RIGA - The Baltic airline industry is continuing to undergo dynamic change, as new players enter the market and domestic carriers scramble to meet the competition. The biggest news of the week was KLM's inaugural flight Amsterdam-Riga on May 31. The Dutch carrier said it planned to fly to the Latvian capital two times daily and seven days per week.
This comes just two weeks after Czech Airlines increased the number of its flights to the Latvian capital to 12 in an effort to win a larger share of the lucrative market.
Latvian officials expect the number of visitors to Riga to soar over the next year-and-a-half, and to facilitate travel to the Baltics the Transport Ministry has begun cutting costs at Riga International Airport.
In Estonia, a SN Brussels Airlines official said last week that the airline was considering launching three weekly flights to Tallinn later this year.
"We've done the cost and turnover surveys, and at this point we'd still like to gather information about our potential customers," Markku Ahteela, the airline's Finland manager, said. "That survey should be finished by the end of June, and it's also then that the decision about opening the air line will apparently be made."
The initial plan calls for Brussels Airlines to fly between the two capitals on Mondays, Wednesdays and Fridays starting in September.
Domestic carriers have also been busy trying to keep pace in the deregulation market.
AirBaltic announced that in September it would launch to more routes from Vilnius to European destinations. Company President Bertold Flick did not say specify exactly which cities these extra routes would cover, but he said that as of June 1 the airline would initiate direct flights from Vilnius to Berlin, Dublin, Hamburg, Copenhagen and Cologne, making the Lithuanian capital the airline's second hub after Riga.
On Aug. 15 this year airBaltic also plans to start operating direct flights from Vilnius to Helsinki, Oslo, Warsaw and Vienna.
Currently airBaltic, which is 52.6 percent owned by the Latvian state and 47.2 percent owned by Scandinavian Airlines system, flies to 19 different destinations in Europe from Riga.
The struggling Lietuvos Avialinijos (Lithuanian Airlines, or LAL), which is wholly state-owned, has responded to these moves by slashing ticket prices and reviewing its marketing strategy. However, given the cutthroat competition, this may not be enough, and LAL managers are desperately trying to boost investment. Initially investments for 2004 had been placed at a paltry 2.7 million litas (782,000 euros), though the company now admits that it will need an additional 8 million litas to survive.
The carrier, which was burdened with debts in late 2003, reported a turnover of 186.5 million litas for 2003, a decline of 10.5 percent from 2002, though it did manage to eke out a profit of 297,000 litas.
Meanwhile, the State Property Fund, which unsuccessfully tried to privatize LAL last year, has announced that another attempt to find a strategic investor for the company may take place this year. A new privatization program might be arranged this fall, while the privatization tender, according to the most optimistic scenario, could kick off in late 2004.
LAL controlled 45 percent of the domestic market in terms of passengers last year, while SAS, which pulled out of the privatization last year, held a 17.3 percent share.
The carrier said it expected revenues to rise 13 percent this year to 210 million litas, even though the Transport Ministry announced on May 28 that the airline had posted a loss - so far undisclosed - during the first quarter.
