30-second interview with Simonas Bartkus, CCO, Air Lituanica
The new Lithuanian start-up airline, Air Lituanica, is launching its inaugural flight from Vilnius to Brussels on 30 June. Amsterdam and Berlin are also in the airline’s schedule, with Prague, Moscow and Munich in mind. The new carrier has leased two Embraer ERJ-170/175 aircraft and aims to succeed where previous national entities have failed.
anna.aero (aa): In the last five years, Lithuanian aviation has experienced the bankruptcy of flag carrier Flylal and then Star 1, which was the latest attempt to develop a national airline. What do you personally think went wrong with those airlines and what does Air Lituanica aim to do differently?
Simonas Bartkus (SB): Both cases were very specific. Lithuanian Airlines (later renamed into FlyLAL) was privatized in 2005 with a substantial debt. This debt, along with increased competition in the market and the start of the global financial crisis, were the major reasons why the shareholders were no longer able to make further investments into the airline. The low-cost carrier Star 1 Airlines was developed as a subsidiary to a local tour operator, which in my opinion, was a bad decision for the airline. Recently, the bankruptcy administrator announced that the main reason for Star 1 Airlines’ insolvency was due to tour operator’s debt.
Air Lituanica is coming to Vilnius Airport in order to fill the gap between the low-cost airlines and the major European carriers already operating in the market. We see a clear regional flight segment; however, we do not intend to become a market leader in Vilnius, such as airBaltic or Estonian Air, which account for 60% and 40% of the market share in Riga and Tallinn airports respectively. Our goal is to become the most convenient choice to reach Vilnius, with 15-20% of the market share in the first three years.
aa: Your routes to Amsterdam and Berlin were both well served in the past from Vilnius. However, in the recent years attempts to restore these routes were not successful. For example, Amsterdam was served by airBaltic in 2010 for five months and then by Estonian Air in 2010-11; the Berlin route was operated by Skyways in 2010. Estonian Air’s attempt on this route lasted only for one month. What is your route development strategy?
SB: Appropriate aircraft with a good configuration and a schedule which meets the market requirements, are the most important factors on certain routes. Estonian Air had achieved good volume of passengers on flights to Amsterdam and Berlin, but at that time their Boeing 737 was too big for those routes, where high flight frequency was more important.
In addition, both Skyways and Estonian Air paid the most attention to their main markets in Sweden and Estonia, thus operations in Lithuania failed to receive adequate attention. So the withdrawals from those routes were mainly caused by the decision to focus on their primary markets, but not due to the poor operational results.
Looking into the historical results, in 2008 FlyLAL carried 94,000 passengers on the Amsterdam route. Meanwhile, airBaltic in the same year achieved 30,000 passengers’ on the route to Berlin. I believe that Air Lituanica could gain back these results within two or three years of operation.
We are looking at niche destinations, reachable from Vilnius within two to two and a half hours, and which have a sufficient flow of business travelers. Connecting flight options are also an important factor in assessing potential routes, as we seek co-operation with major European carriers, such as Air France–KLM in Amsterdam and airberlin in Berlin.
aa: What is your expected passenger mix?
SB: We believe that more than half of the flow will be related to business purposes, with about 30% for leisure/tourists and 15% for VFR traffic.
aa: Could you tell us about your partnership with Estonian Air?
SB: We are working with Estonian Air in several ways. We have leased one of their aircraft and in addition, Estonian Air is our commercial distribution partner. We will sell part of our tickets through its distribution channels, in order to achieve wide distribution and be able to start cooperation with interline and codeshare partners from day one. Moreover, the new Estonian Air’s strategy is almost identical to ours, so we see a number of areas for further cooperation.
aa: What level of support have you received from the airports?
SB: We were warmly welcomed in all three airports. For our small airline, airport marketing assistance entering the markets is very important in spreading the name of the airline. We also have the opportunity to take advantages of the incentives offered by the airports for new routes development.
aa: 83% of shares belong to the Lithuanian government (Vilnius City Municipality). What is your long term strategy in terms of ownership?
SB: We will be seeking a strategic investor for the airline. This is one part of the Vilnius City Municipality’s future plans.
aa: Tickets have been on sale for about three weeks now. Could you tell us how the bookings are going?
SB: Amsterdam has received an extremely high interest, which proves to us that the market lacked this route. As for Brussels, we believe, that Lithuanian Presidency of the Council of European Union, starting this July, will drive the success of the route, at least for the next six months.