AirBaltic, ministry rankle another competitor

Last week Latvia's Transport Ministry refused to approve the winter flight schedule of Czech Airlines, an unexpected development which could leave tens of thousands of Prague-bound passengers looking for alternative routes and destinations over the upcoming weeks.

Citing an agreement between Latvia and the Czech Republic, the Transport Ministry stated that the proposed schedule was not approved since, in the words of the ministry, it needs to be "readjusted."

Arnis Muizneiks, head of the aviation department at the Transport Ministry, didn't specify what readjustments were needed for the proposal to go through, saying that the ministry is looking for "fair and equal opportunities to perform services" for both the Latvian and Czech airlines.

Pavel Sarf, Czech Airline's director for Latvia and Estonia, said that the Transport Ministry's decision effectively amounted to an encroachment on the Czech carrier's market share in Latvia, which has steadily increased throughout the year.

Czech Airlines currently has nine flights per week between Prague and Riga, and Sarf said the winter flight schedule, which is due to begin on Oct. 27, provided for the same number of flights.

Sarf said that last month airBaltic proposed Czech Airlines cut its number of flights to six, which, given the three flights per week to Prague that airBaltic wants to launch this winter, would leave the total number of flights between the two cities at nine.

Czech Airlines declined the proposal on the basis that it interfered with its existing schedule, which has proven to be an attractive product for jet-setters.

The Prague-Riga route is lucrative. According to statistics provided by Czech Airlines, the number of passengers flying the Prague-Riga route grew 24 percent over the first nine months of the year to nearly 47,000 passengers.

As a result, Czech Airlines' market share at Riga Airport now amounts to 10 percent of total passenger turnover, up from 8 percent at the end of 2001.

By contrast, airBaltic has seen passenger volume increase only 1 percent, to 193,568 travelers, over the first nine months of the year. The number of flights made by the company decreased 2 percent year-on-year to 6,694.

Unable to reach a compromise, the two airlines appealed to their respective government agencies to work out a solution. Muiznieks said that talks were continuing.

Sarf said that the Czech Republic's Ministry of Transport and Communication has sent two letters to its Latvian counterpart assuring that once Czech Airlines' nine-flight-per-week winter schedule is approved, the ministry will give the go-ahead for airBaltic to begin its three weekly flights to Prague.

The conflict comes just two weeks after Austrian Airlines canceled its daily Vienna-Riga flights after having its weekly allotment of flights reduced from seven to four by the Transport Ministry in order to accommodate airBaltic's four new flights per week to Vienna.

Austrian Airlines Vice-President Peter Malanik said at the beginning of the month that a four-flight-per-week schedule did not make sense, and that only a flight-a-day schedule is profitable.

As Sarf explained, foreign airlines working the Riga route needed daily flights in order to attract "connection passengers" en route to a further destination. Connection passengers make up from 40 percent to 50 percent of all passengers, said Sarf.

This is one of the reasons why Czech Airlines feels the Latvian ministry's decision is motivated by protectionism, said Sarf. For example, a Riga-Prague-Milan trip offered by Czech Airlines is far cheaper than a Riga-Copenhagen-Milan ticket on airBaltic.

AirBaltic has not denied that protectionism has played a role in the decision. A company official was quoted last week by Baltic News Service as saying, "Until now the Latvian market was one of the most unprotected markets in Europe, and thus became an easily gained booty for any airline wanting to start flights to our country.

"Only lately has the Latvian state started similar measures with which other countries support their own airlines."

AirBaltic is 52.6 percent owned by the state, while the remaining shares are in the hands of Scandinavian SAS.

AirBaltic announced last week that the company will halt its weekly flight to Frankfurt starting Oct. 27. The flight, which regularly took place on Sundays, was dropped since Lufthansa, which flies the other six days of the week, decided to start flying on Sunday.