airBaltic and Estonian Air battle for strategy

CEO Martin Gauss reorients airBaltic back to point-to-point

Following its near-bankruptcy last year and the ousting of former chief executive Bertolt Flick, airBaltic is now busy implementing a restructuring plan, which it dubs “ReShape”. However, across the border to the north competition is increasing from Estonian Air, which is copying airBaltic’s model. Estonian Air’s president and CEO, Tero Taskila, has insider knowledge – he is a former CCO of airBaltic, who contributed to the Latvian carrier’s shift in strategy from point-to-point operator to network airline with steady streams of transfer traffic between Western and Eastern Europe and also between Nordic and Sothern Europe and the Middle East.
Yet this comes as airBaltic refocuses to a more point-to-point approach while struggling to return to profitability. Its traffic is currently 50/50 transfer and point-to-point.
“Transfer traffic caused the losses,” CEO Martin Gauss, a former CEO of Malev, tells CAPA. “I’m happy there still is an airline.” He adds: “The past strategy did not work. Between 2003 and 2008, capacity expressed in ASKs grew 67% but revenue rose at a much lower rate of 43%.”
[pictured: Bombardier Q400 NextGen; courtesy airBaltic]