• 2008-02-13
  • By Mike Collier

FLYING HIGH: airBaltic has turned itself into one of the region's success stories under Flick's leadership

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


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


How is it doing business with the Central Asianrepublics? Sometimes they have a reputation for not having the most transparentbusiness practices…
The situation is very clear. Everything is regulated by bilateralagreements with the EU, which means you have to operate within the framework ofthose agreements. It is exactly the same as it used to be dealing with the westuntil 2004.


flyLAL 'sLithuanian Airlines recently came to Riga to drum up supportfor its own routes. It seems to be targeting airBaltic quite directly. How doyou intend to respond to this?
If theyare talking about flying between Riga and Vilnius, that in itself does not constitutea strategy. We have absolutely no plan for 'taking on' an airline. We developin our own right. We have looked at the Lithuanian market, based some planes inVilnius and serve 22 destinations fromthere. We are absolutely the market leaders in Lithuania in terms of growth and in terms ofsize. But this is not a goal in itself. We want to develop profitably. Size initself 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 fourtimes a day Riga-Vilnius. They will also fly four times a day. So, let's see.


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


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

How do you define airBaltic? Are you competingas a low-cost carrier against the likes of Ryanair or are you an old-fashionednational carrier?
There isnothing final about business development in our industry. The way the so-calledlow-cost carriers look today has developed over the last five to six years. Weare still talking about a very recent development. When you use the phrase 'lowcost', we are definitely low cost. We are extremely low cost. But in terms ofthe service that we offer, we have a hybrid model. We do offer connections andwe do still have a full business class, but our economy class 's if youdisregard our connections 's is closer to some of the low cost carriers.

It'salready old-fashioned to talk about 'low cost' carriers. This was a label for aparticular business model a few years ago. The line between the traditional airlinesand what were called low cost airlines has merged very, very much. We don'tneed to advertise that we are low cost, but that we offer very competitiveprices, a network and good flight times.


It's just a short hop from Almaty to China. Any plans to flythere?
We willstep by step add more destinations to the former Soviet countries. So far wehave no intention to fly to China. But of course Latvia has a very good geographicalposition for operating flights to China. A lot of Western European flightsto China cross Latvia. But this is not on the cards atthe moment.