Latvian flag-carrier airBaltic faced a 30% drop in bookings when Russia invaded Ukraine, but the carrier is confident it will compensate for lost revenue with other destinations.
AirBaltic was one of the very first airlines to decide to leave the Russian market until further notice. The airline canceled all its flights to and from Russian destinations on March 4.
AirBaltic CEO Martin Gauss told Aviation Daily that Russia’s invasion of Ukraine will delay recovery for the carrier. “When we look to last week, bookings went down 30% compared to the week before the war started,” Gauss said. “Maybe it was also related to a first shock. But we are still up 350% compared to last year.”
Gauss explained, calculating for the full year, if airBaltic is not able to fly to Ukraine anymore, it will see a 6.8% hit on its budgeted revenue for 2022. “Russia was only 2.3%, because after the pandemic airBaltic was not allowed to fly as much it did pre-pandemic to Russia,” Gauss said.
For the entire year, zero-flying to both markets would be a 9% drop in 2022 revenue. “But we will offset this by flying more often to other regions. We will soon announce new destinations,” Gauss said, expecting that the network portfolio can compensate for the Ukraine/Russia issue.
AirBaltic is operating up to 90 routes in 2022 and 75% of its business is generated outside Latvia. “We are now not in the best geographical position, but we are in Europe,” Gauss said. The long-term effect of the Ukraine war is yet to be seen for airBaltic. How will it affect transfer business from Ukraine and Russia in the future?
The Riga Hub
Before COVID-19, around 50% of airBaltic’s total passengers transferred through its Riga hub. During the pandemic, this share went down to 30%, where it remains currently. “Maybe it will grow to 35%,” the CEO said.
The carrier slightly adjusted its business strategy, opened a new base—its fourth—in Tampere, Finland, , and increased point-to-point traffic. “This exposed the role of the hub, but Riga remains important,” Gauss said. AirBaltic has also identified a further six airports where it could open new bases, but no announcement will be made this year, depending on how business develops.
On a day-to-day basis, the carrier must now evaluate the economic impact of rerouted flights to avoid Russian and Ukrainian airspace. “You have both now, higher fuel prices and detours; this makes economic decisions necessary,” Gauss said. The CEO expects Russian airspace will be affected longer from the closure, and Ukraine airspace might return earlier.
AirBaltic must now detour to 12 destinations from Riga, of which the route to Dubai is the longest, followed by Egypt. “With 45 minutes longer flying time, Tiblisi in Georgia has the longest detour,” Gauss said. Before the war, airBaltic operated to Kiev, Odessa and Lviv in Ukraine.
“We don’t know how long this will go on, but we will go back immediately to Ukraine the moment it is open again,” Gauss said.
AirBaltic is still below 48% of bookings compared to 2019 pre-COVID-19 levels. “We are deploying only 60% of our capacity,” Gauss said. He hopes that in 2023 the carrier will get close to pre-pandemic levels.
AirBaltic operates 33 Airbus A220-300s; the number will rise to 40 aircraft by the end of 2022.
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