Airport, Estonia, EU – Baltic States, Transport

It is uncertain which strategy Estonian Air will follow. There is no evidence it is preparing to change into an LCC but it is facing up to the challenge of Ryanair at its home base.

Estonian Airline's Estonian Air Chairman, Joakim Helenius, has indicated the carrier plans to develop a new route plan using Vilnius and airports in Poland as layover points for services into Western Europe, writes LETA.

The carrier has already trialled Tallinn-Vilnius-Amsterdam services, achieving average load factors of 83%, including a record 90% average in July-2010. Using the scheme will allow the carrier to operate daily services to Paris, London, Milan, Rome and other western European routes.

Some profitable direct services, such as Moscow, Brussels and Copenhagen will be retained. Estonian Air hopes to announce further details of the strategy in early February 2011.

Under the existing European regulations the skies are "open" to this sort of arrangement for airlines domiciled in, and operating within, EU member countries but it is an uncommon one in the era of direct point-to-point flights by budget airlines that mainly bypass primary airport hubs. The key is the economic viability of the route, which is determined by the supply provided by other airlines, the price offered, and flight timings, the latter consideration especially important on business routes.

Lithuania does not have a national carrier since the demise of FlyLal but in this instance Paris CDG and Rome Fiumicino are already served from Vilnius by Latvia's national carrier airBaltic. They are not fifth freedom routes but airBaltic has established a presence outside Latvia with direct services in Norway, Sweden and Finland. Wizz Air will commence services between Vilnius and Rome and Milan for summer 2011. An opportunity exists for Estonian Air on the London route, which is only operated seasonally at present.

Apart from Wizz Air, Norwegian Air Shuttle and airBaltic (which is a marginal case), there are no other low cost carriers at Vilnius, with a distinct absence of Ryanair, easyJet, airberlin, Vueling et al, though Ryanair has opened a base this year at Kaunas, Lithuania's second airport, with an 18-route network that includes London's three airports and Milan Orio al Serio. easyJet has a single route network (London Stansted), actually at Tallinn.

For a variety of reasons Poland remains less well served by air than it might be. Ryanair operates at nine cities, not including Warsaw, but none of them are a base and easyJet is present only at Krakow. There may be opportunities for Estonian to operate via one or more of Poland's cities but from Warsaw the cities of Paris, London, Rome and Milan are already served by LOT and (except in the case of Milan) the national airlines of the other country. Some analysts believe Estonian's marketing costs within Poland would be too high to make the operation sustainable.

While low-cost carriers' penetration in Europe as a whole has risen to 35.3%, and in western Europe – to 37.3% it remains comparatively low in Eastern Europe at just 7.9%, according to Centre of Asia Pasific Aviation and OAG data.

Long-haul fifth freedom activity has been prevalent in Europe for many decades, for example Air India and Kuwait Airways via London Heathrow to and from North America, Pan Am also had rights through London for many years and more recently the US-Europe Open Skies agreement, which was skewed in favour of US airlines, provided opportunities for carriers such as Delta to connect points in Europe with trans-Atlantic services.