Potential deals make airlines the industry to watch

  • 2005-10-19
  • Staff and wire reports
RIGA - Last week Ryanair announced that it was mulling over the construction of a 100 million euro operational base in either Latvia or Poland, while smaller investors scramble to get a piece of the lucrative market for charter flights. Ryanair, which began regular flights to and from Riga a year ago and has since handled some 300,000 passengers, wants to build a state-of-the-art service center for its burgeoning fleet of planes. The center will provide some 1,300 jobs, according to reports.

The company has narrowed down its choice to Riga or southeastern Poland. Given Ryanair's reputation for holding out for the best offer, ultimately the choice will boil down to which government is capable of promising the most tax breaks and incentives.

The final decision is expected by the end of the year.

Ryanair's arrival in the Baltics 's it recently announced the start of flights to Kaunas 's has not only changed the air travel industry dramatically but many would argue the face of Riga itself. The company's cheap tickets have brought in a flood of holiday makers, including stag parties and sex tourists, and top Latvian officials have complained of the city's deteriorating image as a result.

Still, the Irish airline's presence on the market has put Riga International Airport in first place among its Baltic rivals. The best way to ensure it stays there might be to provide the incentives for the service center to be built here.

Meanwhile, Tez Tour, one of the largest tour operators in the Baltics, said it was planning to buy a stake in Lithuania's Aurela and Latvia's Latcharter, both charter airlines.

"Having abandoned plans to become a shareholder of Lietuvos Avialinijos (Lithuanian Airlines), we are now looking to buy shares in other air carriers. Currently, we are in talks with Aurela and Latcharter," Martynas Laivys, Tez Tour's director for Lithuanian operations, told a news conference last week.

Though Tez Tour was part of the successful joint bid for Lithuanian Airlines (now flyLAL), it has since announced it did not want to take part in management.

Aurela, a privately-owned company, operates charter flights to destinations in Europe, Asia and Africa. Tez Tour is controlled by private investors from Turkey, Russia and other countries.

Finally, World Aviation Capital, a U.K. company, bought a majority stake in Air Lithuania, a domestic airline. World Aviation Capital said it was committed to restructuring the airline and developing its core business.

The price of the deal was not disclosed.