New Aircraft As A Basis For Efficiency – Interview With CEO Of airBaltic

Martin Gauss, CEO of airBaltic, talks on the features of Bombardier CS300 operations, development plans and his airline's advantages in the competitive struggle with the low-cost carriers.
Oleksandr Laneckij 20 October 2017 15:13

Almost 10 months of the year and the summer peak of air transportation had gone, so we can talk about the preliminary results for airlines that fly to Ukraine. We have asked CEOs of airBaltic, LOT, Belavia about interim results and plans for the near future.

The first who answered was airBaltic's CEO Martin Gauss. The German leader of the Latvian national airline began his aviation career as a Boeing 737 pilot of British Airways. Since taking an office as CEO of airBaltic in 2011, he implemented the anti-crisis program that made the airline profitable again.

In Ukraine, the Latvian airline is often called low-cost carrier, although it does not position itself as such one.

Today 80.05% of airBaltic shares belong to the state, another 19.95% – to Danish businessman Lars Tuesen. The latter became a co-owner of the airline in 2017. But this was not the event of the year for airBaltic. This year the Latvian airline became the world's first operator of Bombardier CS300, a brand new narrow-bodied aircraft of the new generation.

In addition, airBaltic after six years of interruption resumed domestic flights within Latvia, and, what is important for Ukraine – the carrier after three years returned to Odesa. The airline develops the only hub in the Baltic region – Riga Airport. In addition, it plans to shift all its fleet to the CSeries aircrafts. We talked with Martin Gauss, CEO of airBaltic, on the peculiarities of their operations, the development plans of the airline and its secret advantages in the competitive struggle with the low-cost carriers.

How can you describe the aviation market of Eastern Europe and what is the role of airBaltic on it? What the most important events of the industry in this summer season would you like to note?

airBaltic is well positioned as a hybrid low cost carrier to continue its success in the very competitive European air transport market. Its increased capacity, efficient aircraft and low cost base will enable airBaltic to continue expansion as the No 1 Baltic carrier. The company will be recruiting around 200 new employees by the end of 2018.

This year is very exciting for airBaltic – our fleet is being modernized, we have added 13 new destinations, our team is growing and more passengers are traveling with us. Because of that, recently we were recognized the Regional Airline of the Year by CAPA.

In addition, airBaltic is carrying out discussions with aircraft manufacturers to identify the optimal solution to replace the existing 12 Bombardier Q400 aircrafts, starting with year 2020. At the beginning the order will be for 14 planes starting delivery from year 2020, including options for an additional aircraft as the airline seeks the growth.

How successful for airBaltic was the summer season of 2017?

We have seen three very strong and successful summer months. With a bigger fleet, we have performed 16% more flights. Usually, when the number of flights increases, load factor becomes smaller. We have managed to increase both. Our load factor in July and August hit the highest mark in company’s history.

This summer has been exciting not only to the company, but our passengers as well. With more state-of-the-art Bombardier CS300 aircraft joining our fleet, now already every fourth passenger has the benefit of travelling with increased comfort of bigger seats, windows and much quieter aircraft

When we worked on the Horizon 2021 business plan a few years ago, we set rather high ambitions for the airline. Still, we never expected to see such rapid growth so early. We hope to finish 2017 with excellent results, as our winter sales look rather promising as well.

What airBaltic is planning for the winter and summer seasons of 2018?

airBaltic will continue to fly to Geneva, Tampere, Gothenburg also during the winter season 2017/2018 as well as re-introduce popular skiing destinations of Salzburg, Verona and Poprad in the High Tatras Mountains.

airBaltic has also significantly improved service for the winter of 2017 by increasing frequencies from Riga to London, Hamburg and Prague. A more convenient schedule for flights to Warsaw will be available, with new morning and evening flights on weekdays.

Starting from October 29 airBaltic will operate the Riga – Abu Dhabi route four times weekly with the brand new Bombardier CS300 aircraft. Etihad Airways will be our codeshare partner on the route.

For the summer season of 2018 airBaltic has added Malaga (Spain), Lisbon (Portugal), Split (Croatia), Bordeaux (France) and Gdansk (Poland). Additional new destinations will be announced in the future.

01

There are foreign low-cost carriers are much less represented in Latvia, in comparison with Lithuania. What is the reason for this? Are they not interested in the local market or are they "not allowed"?

airBaltic serves over 60 destinations from its home base in Riga, Latvia. From every one of these locations, airBaltic offers convenient connections via Riga to its network spanning Europe, Scandinavia, CIS and the Middle East. In addition, airBaltic also offers direct flights from Tallinn and Vilnius. airBaltic is offering a wide range of destination, great connections, good service for affordable prices for travelers from and to Baltics.

The aviation market is changing, and this year the cost of ticket prices have reduced. We expect that it will decrease further next year if the cost positions do not change significantly. Of course, if oil prices and US dollar value increase, then these forecasts will not be fulfilled. Prices are determined by the market, not by us. Nowadays, people choose the cheapest flight offer offered by a ticketing system. Loyalty to an airline no longer exists for the economy class. In the business class, the situation is a bit different. The same situation is with other airlines. We need to adapt to the demand.

airBaltic recently announced plans in the coming years to standardize its entire fleet with the the mid-range CS300 aircrafts. How will this affect the company's strategy?

Latvian airline airBaltic currently plans to order at least 14 additional C Series aircraft, including options for an additional aircraft as the airline seeks the growth. The new order would replace the Q400 NextGen turboprop aircraft. Eventually, airBaltic plans to have 34 Bombardier C Series aircraft on its fleet.

As informed previously, airBaltic was a launch operator for Bombardier CS300 aircraft and has 20 Bombardier CS300 jets on firm order. By the end of 2019 airBaltic is planning to have 20 Bombardier CS300. With an average jet fleet age of only 2 years, airBaltic as an all-Bombardier operator will have one of the youngest jet fleets in Europe.

At the moment airBaltic fleet consists of 30 aircraft – 7 Bombardier CS300, 11 Boeing 737 and 12 Bombardier Q400Next Gen.

airBaltic is the first operator of CS300. How this plane did show itself?

The operational results and exploitation of the new aircraft has so far been successful. Aircraft have shown very good results, fuel efficiency and convenience to both passengers and the staff. CS300 aircraft saves up to 21% fuel compared to the other aircraft on airBaltic fleet. On average, each aircraft spends between 85 and 95 hours in the air every week.

This year alone introduction of CS300 has allowed the company to increase the number of tickets available by 15%. airBaltic has already opened 12 new routes this year, and in late October will start flights to Abu Dhabi with the new CS300 aircraft.

airBaltic has so far received seven brand new Bombardier CS300 aircraft on its fleet. As the launch customer of CS300, airBaltic is aware that during the introduction stage of the aircraft additional upgrades are yet to be expected. Daily airBaltic works in close cooperation with the aircraft and engine manufacturers to provide their successful operation.

Similarly, to other technology sectors, also in aviation there are certain technical nuances that are characteristic to new equipment that require additional attention and upgrades during the initial stages of exploitation. CS300 is not an exception and similarly to all new aircraft their introduction requires additional attention concerning the harmonization between different manufacturer parts and systems.

The new CS300 aircraft with 145 seats, offers excellent flying experience with benefits for passengers such as wider seats, larger windows, more hand luggage space in the cabin, improved lavatories, and other. New aircraft is also much quieter – with four times smaller noise footprint. Moreover, it is the greenest commercial aircraft in the world, as it is the first aircraft to have a transparent declaration of the life-cycle environmental impact, helping to reduce CO2 and NOX emissions by 20% and 50% respectively.

A lot of positive feedback that we receive from our customers about the improved flying experience with the new Bombardier CS300 aircraft compliments the smooth operational performance. Our crew is satisfied being able to fly on the new CS300 on a daily basis. Its new features make the duties convenient and a true pleasure. The key changes for passengers are inside of the aircraft.

02

airBaltic has become a real bridge between North-Western and Eastern Europe and is developing the only fully-fledged hub in the Baltic region – Riga. How does the airline plan to develop the network model?

Latvia, Estonia, Lithuania are the home markets for airBaltic. We are happy that since successful restructuring and achieving profitability over three consecutive years, we are improving our connectivity for Tallinn and Vilnius, and will continue to do so for the routes where the demand is strong. We will continue working on strengthening our positions as the leading airline in the Baltics further improving the connectivity of the region with the rest of the world.

What is the current percentage of transit and charter passengers in your airline's passenger traffic?

Throughout the last several years, the share of transit passengers on airBaltic flights is shifting due to saisonality between 44 und 52%has been considerable, reaching 44% of all passengers. They have chosen our services for the convenient connections airBaltic provides within its network spanning Europe, Baltics, Scandinavia, the CIS and the Middle East. In many cases for our flights from the Baltics, Scandinavia and the CIS the share of transfer passengers may be significantly higher.

airBaltic flies to two largest airports of Ukraine (Boryspil and Odesa). When and where we can wait your airline in the future?

airBaltic plans and evaluates new routes on a regular basis, but there are currently no concrete plans for launching new flights to Ukraine. We offer convenient connections for travelers from Ukraine to over 60 destinations via Riga.