Airline operations across much of Europe could be described as chaos last summer as travelers surged back after Covid. This summer is shaping up to be a lot better, with more staff hired across the system and airlines better prepared for the realities of post-pandemic flying, but it will still be tough.
“Airports, if we have a summer like last summer with all airlines growing, will be congested,” AirBaltic CEO Martin Gauss said in an interview. While the airline’s Riga base was not affected by the disruptions seen at the mega-hubs of Amsterdam, Frankfurt, and London, all of these are important destinations for AirBaltic and issues there can ripple out and affect operations across Europe.
Eurocontrol, which manages the airspace across Europe, forecasts the number of flights in the region to reach 95 percent of 2019 levels in July and August. But it does not expect the recovery to go smoothly, even with airlines and airports having largely addressed the staffing issues that plagued them a year ago. Airspace closures as a result of Russia’s war in Ukraine, the risk of industrial action, and increased travel demand are all expected to pressure European airline operations again this year.
“2023 is set to be the most challenging year for the network in terms of matching capacity with demand, and keeping delays down,” Eurocontrol said in its 2023 outlook.
And, while the staffing situation has improved, it has not been completely solved. Amsterdam’s Schiphol airport recently extended a cap on the number of passengers through April and May citing continuing staffing issues. The cap was previously set to lift at the end of March.
While air traffic control strikes in France, for example, would have a limited operational impact on AirBaltic as long as Eurocontrol keeps high-altitude overflights moving, the Russian airspace closures and other challenges could prove “tough” for the airline, Gauss said. Any Riga flight to or from points south is now limited to a roughly 50 mile wide corridor between Russia and Kaliningrad, a Russian exclave on the Baltic Sea between Lithuania and Poland, that can get congested. This forces AirBaltic to reroute flights to the east over Swedish airspace that adds time — including decreased aircraft utilization — and cost to its operations.
“We accept the situation as is,” Gauss said of the airspace restrictions and their operational implications. “It’s now part of our business.”
Last summer, Gauss attributed the chaotic operational situation to a combination of surging travel demand and under preparation. “The industry did not forecast such a ramp up of travel,” he said in July.
Despite this, and concerns of operational issues across Europe this summer, AirBaltic plans to fly its largest-ever schedule during the peak season. The airline will operate roughly 11 percent more capacity this June, July, and August — the peak summer travel months — than it did in 2019, according to Diio by Cirium schedules. However, the actual number of flights are scheduled to be down roughly 29 percent. AirBaltic is adding at least 10 new destinations to its map, including Bilbao, Istanbul, and Yerevan, while also dropping four destinations, including Edinburgh and Santorini.
Forward bookings for the summer are “in line with expectations,” Gauss said.
AirBaltic used the pandemic to expand its presence outside of Riga as well, including a new base in Tampere, Finland, and expanding its bases in Tallinn, Estonia, and Vilnius, Lithuania. The airline is “happy” with the performance of the latter two, which Gauss said have more budget airline competition today than they did before the pandemic, while the former has “met expectations.” The lackluster results in Tampere prompted AirBaltic to adjust its network there for the upcoming summer to favor leisure travelers; flights to Frankfurt and Oslo are out, while Milan Malpensa and Nice are in.
The airline’s recovery is not only about restoring capacity and adding bases, AirBaltic is also investing in the onboard experience. The carrier is set to become the first European airline to offer SpaceX’s Starlink inflight connectivity for free to passengers across its entire fleet. Gauss expects the rollout to be complete by the end of 2023 as long as the system is certified by European regulators within three months.
“To have internet connectivity is something people are used to, we don’t have that in Europe,” Gauss said referring to the limited availability of inflight connectivity among European airlines. “It will be a very well recognized feature we will have onboard.”
Air France and Lufthansa, to name a few, offer inflight connectivity for a fee on select aircraft in Europe. Free inflight wi-fi is slowly becoming standard elsewhere; JetBlue Airways has always offered connectivity for free, while Delta Air Lines made its inflight wi-fi option free on most aircraft in February.
Financially, privately-held AirBaltic generated revenues of roughly €500 million ($529 million) in 2022, Gauss said. That is on par with the €503 million in revenue it generated in 2019. However, Gauss said the airline lost money last year; it is expected to release a full income statement later in March.
An initial public offering is still planned for 2024, he said. AirBaltic could begin seeking proposals from potential banks and advisers as soon as September.
