Lithuanian Airports have signed an agreement with LOT Polish Airlines to operate regular direct flights between Vilnius (VNO) and London City (LCY) airports under a new route development model that will see each party share the risks and rewards.

Star Alliance member LOT has been flying the 1,063-mi. (924-nm) sector since May 2019, offering six roundtrips per week using Embraer 190 aircraft. The route is currently operated under a Public Service Obligation (PSO) contract, as it is seen as crucial for regional economic development.

However, the current PSO obligation expires on Sept. 30 and cannot be extended following the UK’s withdrawal from the European Union. Under European Commission regulations, PSO subsidies can only be provided on intra-EU routes.

Lithuanian Airports says it has therefore developed a new model that sees both the airline and the airport group bear the financial risks associated with the operation of the route, as well as sharing the financial benefits generated by it. Contracts will only be signed with airlines that can offer a financially viable business plan for a particular route.

“London is a pilot destination for the new flight development model, and we want to test how the model works,” says Lithuania’s Transport and Communications Minister Marius Skuodis. “We hope that Lithuanian Airports will be able to use this model to secure other important destinations for the country.”

Lithuanian Airports says the contract with LOT was signed after an international selection process for a scheduled flight operator, which considered a requirement that the VNO-LCY route be operated at times and frequencies convenient for business travelers. It will commence on Oct. 1, ensuring that the current level of capacity between the destinations is maintained.

“From October onward, the flight will continue to operate from Vilnius at very convenient times, which we believe will also contribute to its growing popularity,” says Simonas Bartkus, CEO of Lithuanian Airports.

“It is very important to understand that the country's investment in the development of priority flights is necessary. Therefore, together with our partners, we will make every effort to ensure that the state budget will provide the necessary amount for the effective continuation of the development of the flights in the coming years, as well.”