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Official accuses Ryanair of trying to subsidize flights

  • 2005-01-26
  • Staff and wire reports
VILNIUS - A state tourism official has accused Ryanair of trying to subsidize flights to Lithuania through a dubious, Web-based payment scheme, while the local media have reported that the discount airliner is no longer courting the Baltic's largest country.

Rima Jakyte, head of the information and analysis unit at the state tourism department, said the discount Irish airline proposed putting links to Lithuania on its Web site in exchange for payments worth up to 1 million litas (290,000 euros) per year.

"I would say that it is pure subsidizing, which is contrary to competition and distorts the market," said Jakyte. "This is not tolerated by the European Commission, either."

Ryanair, which launched flights to Riga in October, has been negotiating with Lithuanian officials to begin flights sometime this year, possibly from Kaunas Airport. In mid-December, the airline proposed that the State Tourism Department pay 200,000 euros per month 's or 8.2 million litas per year 's for a link to the department on Ryanair's Web site. Ostensibly the link would have drawn the attention of thousands of potential tourists to the Baltic country.

The department rejected the offer, which was equal to its annual budget.

Ryanair then offered a link to the tourism department's site on its secondary Web page for 17,600 euros per month, or 211,200 euros per year, but this too was rejected.

"Correspondence was broken off before Christmas, as they understood that we would not pay that price," Jakyte said, adding that the proposals to the tourism department had been presented by Benny Berger, Ryanair's director of route development.

Last week the Verslo Zinios daily reported that Ryanair was no longer eyeing the Lithuanian market, particularly after the entry of Latvia's airBaltic last year.

Managers of Kaunas Airport who held talks with Ryanair said they had failed to lure the carrier even with 50 percent discount tariffs. Airport CEO Rimantas Skridaila said talks with the Irish carrier had been complicated.

"In the beginning Ryanair laid down additional conditions and voiced discontent with [our] proposals. We made certain concessions and offered terms of cooperation equal to Riga, or even better. However, we discovered that they only wanted to maintain pressure on the market," Skridaila said. "In effect, Lithuania's market is too small for them."

Valdemaras Salauskas, secretary of the Ministry of Transportation, told the paper that Ryanair apparently did not wish to compete with airBaltic. "The majority of Lithuanians travel with Ryanair from Riga as the distance of some 100 kilometers is not significant. Most probably the results of a market survey showed them that there was no point to expand in the neighborhood."

Last year Lithuania's airports serviced 1.1 million passengers, a 39.3 percent rise year-on-year. Vilnius Airport alone serviced 994,160 passengers, 38.1 percent more than in 2003. The number of flights handled by the airport surged by 39 percent, to 23,660.