airBaltic CEO Interview: Full Confidence in the A220

DALLAS — There are cases where an airline relies heavily on a single type of aircraft to maximize its chances of success. This strategy is particularly common among low-cost carriers (LCC), who can significantly reduce costs by streamlining their operations and focusing on a single airplane model.

LCCs like Ryanair (FR), Southwest Airlines (WN), or GOL (G3) fully operate Boeing 737 fleets, while others like easyJet (U2), Spirit Airlines (NK) or IndiGo (6E) do so with the Airbus A320 family. As a result, expenses related to maintenance, staff training, and spare parts inventory are given lower priority, thanks to this approach.

Nevertheless, there are instances where premium traditional flag carriers have adopted this approach and achieved success. An example of this is AirBaltic (BT), the Nordic airline, which has streamlined its fleet to consist of just one type of aircraft since March 2020: the Airbus A220-300. Since then, BT's traffic and financial performance have consistently improved, culminating in their best-ever results in the first half of the 2023 report in August.

Airways interviews Martin Gauss, CEO of BT since 2011, to delve into the role the newest addition to the Airbus family has played in the carrier's strategic approach.

30 More A220s at Dubai Airshow 2023

Following the retirement of their last Boeing 737 and De Havilland Dash 8 aircraft three years ago, BT now operates a fleet of 46 A220 aircraft, which effectively cover the airline's entire route network. With a two-class configuration accommodating up to 149 passengers, the A220 has become the focal point of AirBaltic's operations, marketing, and strategic initiatives.

The A220 will continue to play a pivotal role in the airline's plans for at least the next decade. BT recently placed a substantial additional order for 30 A220 aircraft at the 2023 Dubai Airshow, to operate up to one hundred units across Europe from their hubs in Riga (RIX), Vilnius (VNO), Tallinn (TLL), and Tampere (TMP) by 2030.

This will make BT the largest Airbus A220 operator in Europe and the biggest client of the stretched -300 variant worldwide, surpassing the likes of SWISS International Airlines (LX) or even Delta Air Lines (DL).

Maintaining Comfort on Both Short and Long Flights with a Single Aircraft?

While utilizing a single aircraft type throughout their network leads to notable cost savings in maintenance, management, and training, the Airbus A220 offers an additional advantage: its adaptability for operating flights of varying durations.

On any given day, BT has the flexibility to assign the same aircraft for a short 45-minute flight from Tampere to Riga and then immediately deploy it on their longest 7-hour journey from Riga to Dubai (DXB). Nevertheless, there is still skepticism surrounding the comfort aspects of flying in small, narrow-body aircraft for these extended flights.

Regarding this matter, Martin Gauss explained: "We have a very normal Business Class, freeing the middle seat in the front of the curtain, with a dedicated restroom and a dedicated crew."

"Our Business Class," he continued, "is accepted even on flights, which go up to seven hours, because airBaltic's Business Class also comes at a lower price than if you have a lie-flat bed. We don't intend to change that because we could not be as flexible as we are today."

Dealing with Mass Groundings with One Aircraft Type

AirBaltic's quick and extensive route development is highly related to the excellent economic performance the Airbus A220 has had since its introduction in 2016. It is currently the regional jet with the best fuel efficiency results in the market thanks to its advanced Pratt & Whitney PW1100 engines.

Despite this, the airline has greatly suffered from the massive groundings of this brand-new aircraft in recent months due to delays in the delivery of the power plant. In the case of BT, Martin said, "It is very annoying for our industry, but it's not only with the A220."

"To have a modern aircraft today comes with a lot of issues because its technology is constantly developing. On the other hand, it also has the upside of having a significantly lower fuel burn. The engine itself performs very well."

Despite the ongoing shortage of spare engines, BT continues to maintain a strong partnership with Pratt & Whitney, the manufacturer of the engines—the airline maintains unwavering confidence in the power plant that enables the A220 to deliver exceptional fuel efficiency and performance.

AirBaltic Starts Flying out of the Canary Islands

Expanding its reach beyond the Baltic region, the Baltic carrier has recently established its first aircraft base in a different part of Europe. As of December, the airline now operates two A220 aircraft from Gran Canaria Airport (LPA), not only serving its established bases but also connecting to various Scandinavian cities such as Oslo, Copenhagen, and Billund.

This strategic move not only enables BT to tap into additional demand beyond its traditional markets but also extends its influence to one of the busiest air routes in Europe, connecting the popular holiday destination of the Canary Islands with the expansive Scandinavian region.

"To have a base established in Gran Canaria is something new for us. We are not so known in Spain as a carrier from the Baltics," Martin clarified. "We are also not so known in other Nordic countries. The Spanish media is speaking about it, and locals can fly now to the Baltics for these three to four months."

In addition to seizing the new opportunity presented in Gran Canaria (LPA), BT is set to expand its flight offerings and increase frequencies in the Balkans for the upcoming summer season. This expansion includes the addition of flights to Montenegro and Albania, further enhancing the airline's presence in the region. "We see traffic demand into the Nordics from these regions. However, to base the aircraft in the Balkans would not make sense because we use the aircraft to and from the hubs," said Gauss.

In contrast to the Canary Islands, BT has observed a greater number of passengers seeking connecting flights to the Nordic region through Riga rather than opting for direct point-to-point connections to Scandinavia and the Baltic states.

Is it Time to Consider Transatlantic Connections?

Although the Airbus A220 has an impressive range that enables lengthy connections such as Riga to Dubai or Tampere to Tenerife (TFS), which can take up to seven hours, it cannot currently reach the east coast of North America.

"It is too soon to think about offering direct flights to the United States, but it is not too soon for connectivity to the US. We, as an airline, are not intending to operate widebodies for the foreseeable future. There is no aircraft available to us at the moment that could make it to the US."

Even the Airbus A321XLR, according to Martin Gauss, does not fit the profile for these flights, despite advances made in range and fuel efficiency. "There is enough market to fly a narrow body to the US, but there is no narrow body that can make it profitable, at least with the number of seats."

Nevertheless, to add BT to the extensive roster of transatlantic flight providers, the airline has recently entered into a codeshare agreement with Delta Air Lines (DL). This partnership will enable passengers departing from Riga to seamlessly connect to DL flights from over 20 European airports to various destinations in the United States.

airBaltic, the Premium Wet Lease Provider

With an operational capacity encompassing over 70 destinations and a fleet of more than 40 aircraft, Riga Airport, along with other Baltic hubs, may face the challenge of accommodating the rapid expansion of airBaltic. It is intriguing to analyze how BT's profile will transform and develop in the coming decade.

Martin Gauss said, "We have an order for up to 100 aircraft for the next five years. Part of it will be destined for "premium" ACMI and wet lease. We have the most modern aircraft; we just don't have enough today."

"We see ourselves as a premium wet lease provider," he added. "That's the feedback we have from the market. Nobody offers you that kind of aircraft and the service level our cabin crew is used to providing. That business works for us very well, and there is no other airline doing what we do."

In the upcoming decades, BT will primarily focus on two key objectives. Firstly, it aims to expand its presence in Scandinavia and the Nordic region, positioning itself as a formidable competitor to established carriers like Norwegian and Scandinavian Airlines. This growth strategy entails establishing a strong foothold and capturing a significant market share in these regions.

Secondly, BT plans to continue leveraging wet leasing as a crucial component of its long-term strategy. Wet leasing, which involves leasing aircraft along with crew and maintenance, will play a pivotal role in the airline's operations. This approach allows BT to efficiently manage capacity, enhance flexibility, and optimize its resources.

By pursuing these dual goals of expanding in Scandinavia and leveraging wet leasing, the Baltic carrier aims to strengthen its position in the market and ensure sustainable growth in the years to come.

Featured image: Daniel Crawford/Airways.