However, funds from the flights development programme which has been effective for three years now are insufficient to ensure flights to main London airports, because the risk of the desired flights to London is very high due to high operating costs and fierce competition in the market. And this is why financial involvement of companies doing business in Lithuania and interested in the establishment of these flights by sharing risk could be a good solution.
Would be appreciated by potential investors
Such an idea was expressed in business breakfast held by the British Chamber of Commerce and Lithuanian Airports at the end of March, when the discussion was held on the actions that should be taken for flights between Lithuania and one of the largest London airports to become a reality.
According to the Head of the Service Group of “Investuok Lietuvoje” (Invest in Lithuania) Laisvis Makulis, with the business deciding on which city to choose for future investment, the issue of connection by air plays an important role.
According to L. Makulis, we cannot change such things as the market size or geographic location of the country, but we have opportunities to improve communications.
“Flights to London’s Heathrow or Gatwick airports and to Paris Charles de Gaulle airport are very important. We must improve communications, because otherwise new jobs and potential taxes and revenues of local service providers may be lost, also making the ability to attract similar projects in the future less likely”, - said L. Makulis.
Mariano Andrade Gonzalez, Executive Director of Barclays operations centre in Lithuania, having participated in the discussion also expressed the need for direct connections to any of the largest London airports. According to him, considering the time spent traveling from airports outside the city, flights operated by budget airlines would cost more to his company than flights offered by traditional airlines.
Millions for a possibility to land in Heathrow
Director of Department of Commerce of Lithuanian Airlines Jūratė Baltrušaitytė reminded that a wish to have a flight operated by traditional airlines to one of the major London airports have been heard, and massive effort has been made to achieve this goal.
J. Baltrušaitytė also reminded that currently seven flights are operated from Lithuania to the capital of Great Britain every day. Fierce competition and a large slot price in Heathrow and Gatwick airports stops traditional airlines from having such a flight from Vilnius.
Airlines often pay millions for slots in Heathrow airport, which is the main European aviation hub. For example, Oman airlines “Oman Air” paid USD 75 million in the beginning of last year for acquiring a slot in Heathrow airport from “Air France/KLM”.
“Negotiating for flights from Lithuania to London Gatwick airport, one traditional airline company calculated that the risk of launching such a flight costs EUR 2.2 million per year, meanwhile a total of EUR 1 million is allocated for promoting flights per year, while the maximum amount which one carrier may receive is EUR 200 000 in three years” - said the Director of Commerce of Lithuanian Airports.
According to J. Baltrušaitytė, even though recently “British Airways” started flying to London Heathrow airport from Tallinn, we have to keep in mind the fact that even with the two new flights operated by British airlines, there are a total of 5 flights per week going from the capital of Estonia to London.
In order to meet the wish of both entrepreneurs and representatives of the tourism sector to have a flight to one of the major London airports and with limited flights promotion fund resources, J. Baltrušaitytė offered entrepreneurs to use experience of other countries and contribute to the flights promotion fund.
“Both international and local business could contribute by making payments to the special fund used to support the necessary destinations. The state could double the funds invested by business, thus meeting all requirements for state support. Such a model functions in Sweden and Scotland. Here EUR 10 million - 15 million per year are allocated for the development of destinations per year” - J. Baltrušaitytė named one of the possibilities for promoting new destinations.
“Ryanair” is stepping on heels of “Lufthansa”
When talking about the European aviation market, J. Baltrušaitytė also emphasized that budget airlines are already at the heels of traditional carriers, which are experiencing the pressure of increasing competition. In 2016, “Ryannair” ranked second in terms of the number of passengers served in Europe giving way solely to the entire “Lufthansa” Group.
“Moreover, say, “Ryanair” no longer flies to secondary airports located outside of city boundaries only, but the airlines already offer flights from certain airports of major European cities, including the Brussels Zaventem, airports of Copenhagen, Madrid or Frankfurt. I have no doubts that we will also see them, “easyJet” or “Wizz Air” in other major airports in the future”, - said J. Baltrušaitytė.
Moreover, the difference between the services offered by traditional airlines and budget carriers and their quality has also decreased. Many traditional airlines merely offer free food or beverages on the plane, moreover they also charge extra for other services, such as carriage of checked baggage.
Another example is “British Airways”, the company, which decided to increase the number of economic class seats in planes flying in short distance destinations, which means reducing legroom, which will become similar to that available in “Ryanair” aircrafts. Moreover, the government of Great Britain decided including another budget company “Norwegian” into the list of airlines whose services are used.
