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Blame Airports and Airlines for Europe’s Summer Travel Woes: AirBaltic CEO

Edward Russell
July 21st, 2022 at 3:42 AM EDT

AirBaltic CEO Martin Gauss doesn’t let anyone off the hook when it comes to where blame is due for the chaos that has engulfed air travel in Europe, and much of the world, this summer.

“The industry did not forecast such a ramp up of travel,” he said aboard one of his airline’s Airbus A220 jets at the Farnborough Air Show in the UK this week. When he says the industry, Gauss means everyone that keeps planes flying: airlines, airports, air traffic controllers, and the contractors that support all of them.

Gauss admitted that AirBaltic even underestimated summer travel demand, which he said is “much better than expected.” That said, the airline itself does not face any of its own staffing issues, nor does its home airport in Riga, Latvia.

Some would disagree with Gauss’ view that everyone is at fault. The leaders of many of Europe’s largest airlines, including International Airlines Group — the owner of, among others, British Airways and Iberia — Lufthansa Group, and Ryanair all predicted robust travel demand this summer as recently as April. And, as many of them have cancelled flights and pruned schedules, have placed the blame primarily on airports, as well as increased staff absences due to Covid.

Capacity restrictions are in place at Amsterdam, Frankfurt, and London Gatwick and Heathrow airports this summer. The most recent reduction was at Frankfurt, a major hub for Lufthansa, where the number of aircraft movements — a takeoff or landing — were cut to 88 an hour from 96 from July 18 through at least August.

British Airways, Brussels Airlines, EasyJet, Eurowings, Finnair, KLM, Lufthansa, SAS, Swiss, and Wizz Air have all cut flights this summer as a result of airport restrictions, industrial actions, or other operational issues. The leaders of both Emirates and Qatar Airways, two of the largest airlines to Europe, have also derided the limits on flights and passengers that they say came with little notice.

Operational challenges are not restricted to Europe. Airlines and airports in Australia, Canada, and the U.S. have also had their share of difficulties and schedule cuts this summer just as traveler numbers have come roaring back.

The cost of the restrictions, particularly if flights are cancelled close to their departure date, is “heavy” for airlines in Europe, said Gauss. This is because they must both reaccommodate or refund affected passengers as well as pay them compensation under the EU 261 passenger protection guidelines. Gauss did not put an amount to the compensation AirBaltic may need to pay but he said that, when coupled with high fuel costs, it could result in a “worse result” financially for the airline this summer than last year.

That poor performance comes as AirBaltic maintains expectations of record revenues this summer as it has been able to quickly redeploy aircraft into other markets that do not have limits. The airline does not publicly release financial numbers.

OAG has estimated that the passenger caps at Heathrow alone, which continue through September 11, could cost airlines as much as $550 million in lost revenue.

Gauss declined to forecast when air travel could return to a “normal” level of delays and cancellations but noted that some of his competitors have said disruptions could last into next year.

Even as AirBaltic deals with difficult conditions this summer, Gauss is thinking about its future. The aircraft at Farnborough was number 36 of 50 A220s that it has on order from Airbus. AirBaltic will take delivery of the remaining 14 over the next few years, and it has options for 16 more. But analysis is already underway for what’s next.

“The [Airbus] A321XLR could be a very good aircraft [for us], but it could also be a small widebody,” Gauss said. Either option would be a departure for AirBaltic that prides itself in a simple fleet of just A220s; its last De Havilland Dash 8s will be returned to lessor Nordic Aviation Capital this summer. A single-airplane type fleet gives it many financial savings, including in maintenance and pilot training.

Either the A321XLR or a small widebody — Gauss did not specify what small widebody AirBaltic was considering — would allow the airline to add long-haul routes from Riga. The U.S. and Canada are two markets under consideration where demand has grown significantly, particularly since NATO expanded its presence in Eastern Europe after Russia’s invasion of Ukraine in February, said Gauss.

No decision on a future aircraft will be forthcoming until after AirBaltic repays the state aid it received during the pandemic, he said. That aid is due by 2027 but the airline hopes to settle its debts with the proceeds from a long-planned initial public offering, which it aims to do in 2024.

Edward Russell
July 21st, 2022 at 3:42 AM EDT

Photo credit:  Airline Weekly / Edward Russell

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