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AirBaltic eats away at Lithuanian Airlines' market share

Feb 01, 2006
Staff and wire reports

VILNIUS - Since launching flights to and from Vilnius in 2004, Latvia's airBaltic has made remarkable advances in consolidating a share of the passenger air travel market in the Lithuanian capital and closing the gap with leader Lithuanian Airlines (LAL). LAL share of the passenger market fell 2.87 percentage points to 43.3 percent, data from Vilnius International Airport shows, while, airBaltic boosted its share to 24.93 percent by the end of 2005.

"AirBaltic's growth has been spurred by one-way ticket sales, low fees and direct flights. The growth of our market share shows that airBaltic offers good and competitive services," Bertolt Flick, company president, was quoted as saying.

The Czech Airlines ranked third with a 6.1 percent market share, while Germany's Lufthansa was fourth with 5.2 percent and Poland's LOT fifth with 4 percent.

LAL has seen its domination on the market whither after EU membership and a failed privatization in 2003. While in state hands, the carrier struggled to grow in step with competitors, who were quicker to take advantage of the open-skies policy and the arrival of the so-called discount airlines.

LAL, which was purchased by a local electronics firm last year, has been shackled by outstanding debts in recent years. Fortunately the company last week was able to reach a settlement with Vilnius International Airport over 19.5 million litas (5.5 million euros) in debt. Under the deal, LAL will repay the debt by 2014, with the principal amounts to be paid in 2006-2009.

Vilnius International Airport recorded a 28.9 percent growth in passenger traffic last year, up from 994,200 in 2004. Airport executives said they expected to service some 1.5 million passengers this year.

Meanwhile, Lithuania's Trans-port Ministry announced that the country's three international airports - Vilnius, Kaunas and Palanga - would be expanded in order to comply with Schengen requirements and remain open to travelers from non-Schengen countries after the country joins the visa-free travel zone.

The ministry said that, according to preliminary estimates, it will need 114-124 million litas by October 2007 in order to carry out the expansion plans.

"Last year, we expected that non-EU citizens would be able to fly to our airports at certain times and passenger flows would be separated. It turned out in November, however, that the terms have changed and investment will be required," said Valdemaras Salauskas, Transport Ministry state secretary.

As part of preparations to join the Schengen area, Vilnius Airport plans to begin construction on a new 14,000-square-meter passenger terminal in late April. Mintages Ivanauskas, airport director, said the estimated cost of the project is 110 million litas, but they expect that competition among suppliers will help to bring it down to 100 million litas.

The airport intends to invest 80 million litas of its own resources and borrow the remaining money from local commercial banks
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