Routes speaks to Aurimas Stikliūnas, the head of Aviation Services at Lithuanian Airports, about how the coronavirus crisis has affected Vilnius Airport (VNO) and what is being done to re-stimulate demand. He explains that when it comes to getting people to fly, safety is always the most important factor.
How has the coronavirus crisis affected your airport?
The situation has changed drastically since the middle of March, when most of the regular operations ceased and only the cargo operations were working. The last regular operation stopped at the very beginning of April. For more than one month Lithuanian airports didn’t have any regular operations except repatriation flights. For the cargo operation, we actually saw a high increase in flight operations and cargo volumes. That's mainly due to medical equipment and other supplies necessary for the coronavirus crisis.
Since airlines are our major partners and revenues are mostly driven by airlines and passengers, revenues have of course been impacted. It was like a restart; a good time to rethink our strategy, especially in route development, and how we can recover after the crisis
Even before all the regular operations were stopped in March we were working on our strategy and rethinking how we're going to develop the airport in the future, concentrating on short-term and medium-term strategies.
In the short term we engaged our stakeholders as well, from the tourism and business sectors, and also governmental institutions. We asked how they could commit to the restart and support airlines, and what kind of measures they can implement.
We have also simplified some incentives and introduced new incentive teams which are dedicated to the recovery process for airlines.
We are working together with our stakeholders on the medium-term developments, looking at the next couple of years. We need to analyze what kind of destinations would be relevant for both business and tourism, and what kind of the mechanism we can offer to the airlines in order to build sustainable growth in both flight volumes and also from passenger volumes.
How are those conversations over incentives progressing? Is it individual for each carrier, or one approach for all?
We are consulting with our airline partners, how they see the recovery process and what they actually need. When we can see it from their point of view we can, for example, provide additional discounts on airport charges for the airlines who will recover their operations during this year, so that means that we will share their financial risk.
We also implemented our marketing strategy with additional activities. We need to understand how to rebuild demand in the operations, creating the confidence to travel again. We are planning to launch big marketing campaigns in Lithuania and other targeted destinations all over Europe in order to encourage people to travel again. We want to show the opportunity to travel from Lithuania and to Lithuania.
You mentioned your stakeholder group. How important is it to engage that group when it comes to demand regeneration because of the reach in the marketing power that they have?
The strategy we had before the crisis was based around this, and we had some funding from stakeholders dedicated to strategic destinations. This was for the inbound tourism sector and also the business sector, which is also closely related with the foreign investment here in Lithuania.
Everybody understands, airports and also our stakeholders, that connectivity is one of the key drivers of our economy and is needed to recover our destinations. They are already on board and we are working on additional mechanism or support teams, and how they can share the risks with the airlines.
With your new marketing drive, what is the key message to potential passengers?
As always, safety is the most important thing in aviation. It’s really important to show that both airports and airlines are ready, and really looking after the safety and security of passengers, in the context of the coronavirus. We have already implemented lots of measures for the safety of our passengers, and our airlines have done the same.
Currently we have three routes already operating from Lithuanian airports, to Frankfurt (FRA), Riga (RIX) and Tallinn (TLL), and we can see from the load factors that the demand is there and people are still willing to travel.
Look into different segments, the tourism sector is highly impacted, even more than the others. Looking ahead to the recovery, VFR-driven traffic will recover first, driven by immigrants who are most willing to travel. We see some demand from business, but we will need to wait for some time for the tourism segments to recover.
We also focus on this in our marketing strategy, promoting our destination while showing that travelling by plane is a safe option, similar to rail, cars and buses etc.
How concerned are you regarding quarantines and travel bans imposed by other countries, such as the two-week quarantine in the UK?
We have the same situation here in Lithuania, only Lithuanians and people from other Baltic states and Poland can travel. Passengers from other European countries are not allowed to enter the country currently.
But I believe these are the next stages that all countries have to work together on. And I do believe that without removing those restrictions the airline industry could not recover as quickly as it could otherwise.
This is actually a major obstacle in order to increase the demand for travelling, because nobody wants to travel to one country and spend time in quarantine when they return home.
We can see that some countries are really doing well with measures that don’t involve quarantines. We have a good example in Austria and the Czech Republic where the business passengers are allowed to enter the country.
I believe that our government will work in the next couple of weeks on this topic and as we see some changes soon. Norway will be next on the agenda, then Germany, France, Netherlands, Denmark and Austria.
It's still really important to develop all the aviation industry, and without removing the restrictions on passengers and opening the borders I don't believe that the industry can recover quickly.
You have many LCC routes. Are you concerned that new legislations, such as social distancing meaning middle seats are blocked and so on, could put pressure on low fares meaning they find it more difficult to stimulate demand?
It's hard to tell, but considering what airline says publicly… they are not very comfortable with these regulations. If you block more than 30% of yours seats, economically it hits really hard.
I believe if those requirements are implemented, many, many routes cannot be recovered from an economic point of view, because it will not be profitable anymore for the airline.
I'm sure that airlines are looking at implementing many safety measures, but blocking the middle seats means nothing. If you'd like to keep the distance of two meters between passengers you have to block more seats than just the middle.
This may be some kind of political thought for security, but I don't believe that many airlines will agree with this regulation.
Photo credit: Vilnius Airport
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