Technology independent: airBaltic leans on training and MRO to succeed where others haven’t

With the fall of the Soviet Union, all newly-independent states had the same problem in regards to connectivity – the departure and arrival boards were left almost empty. To fill the void, the Baltic states established their own airlines: Estonian Air, Lithuanian Airlines and Latavio.

Latavio was the first piece to fall, shutting up shop in 1996, one year after a joint venture between the Latvian government (51 per cent stake), Scandinavian Airlines Systems (SAS, 29 per cent), and investment funds from Denmark (8 per cent) and Sweden (6 per cent) established airBaltic.

Lithuania’s first attempt folded when Lithuanian Airlines (renamed to flyLAL in 2005) went bankrupt in January 2009. Despite a brief second attempt to establish a national airline with Air Lituanica, which started operations in 2013 and tapped out in 2015, Lithuania has abandoned its dreams to own a flag carrier for now.

The last piece to fall was Estonian Air and its successor, Nordica. Despite Nordica holding out for four years since its establishment in 2015, airBaltic popped the champagne on June 21, 2019, when the Tallinn-based Nordica announced it would only operate flights and transfer the commercial responsibility to LOT Polish Airlines, a 49 per cent stakeholder of Nordica, starting October 2019.

airBaltic is fending off the much more powerful foreign low-cost carriers

From 2017’s 3.5 million passengers, the airline grew swiftly to 5 million in 2019, but its growth showed a remarkable restraint. Moves like leasing two Airbus A220 aircraft to Lufthansa for the busy summer months allow airBaltic to increase and diversify its revenue: in the first half of 2019 alone, it earned $5.5 million from aircraft leasing services.

Crucially, airBaltic is also executing on a strategy of inhouse self-reliance, particularly around training and maintenance, repair and overhaul.

Last year, airBaltic became fully reliant on its own services in two key areas: airBaltic Training and its MRO department. On the training side, the airline ordered its first Airbus A220 full-flight simulator that arrived in Riga on December 3, 2019.

In MRO terms, in September 2019 Latvia’s Civil Aviation Agency certified that airBaltic is fully capable of conducting full-scale EASA Part-145 line maintenance and base maintenance for the aircraft that will carry it into the future: the A220. The ability to do so bore fruit fairly quickly, and in November 2019, the airline finished its first C check on the A220-300, once again becoming the first to do so.

As of now, the only other European operator of the A220, Swiss International Air Lines, outsources its C and D check procedures to SAMCO, a Dutch maintenance company. Swiss tells the World of Aviation that SAMCO is currently “the only external service provider certified in Europe for the A220.”

AirBaltic’s strategy is to avoid being swamped by larger competitors by taking the initiative and doing things itself. Becoming fully independent and being able to offer maintenance for the Airbus A220 will not only allow the airline to plan better and in turn reduce its operating costs, but also potentially earn some additional revenue from those European operators that are unable to get their hands dirty on the narrowbody, especially as Airbus’ sales efforts bear fruit.

The upgrade to its pilot training subsidiary will essentially provide the same benefits. When chief executive Martin Gauss spoke about the A220 during his presentation at the 2019 Paris Air Show, he noted that the aircraft provides a break-even point at only 90 passengers. This allows airBaltic to be more flexible on its route network, making it “the ideal aircraft for a regional and seasonal market with thin routes.”

Whether the hybrid model combined with the much more efficient Airbus A220 fends off the likes of Ryanair and Wizz Air currently wreaking havoc on traditional airlines across northern and eastern Europe remains to be seen. AirBaltic’s independence could be the key to fighting off the low-cost carriers.