Riga International Airport 's bright future despite recent turbulence

RIGA - Riga International Airport (RIX), born October 1974, is the country’s busiest airport. Controlled at the time by Aeroflot, the airline synonymous with USSR civil aviation, Riga’s airport had no right to independent management. After Latvia restored its independence in 1991, the company was divided into three independent entities: Latvijas Gaisa satiksme, Latvijas aviolinijas, and national airport company ‘Riga’ which included three airports (Riga, Liepaja and Daugavpils).

From 1993 until today, Riga International Airport has implemented several large modernization projects, including runway upgrades, modernization of the administration building, construction of new parking facilities, waiting rooms for business class passengers and a VIP center, as well as computerization of information monitors. By 1999, 18 airlines offering 28 direct flights were operating within the airport (Copenhagen, Stockholm and London being the most popular destinations). In 2007, RIX emerged as the largest airport in the Baltic states, with the number of passengers using the airport close to the combined traffic turnover of Tallinn and Vilnius airports. Despite the global economic crisis that began in 2007, a new departure terminal opened in March for the non-Schengen area passengers. More than 3 million passengers used the airport in 2007, which constituted a 26.7 percent increase, year-on-year.

In 2007, Latvia along with Estonia, Lithuania, the Czech Republic, Poland, Malta, Hungary, Slovenia and Slovakia joined the Schengen zone, bringing the number of EU member-states to twenty five.  All the border controls between Latvia and other Schengen members were abolished, which had a positive effect on airline passenger traffic. In 2008, the number of people commuting through RIX posted an 18.5 percent growth compared to the previous year. 

This year, as major airlines all over the world are grappling with the effects of sagging passenger numbers and diminishing freight volumes, RIX is continuing its rapid growth. As of January 2009, RIX has served 10.3 percent more passengers than in the previous year. Compared with the flight schedule in the winter season of 2008/2009, the number of regular flights has grown (500 regular flights last winter increased to 560 flights this season). This can be largely attributed to the additional flights introduced by Ryanair and airBaltic airlines. The destinations include Glasgow, Brussels, Frankfurt, Kaunas, Pskov and Dushanbe and reflect the important role of Riga as the meeting point between West and East.

Krisjanis Peters, chairman of the board of the airport, has emphasized the importance of the airport’s excellent performance this winter. He says that “Due to the difficult situation in the aviation industry many airlines in the winter season choose to decrease the frequency of flights and the number of routes, whereas the airlines Ryanair and airBaltic step up their operations in Riga. It shows the strength of these airlines and the invariable attraction of Riga as a tourism and business destination and a convenient transit point for further travel.”

While Riga Airport is celebrating success, the competitors remain sceptical. LETA reports that Tallinn Airport CEO Rein Loik attributes high passenger traffic at RIX to the practice of repeated registration of the transit passengers traveling through Riga.   “Riga Airport is a transit hub,” commented Loik, “and an Estonian passenger traveling to Brussels through Riga is registered four times. This is how the number of passengers in Riga is skyrocketing. True, this is normal procedure also in other transit hubs. Tallinn, of course, is not a transit hub.”

With the increased passenger count, more and more young travellers are using RIX. In May 2009, RIX served 48 children, in June this number rose to 219, while in July it was already 381 young passengers. It is extremely important to provide a safe and comfortable environment for the children that are flying through Riga, and to address this issue in August the airport opened its second playground. The new facilities welcome young transit passengers who sometimes have to spend a lot of time in the airport due to flight layovers. Traveling with children is a very stressful time not only for the children, but also for their parents.
Until recently, future prospects have also looked bright. As per International Air Transport Association statistical data, the passenger turnover could reach 20 million a year by 2032.

However, on Nov. 16, airport management, addressing the recent resolution by the Latvian Cabinet of Ministers, warned of possible impediments in the development of the airport and aviation industry in Latvia. According to the government-produced document, 80 percent of RIX profits will be diverted to the state budget while the state subsidy will be reduced four times. The airport believes that this will undermine the prospects for sustainable development going forward. It would also be more difficult for the airport to attract foreign direct investment and maintain the level of security and service quality.

“Riga International Airport is the most competitive ‘product’ of Latvia. By ignoring this fact and not taking logical, considerate steps that even do not require public funds, the state risks to lose hundreds of millions of lats,” said Peters.
“We must not ignore the fact that in 2007 the aviation industry contributed almost 400 million lats (570 million euros) to Latvia’s GDP. My estimates for 2008 are similar. The situation demands that we elaborate and implement the aviation policy endorsed by all the stakeholders, creating favorable conditions for development of the airport,” he continued.

Furthermore, Riga Airport has to acknowledge intensifying competition among its Baltic counterparts. For instance, Vilnius’ airport, the largest of the four airports in Lithuania by passenger traffic, has recently slashed passenger tariffs, becoming one of the lowest cost airports in Europe for new destinations. The updated price structure is aimed at promoting new flights from Vilnius. This is the second price reduction that Vilnius has introduced since the beginning of 2009.

RIX believes that Vilnius Airport was able to adopt a flexible pricing policy, which is better adapted to today’s economic reality, thanks to support from the Lithuanian government, which is key to attracting airlines and passenger flows.
Peters further commented on the situation, that “It is easier to achieve the goal than to hold on to it. At present, Riga Airport is handling almost two thirds of the entire air passenger traffic in the Baltics. Only five years ago all three Baltic states were in equal positions. Thanks to a clearly defined goal, consistent strategy and focused work we have attained our current position. 

The competition among the airports is tough. Errors and ill-considered actions will be used against us to seize the market share that we fail to protect. The consequences can be dramatic – sliding back to the status of a provincial airport.”
RIX seems to be willing to work with the Latvian government in order to find the best solution. In a press-release, it has been urging state officials to evaluate the positive impact of the airport on the economy and, together with the stakeholders of the aviation industry, to agree upon the short- and long-term goals and on the preconditions for their implementation, such as future tariff policies, competition guidelines and infrastructure development targets.