Air Lituanica's demise reignites calls for joint Baltic effort on aviation

By bne IntelliNews May 22, 2015

Troubled Air Lituanica will halt operations after less than three years on the market, the company announced on May 22. The demise of the Lithuanian airline instantly reignited calls for the Baltic states to cooperate on air transport.

Air Lituanica said in a statement that it is halting all flights from May 23 onwards. "There is a risk that due to financial strain the company might fail to fully fulfill its commitments to passengers, [therefore] it stops flights on all of its routes," the company said, according to Delfi.

The Lithuanian carrier was launched by the municipality of Vilnius in May 2012, with the strategy being to sell a minority stake to a strategic investor. However, that hunt has proved fruitless.

The company has long been on the verge of bankruptcy, but efforts to secure government support failed. A recent decision from Vilnius' new authorities – elected in March – against handing the airline a €5mn lifeline sealed it’s fate.

The Civil Aviation Administration (CAA) has now suspended the company’s operating license until November 22. ​Latvian flag carrier airBaltic will step in to cover bookings for the next eight days. In the "next few days Air Lituanica will continue talks with airBaltic and will look for possibilities to carriage passengers travelling after May 29," the statement adds.

The collapse of the Lithuanian airline quickly reinvigorated  calls for the Baltic states to re-think their approach to air transport. All three have seen their carriers struggle or collapse in recent years. Beset by high fuel costs, recession, and competition from budget carriers, even airlines in some of Europe's biggest states are fighting for life, let alone those in a region of just over 6mn people.

“Today's event in Vilnius is a strong signal that the three Baltic countries should take a common approach to their aviation,” CEO of Latvian airline airBaltic Martin Gauss said in a press release. Lithuanian transport minister Rimantas Sinkevičius also spoke in similar vein.

However, Latvia and Estonia - which both still boast their own flag carriers - have proved unenthusiastic in the face of Lithuanian suggestions that they should club together to build a regional carrier. Vilnius even tried to get its neighbours to share a state plane after Lithuania's president posted a picture of herself on a Wizz Air flight to London to attend the funeral of Margaret Thatcher in 2013.


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