Estonian Air's recent financial difficulties have led to rumours of a possible takeover by Latvia's AirBaltic. (photo: Estonian Air)
TALLINN - A growing spat is developing between Estonia's national airline "Estonian Air" and Latvia's "airBaltic" as the two sides step up competition to win market shares as the country's economy begins its climb out of recession.
It began earlier this week when Estonian Air Deputy President in charge of commerce Rauno Parras accused the Latvian airline of maintaining artificially low prices to steal Estonian customers.
"Some airlines have increasingly opted for the strategy of luring customers from neighbouring markets to fly to their desired destinations via the airline's home base at much lower prices than offered for direct flights from the said home base in order to increase the number of passengers," he said.
AirBaltic spokesman Janis Vanags shot back, saying that the Estonian airline -- partially owned by SAS -- had missed key opportunities and was now suffering for it.His comments also prompted speculation on a possible takeover.
"Sweden and Finland are the main incoming tourism markets with over 3 million visitors to Estonia every year. airBaltic is surprised that Estonian Air has neglected these markets for many years. This kind of attitude makes us doubt, if the acquisition of Estonian Air would add any value to airBaltic," he said.
In the latest twist, Parras has leapt to defend the company's actions and claim that any talk of a possible takeover is simply "rumours".
Estonian Air's home market share has suffered recently -- it last year carried just 41 percent of Tallinn's 1.3 million passengers, the lowest market share it has had for years. Moreover, throughout the recession the company has been in difficult financial straights and struggling to keep afloat.