Analytics, Estonia, Transport

Andrus Aljas.

According to him, the competition is tight because Scandinavian airlines and national carriers compete in Tallinn; moreover, there are some hubs not far from Tallinn – Riga, Stockholm, Helsinki and Petersburg.

'At the moment, there are four key questions in Estonian aeronautics. The first is deterioration of economic environment, additional expenses due to rising fuel prices and environment protection. Price of fuel has come down, but what has rose once, might as well do it again. When it comes to fuel, we can't talk about relation between supply and demand. It's difficult to forecast," Aljas said.

Fuel makes 30% of total expenses, and if the price doubles, it is hard to come by.

Secondly, Aljas pointed out consolidating since Air France and KLM together form one very powerful company, Lufthansa did some take-overs, and British Airways took over Iberia.

"The third important issue is revolution of cheap flights and open sky," Aljas told explaining that negotiations are going on between EU, USA and Asia to lose today's restrictions.

79% of airlines, operating in Tallinn, are traditional and 21% perform low-cost flights. In Riga the relation is 14 and 86%, respectively, and in Vilnius the percentage makes 20 and 80%.

"It is so because Estonian market is small, the potential of clients is limited. Low-cost airlines haven’t entered the market aggressively," explained Aljas, noting that prices at Tallinn airport are competitive.

"Estonian market is one of the smallest in Europe, only Malta, Cyprus and Luxembourg are smaller. But to have a point in flying to destination three times a week, it needs 25,000 passengers a year," Aljas said and added there are few profitable destinations.

He said one sign that the market is small, is that SAS and LOT will end their flights here and easyJet will end flying to Berlin.

That is why the company is trying to be more flexible. They will get themselves smaller planes, Saab and CRJ900s, and they focus on the local market.

"We have focused on local niche, for example, on October 2 we will start flying between Tallinn and Kuressaare. There are more plans to come. The vision is to serve the entire Estonian market, fly to Kuressaare, Tartu, Helsinki and Vilnius," Aljas commented the company's future plans.