FlyLAL grounded - 30,000 passengers without refunds

  • 2009-01-21
  • By TBT staff

GROUNDED: Tens of thousands were left with worthless tickets after the airline canceled all its flights.

RIGA - It would seem that the bitter competition between FlyLAL airlines and airBaltic has come to an end, as FlyLAL has been grounded and its license revoked over outstanding debts. The development has left nearly 30,000 ticket holding passengers without accommodating flights or refunds.

Passengers are also showing their outrage at the lack of FlyLAL's responsibility towards their customers.
"I am disappointed and angry. I had to pay about 750 litas (217 euro) for a one way ticket at late notice with airBaltic after I already paid 480 litas (139 euro) for a ticket with FlyLAL. They said I could just write a complaint and they provided only one phone number, which no one answers anyway. I am angry and disappointed. I don't think I will ever get my money back," said customer Jurgita Linikaite, a jewelry maker flying from Vilnius to London.

AirBaltic, however, is reaping the benefits of FlyLAL's loss and is reviewing its schedule to accommodate Lithuanian passengers. 
AirBaltic had previously cut the number of flights as demand was down and oil prices had been steadily rising.
"Passengers stood in long lines at our office in the airport on Jan. 17. People were seeking alternatives to FlyLAL's cancelled flights," said Tadas Vizgirda, airBaltic's vice-president and head of the Lithuanian unit.
In late 2008, airBaltic had planned to pursue new routes to New York and China, but those plans have been scrapped due to financial strains.

"It is already clear that some routes will have to be abandoned because we know that they are not commercially viable. But we plan to fly on routes where there is greater demand. We may decide on that as soon as this week," said Vizgirda.

AirBaltic is now finding itself having difficulty handling all the new increased passenger demand.
"We were not ready for such a sudden increase in passenger numbers," the airline official said.
AirBaltic handled 37,800 passengers at Vilnius International Airport in Dec. 2008, accounting for 34.3 percent of the total passenger traffic at the airport.

Vizgirda said that airBaltic's sales have surged five-fold over the weekend as FlyLAL sent passenger lists to airBaltic, assuming that the airline would offer them cheaper ticket options.

The reason for FlyLAL's sudden shutdown was ultimately caused by a failure of Swiss company SCH Swiss Capital Holding, which recently bought out the airline, to provide a 1-billion-euro loan it had promised.
The airline is now expected to launch bankruptcy proceedings in the near future.
The Lithuanian Civil Aviation Administration (LCAA) has issued a warning letter to FlyLAL for closing down its Vilnius offices. Despite the fact that the airline had its operating license suspended on Jan. 16, the airline is still responsible for ticket holding passengers.

"The company cannot run from its responsibility to passengers. Under the law, it cannot fly people, but it must continue working," Kestutis Auryla, the head of the LCAA, told the Baltic News Service on Jan 19.
Passengers, numbering about 30,000, have no options for refunds aside from contacting their credit card companies, as most travel insurance agencies do not cover sudden airline insolvency.

Lithuania President Valdas Adamkus will also have to start looking for a new airline to take him on his international journeys. Giedrius Krasauskas, head of the President's Office, confirmed that the office will terminate their contract with FlyLAL and plans to open a tender for new airlines.
"However, such procurement procedures normally take around a couple of months to complete. Therefore, we will most probably purchase airline services separately for every presidential visit," said Krasauskas.

"Lithuanian Airlines AB has sued Latvian airline airBaltic and the Riga International Airport with the 200 million litas claim for unfair competition. The court made a decision to arrest the assets of the mentioned companies. The financial situation of flyLAL 's Lithuanian Airlines would change substantially if the claim is satisfied," said a press release from FlyLAL.

"We sincerely regret that the current situation has led to this painful decision and that no other solution was found," said Vytautas Kaikaris on behalf of FlyLAL
As it stands, FlyLAL's debts are currently hovering at about 26 million euros.