Lithuania - Does It Really Need A Flag Carrier?

Vilnius Airport.

Why doesn't Lithuania have a national carrier? It may look like Lithuania's geographical position is perfect for an airline, but it's 2019 and no signs of emerging flag carriers are visible. Then the question arises: "Do we really need one?"

To answer this question we need to go back in time. After the Soviet Union fell, Lithuania had its flag carrier, Lithuanian Airlines (later regarded as FlyLAL) established in 1991. The airline continued its operations up until 2009 and after a series of unfair competitive practices against the airline at its Vilnius hub airport, rising fuel cost, the great economic recession of 2008 and a lack of a growth strategy put the airline into a bad financial situation. Although there was a plan to restructure the struggling carrier and make it profitable by 2010, it wasn’t activated and the airline had to cease its operations.

In 2013 Vilnius Mayor Artūras Zuokas established a new airline called AirLituanica after two pilots Steponas Darius and Stasys Girėnas wanted to complete their goal: to cross the Atlantic with their aircraft named Lituanica. This airline had flashy, stylish and definitely beautiful branding up its sleeve, but when comparing it to FlyLAL it was clear that it wasn't a national carrier everyone hoped for. After 2 years of struggles and unpaid debts AirLituanica filed for bankruptcy and for the second time Lithuania had no national carrier.

It is possible that we won’t see a national carrier for another decade or more. In an article called “Why Lithuania needs national airlines?” FlyLAL Chairman Gediminas Žiemelis said: "In recent years we understood that without interest from state this strategic state territory has no future.“

One of the main reasons for FlyLAL‘s bankruptcy was unfair competitive practices which led it to a war with the Latvian air transport company rather than to growth which made the airline drown in loses and eventually shut down. As Gediminas Žiemelis said, the state had no interest in aviation and a flag carrier. Even after seeing the government fail to help the airline to restructure and begin profitable operations it is in fact wrong to say that the Lithuanian government wanted the airline to fall. After further investigation it is easy to see that the great economic recession stopped the Lithuanian government from lending the airline a much needed 30 million Litas (8.9 million €) to sustain its losses. In the same article astonishing numbers were given: FlyLAL generated around 1 billion Litas (295.9 million €) GDP, paid about 30 million Litas (8.9 million €) in taxes and was responsible for creating 5-6% of Lithuania’s GDP. Unbelievable numbers for an airline whose fleet was made up of 13 aircraft. Maybe Lithuania lost the chance at having one of Europe's leading airline.

Lithuanian Airlines Boeing 737-500. Frankfurt, July 2005 (Photo © Wikimedia Commons/Arcturus)

When ex-mayor of Vilnius, Artūras Zuokas was in charge, AirLituanica was registered and commenced its operations from Vilnius International Airport in 2013. The airline met its demise in 2015 after the new mayor of Vilnius Remigijus Šimašius was elected and chose to subsidy flights to London rather than put money into still young airline. Go Vilnius presented stunning numbers in an article stating that Lithuania in 2016/2017 had lost over 20 major business events, 4 major investors and combined 797 million € of investments because of lack of infrastructure to reach Lithuania. Later Remigijus Šimašius proposed subsidizing flights to London for 2.1 million €.

AirLituanica Embraer ERJ-170. (Photo © Wikimedia Commons/Eric Salard)

The following are a few contributing factors to why Lithuania lacks a national carrier: absence of proper support from the state, enormous competition within the aviation market in Europe, mismanagement and rising fuel costs. All of which could be the nails in the coffin preventing a new national carrier from starting its operations.

Even though 2 flag carriers met bankruptcy, the Lithuanian aviation market is growing strong after having its first A330 delivered to charter airline GetJet airlines, the launch of Lauda flights, LOT starting services to London City Airport and ever-growing traffic at Vilnius Airport. These events show that there is a lot of potential when it comes to the aviation industry in Lithuania and we may see a national carrier in a decade or so, if not in a few years.

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