WEBSITE EXCLUSIVE: Bertolt Flick Q&A

It was once an ill-defined semi-subsidiary of SAS, but in recent years airBaltic has transformed itself into one of Europe's most dynamic smaller airlines. With an extensive network of routes established in Western Europe and Scandinavia, airBaltic is now looking eastwards towards Central Asia and beyond. It may also face stiffer competition from local rival flyLAL-Lithuanian Airlines, which is also overhauling its service. airBaltic CEO and President Bertolt Flick took time out to outline the airline's future direction.


airBaltic is opening several new routes eastwards over the next few months [including Yerevan, Almaty, Sochi and Simferopol). This seems to be a market few others have yet entered. How has this new eastwards focus developed?
"You have to look at the history of Latvia. Until 1991, Riga had about 2.2 million passengers 's all going eastwards. With independence there was a collapse in traffic, and then traffic to the west started and developed. Really we are re-opening routes that had been served from Riga before rather than discovering something entirely new. There are business ties, family ties. There is a lot of traffic originating in the Baltic states for Russia, Ukraine, Belarus and beyond. So we're not in the same situation as Western European countries.

Will you be specifically targeting business travelers, for instance those involved in the oil and gas industries?
It depends on the route. We have routes that are definitely more used by business travelers but for example Sochi is primarily a holiday route.

How is it doing business with the Central Asian republics? Sometimes they have a reputation for not having the most transparent business practices…
The situation is very clear. Everything is regulated by bilateral agreements with the EU, which means you have to operate within the framework of those agreements. It is exactly the same as it used to be dealing with the west until 2004.

flyLAL 'sLithuanian Airlines recently came to Riga to drum up support for its own routes. It seems to be targeting airBaltic quite directly. How do you intend to respond to this?
If they are talking about flying between Riga and Vilnius, that in itself does not constitute a strategy. We have absolutely no plan for 'taking on' an airline. We develop in our own right. We have looked at the Lithuanian market, based some planes inVilnius and serve 22 destinations from there. We are absolutely the market leaders in Lithuania in terms of growth and in terms of size. But this is not a goal in itself. We want to develop profitably. Size in itself is not a goal. We are not looking at any competitor airline and saying 'We have to take them on'. That is a funny strategy in itself.

We fly four times a day Riga-Vilnius. They will also fly four times a day. So, let's see.

Would you be interested in absorbing Estonian Air into you structure? It would seem to be a natural fit.
At the moment we have absolutely no plans in that direction. It's not on the table.

Is it a help or a hindrance to be partially owned by the state of Latvia?
There is a clear strategy which is agreed between the shareholders. Of course a rapid increase in operations has an effect on the bottom line of the company. Year on year on year 40% growth does not allow the highest profit margins but at the same time we need to achieve a certain size in order to be able to survive 's and we have been profitable since 2001.

How do you define airBaltic? Are you competing as a low-cost carrier against the likes of Ryanair or are you an old-fashioned national carrier?
There is nothing final about business development in our industry. The way the so-called low-cost carriers look today has developed over the last five to six years. We are still talking about a very recent development. When you use the phrase 'low cost', we are definitely low cost. We are extremely low cost. But in terms of the service that we offer, we have a hybrid model. We do offer connections and we do still have a full business class, but our economy class 's if you disregard our connections 's is closer to some of the low cost carriers.

It's already old-fashioned to talk about 'low cost' carriers. This was a label for a particular business model a few years ago. The line between the traditional airlines and what were called low cost airlines has merged very, very much. We don't need to advertise that we are low cost, but that we offer very competitive prices, a network and good flight times.

It's just a short hop from Almaty to China. Any plans to fly there?
We will step by step add more destinations to the former Soviet countries. So far we have no intention to fly to China. But of course Latvia has a very good geographical position for operating flights to China. A lot of Western European flights to China cross Latvia. But this is not on the cards at the moment.