Airport managers, minister chart common future for air hub

  • 2007-04-04
  • By TBT staff
RIGA - The ambitious goal to transform Riga into the premier flight hub of Eastern Europe is continuing unabated, with plans this year to launch direct flights to Asia and increase flights to North America. Airport managers also confirmed that they would press ahead with the current fee system that gives larger airlines steep discounts based on passenger turnover, despite objections from Latvia's competition authorities.

"I do not want to speak about discounts. I am speaking about the price," airport council chief Andris Ozols told the Baltic News Service.
"The price must be differentiated, and I think that those companies that fly more passengers should pay less for serving one passenger that those that carry small numbers of passengers," he said.

In November the Competition Council ruled that the discount system, which was implemented in 2004, creates a five-fold price difference that distorts competition and forces some airlines to subsidize others.
"The Competition Council's demands are quite logical. Even the lowest price should be high enough to cover the costs and allow the airport make profits," Ozols admitted.
At the same time, he said, "The airport wants to receive higher revenues from those who carry smaller numbers of passengers. Otherwise, it would not be made clear that the policy of the government and the airport is to serve as many passengers as possible."

Transport Minister Ainars Slesers appealed the council's decision, leaving the discount system in place.
Meanwhile, the European Com-mission is reportedly evaluating whether the system could be construed as state support.
The lowest discount prescribes a 10 percent reduction for 25,000 passengers carried annually, while the largest amounts to 80 percent for 250,000 passengers carried.

Presently two airlines 's airBaltic and Ryanair 's benefit most from the system.
Last year Riga International Airport served 2.5 million passengers, up 32.9 percent year-on-year. The number of flights grew 16.2 percent to more than 40,000. This year the airport may serve 3.3 million passengers, Slesers told journalists on March 28.
In the long run, Slesers hopes the airport will handle 10 million passengers (by 2013), and maybe even as many as 30 million in 20 years.

To accomplish this, however, major investments will be required, and Slesers will have to get his Cabinet colleagues to approve them.
A draft plan for the airport's development calls for 150 million lats (213 million euros) to be invested so that the airport can handle 10 million passengers a year by 2009.
Further on, 350 million lats should be invested to serve 15 - 17 million passengers by 2020, and 500 million - 1 billion lats should be invested to serve 30 million passengers by 2030.
Airport officials said reconstruction and extension of the runway would be finished before October 2008, enabling the airport to receive larger intercontinental flights.

The runway is currently 2.55 kilometers long but after the extension it will reach 3.2 kilometers, enabling the airport to receive bigger aircraft not serviced at present, particularly those on routes to and from Asia, Slesers said.
Ozols said the airport, which is owned by the state, may also want to consider outsourcing management once the passenger volumes reach a particular level.
He did not rule out this option in the distant future, but said that the airport's development plan, the details of which were still being worked out, would cover up to 2014.
"At present it is important to understand how to manage this significant company, which will have a large part of its income coming not from aviation, but from infrastructure 's tax free shops, logistics, sorting of mail and other businesses growing around the airport," said Ozols.

Slesers, in the meantime, said some 20 new routes might be launched from Riga this fall, including those to Scandinavian countries.
He said negotiations were under way to increase the number of flights between Riga and New York. Currently there is only one flight per week between the cities, though next year the number could be raised to four.