Summary
- Lithuanian Airports has signed an agreement with LOT Polish Airlines to offer direct flights between Vilnius and London City Airport under a brand new route development model.
- The brand new model involves each parties sharing the financial risks and advantages related to the flights, unlike the previous subsidy-based public service obligation arrangement.
- LOT Polish Airlines will proceed to operate the route, offering five weekly flights, and the convenient flight timings are expected to contribute to its growing popularity.
On September twenty fifth, Lithuanian Airports announced that an agreement was made with LOT Polish Airports involving service to London City Airport. The deal involved the 2 parties, in addition to Lithuania’s Ministry of Transport and Communications, and can see the Polish carrier connect Vilnius and London City with regular, well-timed E190 flights. The announcement concludes a government-driven process that sought bids from airlines to offer this critical business link. LOT had been operating the route since May 2019, but its contract as a public service obligation was only valid until September thirtieth, 2023.
Same airline, same route, but latest business model
An “investment agreement” has been signed between Lithuanian Airports and LOT Polish Airlines to offer direct, regular flights between Vilnius and London City. As noted by the previous, the contract shall be implemented under what it calls a “latest route development model.”
“This convenient and familiar destination to the middle of London is important to satisfy the needs of Lithuanians living in London, businesses and visitors to Lithuania. It’s a bridge between Vilnius and London, and we see that users on either side are satisfied. I’m delighted that we now have been capable of secure this route each in 2019 and now. It’s a great example of cooperation between project management and national institutions. We hope that Lithuanian Airports will find a way to make use of this model to secure other essential destinations for the country,” -Marius Skuodis, Lithuanian Minister of Transport and Communications
Photo: GCMap.com
Simonas Bartkus, CEO of Lithuanian Airports, notes that this just isn’t a public service obligation in the conventional sense – where a subsidy or grant is provided to the airline to operate the route. Indeed, Lithuanian Airports were forced to re-examine the route and its financial support as a public service obligation. Brexit meant that funding for flights could now not proceed in the identical way.
This “route development model” is predicated on a long-term partnership between Lithuanian Airports and the airlines operating the flights. Each side bear the financial risks related to the operation of the flight and can, in turn, share the financial advantages generated by the flight.
LOT “wins,” but competition unknown
At the top of May 2023, when the bidding process was announced, we examined other possible airlines that might pick up where LOT left off.
Essentially the most significant technical hurdles were range and aircraft size, with London City not accepting anything larger than an A318 (which needed to be specially modified anyway). This ruled out the Airbus A220-300, the one aircraft type operated by Latvia’s airBaltic. British Airways and its CityFlyer E190s could have worked well, particularly as London City is already a house base. Moreover, SWISS and their Airbus A220-100s or Helvetic Airways and their E190s can have also worked, especially as these airlines already operate service to Vilnius from Zurich.
Photo: Frans Zwart | Wikimedia
Besides the technical limitations and requirements, Lithuanian Airports noted that the choice criteria included the requirement that the route be operated at times and frequencies convenient for business travelers. Moreover, profitability would have been a serious determining factor for airports.
So, while it’s less exciting to see more of the identical, incumbent airline LOT Polish Airlines will proceed serving the route. Based on data from FlightRadar24.com, this appears to currently be a five-times weekly service operating as flights LO273 and LO274.
“This route is a prestigious project and a really strategic one within the context of the prevailing regular flights. From October onwards, the flight will proceed to operate from Vilnius at very convenient time, which we imagine can even contribute to its growing popularity. It is vitally essential to grasp that the country’s investment in the event of priority flights is mandatory, subsequently, along with our partners, we are going to make every effort to make sure that the state budget will provide the mandatory amount for the effective continuation of the event of the flights in the approaching years as well,” -Simonas Bartkus, CEO, Lithuanian Airports
What do you’re thinking that of a risk and profit-sharing model for route developments, particularly for smaller capital cities and economic centers which may be ignored by airlines? Share your thoughts by leaving a comment!