Postimees: Estonia's Nordica hoping to overcome crisis with air carrier tenders

TALLINN - Nordic Aviation Group AS, the Estonian state-owned airline operating under the Nordica brand, can still exit the crisis on top, Nordica's chief commercial officer Deepak Ahluwalia said, adding that air carrier tenders are the business line holding the biggest potential for Nordica, Postimees reports.

Ahluwalia told Postimees that Nordica is participating in numerous air carrier tenders in European states and if it proves the winning bidder, the airline will start servicing the routes with its aircraft and crews. A subsidiary of Nordic Aviation Group, Regional Jet, is already operating a route between Stockholm and northern Sweden under the Xfly brand in a similar manner.

"During the peak period of the pandemic, states did not hold many tenders; however, now that travel has resumed, new procurements are frequently being announced. Airlines no longer want to lightly take risks during the pandemic and service loss-making flights. For instance, before the pandemic Finnair carried passengers to Helsinki from Joensuu, Kemi or Kokkola. At the start of the pandemic, these links were halted and Finnair has not been ready so far to start operating these routes once more," he said.

Ahluwalia added that states have had no choice but to relaunch their domestic flights through tenders and there are many of them being held.

"We're planning to take part altogether in some 30 air carrier procurements this year and next year," he said.

The chief commercial officer of Nordica said that in the case of a winning bid, the airline will gain income that does not depend on ticket sales or passenger load factors.

"We'll be responsible for our maintained and manned aircraft remaining on schedule and the local government will pay us for flight volumes and seats. Thus, it is undoubtedly an excellent business opportunity and one that will help us cope with the crisis," he said. 

Ahluwalia could not say with certainty when Nordica will resume flights from Tallinn.

"Aviation has bounced back 60 percent compared with 2019, but this first and foremost pertains to private passengers who want to fly on a holiday or to visit someone. Business travel, which has always been Nordica's priority, has not recovered in a comparable volume, however. Looking at the times and destinations of departures from Tallinn, it is clear that these flights do not suit business customers," he said.

Ahluwalia noted that flying to a destination in the morning and returning to Tallinn on the same evening is nearly impossible. The Estonian state would benefit from business passengers the most, however, because efficient links with European hubs would bring both money and investors into the country.

"We estimate that the volumes of business customers should reach next year 70 percent of the 2019 level; however, there are also skeptics who believe that only one-third of business travel will bounce back within the coming year. We are prepared to launch routes from Tallinn as soon as demand grows," he said.

The revenue of Nordic Aviation Group declined 42 percent on year to 61 million euros in 2020 and the group's loss grew threefold to 10.5 million euros. The group was granted 30 million euros of state aid last year.