Estonian Air widens international network to Rome and Munich

One of the less high profile countries that joined the EU in May 2004 was Estonia. With a population of just 1.3 million, Estonia is the smallest of the Baltic States to have joined the EU, as Latvia (2.3 million people) and Lithuania (3.4 million people) are both significantly larger. Estonia regained its independence in 1991 after successfully breaking away from the USSR. It celebrated the 10th anniversary of independence in 2001 by winning the Eurovision song contest, resulting in this global televisual spectacle being held in Tallinn in 2002 when neighbours Latvia took the honours.

Image: Tallinn Airport
Estonian Air increased its traffic at Tallinn Airport by 70% between 2003 and 2006.

Image: Estonian AirGrowth has been rapid since 2003

Since joining the EU, growth for both Estonian Air and Tallinn Airport has been dramatic. Airport traffic has more than doubled between 2003 and 2006, while Estonian Air’s traffic has advanced by nearly 70%. As a result Estonian’s share of Tallinn traffic has fallen from 57% in 2003 to 45% in 2006.

Chart: Tallinn Airport Traffic 1997 - 2006
Source: Tallinn Airport website, Estonian Air annual reports

Double-digit airport growth in 2007

So far in 2007, Tallinn Airport growth has averaged 11.5%, which indicates that annual traffic should reach 1.7 million passengers this year. Growth has varied between 4.2% in May and 19.3% in the most recent month, October. August is the peak month, with traffic around 50% higher than in January.

Chart: Tallinn Airport Seasonality
Source: Tallinn Airport website, Estonian Air annual reports

In terms of the leading airlines at Tallinn Airport this winter, Estonian Air still has nearly 50% of available seat capacity and operates one domestic route and 14 international routes. No other airline operates more than two routes at the airport.

Airline Frequency Share Capacity Share Number of Routes
Estonian Air 38.5% 47.6% 15
Finnair 12.2% 10.4% 1 (to HEL)
EasyJet 3.8% 7.5% 2 (to STN, SXF)
Air Baltic 12.2% 7.0% 2 (to RIX, VNO)
Czech Airlines 4.9% 6.4% 1 (to PRG)
KLM 4.9% 4.9% 1 (to AMS)
All others 23.6% 16.2%
Source: OAG Max Online for w/c 10 December 2007

Map: Europe AirportsLCCs have a relatively small presence at the airport this winter with easyJet connecting to London Stansted and Berlin Schönefeld and Norwegian operating three times per week to Oslo. EasyJet began daily Stansted services in November 2004 and, as a result, scheduled traffic from London to Tallinn has increased nearly fourfold from 44,245 in 2003 to 171,293 in 2006.

2006 disappoints financially

Since 2003, SAS has owned 49% of Estonian Air having bought out the share previously owned by Maersk Air A/S. The government still holds a 34% share, with the remainder in private ownership. Key performance indicators for the airline in the last two years are shown below:

  2005 2006 change
Aircraft movements 9,051 9,070 +0.2%
Passengers 642,821 689,747 +7.3%
Load factor 61% 62% + 1 point
Average sector length 1,220 km 1,253 km +2.7%
Average aircraft block hours/day 10.2 hours 10.5 hours +2.9%
Revenue (EEK 000s) 1,151,678 1,291,416 +12.1%
Operating profit/loss (EEK 000s) 57,716 -71,516
Operating margin 5.0% -5.5%
Source: Estonian Air annual report
Image: Stockholm
While airport traffic doubled in the three years to 2006, three routes – Copenhagen (24%), Stockholm Arlanda (17%) and London Gatwick (13%) – accounted for over half of all passengers carried in 2006.

Unexpected technical problems (on average one aircraft was out of operation during half the year) and higher fuel prices cost the airline an estimated EEK 73.4 million which helps explain the poor financial performance in 2006.

Copenhagen, Stockholm and London account for over 50% of traffic

Just three routes to Copenhagen (24%), Stockholm Arlanda (17%) and London Gatwick (13%) accounted for over half of all passengers carried in 2006. New routes were started to Barcelona, Dubrovnik and Simferopol, though only Barcelona will be served year-round. Services to Manchester were dropped. Frequencies this winter on the airline’s 15 routes from Tallinn are summarised in the table below.

Frequency Destination
>13 per week Copenhagen (19), Helsinki (19), Stockholm ARN (16)
7-13 per week London LGW, Oslo, Vilnius
5-6 per week Brussels
3-4 per week Frankfurt, Hamburg, Kiev, Milan MXP, Moscow SVO, Vienna
1-2 per week Dublin, Kuressaare
Source: OAG Max Online for w/c 10 December 2007

The routes to Helsinki, Kuressaare and Vilnius are operated by subsidiary Estonian Air Regional with two 33-seat Saab 340s. The remaining fleet of four 737-300s (142 seats) and two 737-500s (118/120 seats) are not excessively overworked in this winter’s programme. Three of the aircraft have no scheduled flights at all on Saturdays.

Image: New RoutesNew routes for 2008

The airline recently announced the addition of two new destinations for 2008. Munich will be served three times per week from 30 March, making it the airline’s third route to Germany after Frankfurt and Hamburg. Rome will be served twice weekly from 4 April and will be the second route to Italy as Milan Malpensa is already served.

Table: Estonian Air - Winter 2007 Schedule from Tallinn


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