgart, Hamburg, Düsseldorf, Amsterdam, Istanbul, Helsinki, and Copenhagen.

“Vilnius should be connected to these cities by morning and west flights, but not by those that would take off at 5 o’clock in the morning, but would land well after midnight. To improve business conditions and increase attractiveness of the country’s investment, the largest financial centers, Frankfurt, Copenhagen, Helsinki, Amsterdam, need 3-4 flights a day, “said the interlocutor, adding that the pandemic threatens to lose some of a hitherto hard-won address.

Regarding flights necessary for business, R. Valiūnas agreed that the need for business flights after quarantine lessons may decrease, but this trend was also felt before quarantine.

“More and more companies, especially large international companies, are striving to operate sustainably, making remote meetings, which save time and resources while protecting the environment, become increasingly popular. Of course The COVID-19 outbreak and limited opportunities to travel and communicate directly have only further increased the prevalence of remote meetings, he said – On the other hand, although the practice of remote meetings has been introduced into sustainable businesses For many years, the need for face-to-face meetings, and therefore for flights, continues and continues to grow. In many ways, face-to-face has been and will continue to be more effective than distance, despite advances in technology “