New Baltic Carrier Plans to Succeed Where Predecessors Have Failed

A new Lithuanian airline plans to launch operations next year and establish itself as the Baltic nation’s flag carrier. Air Lituanica plans to introduce flights during 2013 and succeed with previous national entities Lithuanian Airlines and flyLAL have failed by establishing a sustainable network of routes from the Lithuanian capital Vilnius and its second city Kaunus.

Air Lituanica hopes to overcome the problems of its predecessors and help establish new air services in the country. The airline will be partly supported by the State with the Vilnius City Municipality holding a 34 per cent shareholding, although a local strategic investor will hold a controlling 49 per cent equity stake. The remaining 17 per cent of the airline will be split between Lithuanian businesses, enterprises and individual private investors.

The start-up plans to initially operate to six destinations with flights from Vilnius and Kaunus. These comprise the western resort town of Palanga and international services to Amsterdam, Brussels, Kiev, London and Moscow. In 2014, there are plans to add flights to Berlin, Hamburg, Munich, St Petersburg, Stockholm and Tbilisi, while Istanbul is on the radar for 2015.

According to estimates the airline forecasts to carry around 125,000 passengers a year and expects to generate approximately LTL 36.2 million (EUR 10.5 million) in tourist spend in Lithuania, said Vilnius Mayor Arturas Zuokas at an event in Kaunus to promote the new carrier last week.

Since the three Baltic States of Estonia, Latvia and Lithuania gained independence from the Soviet Union in the early 1990s the aviation industry in Lithuania initially failed to record the growth levels of its neighbours, as the table below highlights, due partly to the lack of a strong local operator. However, growth from low-cost carriers during the past decade has slowly enabled the market to partly fulfill its potential. Ryanair is currently the largest carrier from Lithuania with a 37.7 per cent share of the available seat capacity this year, followed by Wizz Air with a 13.6 per cent share.

In the early 1990s Lithuania was actually the largest of the three Baltic markets accounting for 46.5 per cent of the international flights from the three countries. However, just ten years later it had the smallest international aviation market in the region, constituting just 32.6 per cent of the total seat capacity from the three Baltic States. This share subsequently declined to 25.5 per cent in 2010, but recent route developments and restructuring of networks in Estonia and Latvia has meant this will grow to 29.1 per cent this year.