airBaltic, a relatively small airline based in the Baltics seized the opportunity at the beginning of the pandemic to switch to an all-Airbus A220 fleet. In a year, they retired all their Boeing 737s and Bombardier Dash 8s.
Why did airBaltic make this switch and were they able to do it? And how will they benefit from it? Let’s Talk Aviation!
History
airBaltic is an up-and-coming European airline based in Riga, Latvia. They have secondary hubs in the two other Baltic countries Estonia and Lithuania. First established as a joint venture between Scandinavian airlines and the Latvian state in 1995. In the first years of the airline, they used a Saab SF340 aircraft with only 33 seats for their operations.
In the years that followed, the airline grew enormously. The number of passengers increased from 218 thousand in 2000 to 3.2 million a decade later.
When we fast-forward to 2011, Scandinavian airlines have sold their shares and the company got in financial turmoil. This was also the year they achieved a record revenue of 327 million, a number they wouldn’t beat in the years that followed.
A new business plan
A new CEO is appointed, Martin Gauss. Remember this name as he is currently still in charge of the airline. He had the hard task to turn things around. At the time, the fleet was far from homogeneous and consisted of Boeing 737s. These were second-generation 737s while the new generation 737s were already used widely. Furthermore, they had 757s, Bombardier Dash 8s, and Fokker 50s.
In his first months, airBaltic launched a new business plan aiming for profitability in 2014. Part of this plan was to reshape their fleet. In the original plan, they would use the Bombardiers for regional flights and either Airbus A319s or Boeing 737 NGs for longer flights. The latter would replace the aging 737s and 757s.
The original plan only mentioned the Airbus A319 and Boeing 737 NGs as a replacement for the older aircraft in their fleet. However, in December 2012, airBaltic announced that it had picked the Bombardier CSeries as aircraft of choice. They would become an all-Bombardier airline (keeping the Dash 8s). It placed a firm order for 10 aircraft in 2012, and also acquired purchase rights for another 10 aircraft. Just remark that at the time, the Airbus A220 was still the Bombardier CSeries before Airbus bought a 51% stake in the program in 2018.
The company became profitable in 2013, one year ahead of schedule and stayed profitable for the following years. During these years, the number of passengers decreased from over 3 million in 2011 and 2012 to ‘only’ 2.6 in 2014 and 2015. But, as mentioned before, they used more efficient planes and were able to turn a profit.
Expansion beyond Latvia
In these years, airBaltic expanded into the neighboring countries, Estonia, and Lithuania. In December of 2016, as the launch customer of the CSeries program, they received the first CS300 airplane. This allowed the airline to grow further and in 2017, they operated over 50 thousand flights, compared to nearly 44 thousand the year before. Ten new routes were added to the network. 2017 can be seen as the first year of the rise of the company.
By the end of 2017, they still operated a mix of three aircraft, Bombardier Dash8s and CSeries and Boeing 737s.
In the years that followed the company kept growing and in 2019, their number of flights had increased to over 62 thousand for the year and the number of routes has increased to nearly 90 compared to only 60 a few years before. The airline had a bright future ahead.
During these years of growth, the fleet already changed a bit. The airline retired a big chunk of their 737s and only 4 were still in use. They now had 22 A220s, 12 Dash 8s, and 4 737s.
The airline was looking to expand as there were at the time 28 A220s on order, with an option for 30 more. This is more than enough to replace the existing aircraft in the fleet.
COVID-19
2020 was the year that changed everything, due to lockdowns they had to stop flying completely. However, they made the most of it. Quite quickly, it became clear that the demand for flying would be reduced for the near future and this meant that they were possible to retire their Dash 8s and 737s early, three years before their planned retirement in 2023.
By the end of 2020, they received their 25th A220 and sold their last 737. While 2020 clearly was a bad year for the company with a loss of 264 million euros, they were able to reposition themselves and line up for a great future ahead as an A220-only airline. Right now, the average age of their aircraft is less than 3 years, and their oldest plane is not even 5 years old.
Going back to their CEO, Martin Gauss, in 2020 he received his type rating for the A220 so that he could keep on flying as a pilot for the airline, I think that is pretty cool.
Besides piloting for the airline, he also has a good vision on how to lead the airline to greater heights in the future. In 2025, the airline will have a fleet of 50 A220s projects have a billion euros in revenue, double the revenue for 2019. To achieve this, they have overhauled their fleet. It was quite a mess at the beginning of the 2010s, with four different types of aircraft. By switching to a single efficient aircraft, their operations will become more efficient. No scheduling problems with different crews for different aircraft and fewer costs for maintenance as they only need inventory for one type of aircraft.
Future
I think the airline has a bright future ahead, before the pandemic they already had a good vision on how to steer the airline towards profitability by overhauling their fleet and focusing on a single type, the Airbus A220, which turned out to be a perfect aircraft for the regional airline. The pandemic certainly didn’t help; however, they made the most of it and retired some older aircraft.
Now that they only operate a single aircraft, their operations will become more efficient. For example, look at Southwest airlines in the US or Ryanair and EasyJet in Europe. All these airlines keep their costs low by focusing on a single aircraft.
