Ahead of Routes Europe, Oliver Clark spoke to Tallinn Airport Chairman, Rein Loik and Richard Maslen interviewed Board Member Erik Sakkov about plans to position the Baltic airport as a key gateway between Scandinavia and Eastern and Western Europe.
Tallinn Airport’s chairman, Rein Loik, is pretty candid about the challenges his gateway has experienced in recent years. In the wake of the global economic slowdown in 2008, Tallinn experienced a loss of key routes and a 25 per cent fall in traffic. The situation not being helped by the 2009 bankruptcy of Lithuanian airline, FlyLal, which impacted traffic.
As the capital gateway of a country with just 1.34 million inhabitants, it became clear to Loik and his colleagues that the airport needed to rethink its strategy and turn itself from effectively a point-to-point market into a transfer hub if it was to kick-start growth. Fortunately, they found a willing partner in national carrier Estonian Air.
“Our geographical location is certainly serving us well as we seek to become a hub between Scandinavia and Eastern and Western Europe. Starting from the summer schedule this year, Estonian Air will start implementing its new strategy which will involve more hub and spoke operations. We also have plans to develop this concept further in the future by integrating long-haul operations into the system,” he said.
With links to London, Paris, Amsterdam, Brussels and Frankfurt on the one hand, and services to Moscow, Warsaw, Kiev and Oslo on the other, provided by Estonian Air and other carriers, Tallinn is well on the way to realising its initial ambition of linking the major cities West and East of the Baltic.
The airport reported an almost 38 per cent traffic growth in 2011 and Loik expects a 20 per cent increase this year. Loik calculates that some 40 per cent of the market is made up of business traffic. “Our largest point-to-point markets are the UK, Germany, Sweden, Norway and Finland, however, with an increasing number of new services and frequencies, we are already seeing strong growth in other origin-destination markets like Russia, Italy and Spain."
“We are currently looking at further development in Western Europe, however, new markets in the East are equally important as they complement each other, especially as part of developing hub traffic via Tallinn,” he added.
Today, Tallinn is served by 13 scheduled airlines, including legacy, low-cost and regional carriers. The largest is its home carrier Estonian Air with a 33 per cent market share, followed by Ryanair, Finnair and German flag carrier Lufthansa.
In terms of its European operations, Loik says he is keen to add to its route network. “We are missing quite a few important dots on our network map, including but not limited to Berlin, Rome, Madrid and Zurich. This makes us look for a number of different airline partners that could potentially operate the routes, both legacy and low-cost carriers,” he said.
Looking longer-term, Loik says the next step for Tallinn will be establishing long-haul routes to Asia and then to “take a globe and look” at Tallinn’s location en route to destinations in the Far East, Middle East, India and North America.
While the next step in Tallinn’s ambitions is to take advantage of its geographical proximity to Asia to establish new long-haul routes, the airport team are also well aware of the importance of low-cost carriers. In April 2012, the airport announced it would build a new low-cost terminal to accommodate low-cost carriers such as Ryanair, easyJet and Norwegian.
With other terminal improvements also underway and plenty of capacity to grow, Loik believes Routes Europe will provide a perfect showcase to airlines of Tallinn Airport’s potential. “We really hope we will be able to demonstrate to all Routes Europe delegates the potential and attractiveness of our destination as a place to revisit during their next holiday and for the airlines as their next new destination,” said Loik.
In our exclusive interview Erik Sakkov reinforced many of these comments, providing more details of the airport's growth aspirations.
Q) What have been the key developments at Tallinn Airport these past 12 months?
A) "Of course being the 'European champion' last year with a growth rate of 37.1 per cent. But, the most important thing is that we have increased our transit passenger volume by a whole magnitude - more than 20 times - and we are on our way to becoming an established regional hub. Estonian Air with their new strategy have made an enormous contribution to that."
Q) Can you detail your recent performance in terms of passenger traffic and movements and how this will develop in the coming years?
A) "After handling one million passengers for the first time in 2005, we have now grown to 1.9 million passengers last year. This year’s target is 2.4 million, and we forecast breaking the three million figure in 2014. For the coming years our goal is not to be only a strong and reliable regional hub, but to become an international hub, serving flights from Asia to Europe. Also, we feel there are opportunities from Asia and from India and Gulf region to North America, for example. We have a great geographical advantage, as we are the closest EU airport from most major Asian airports. With flight times to Tallinn not exceeding 10 hours from most Asian airports, the carriers are able to make a full rotation of one aircraft in 24 hours, while saving a significant amount of costs. Our next development is opening a new point-to-point terminal in 2013, which increases our annual capacity significantly. A good example for us is the experience of our good neighbours Finns, whose national carrier Finnair has had a great success doing that. We will not try to copy them, we will do everything even better!"
Q) How important is it for an airport to have a strong home carrier?
A) "For us, serving a small country – it is invaluable. Success stories of airports like us prove the same, and failure stories do as well. Estonian Air is currently serving 37 per cent of our passengers, and is the main contributor to our growth. And, last but not least, who else will serve us Estonian food, Estonian newspapers and Estonian beer on flights?"
Q) How has the revised business model of Estonian Air impacted the policies, infrastructure and development plans at the airport?
A) "As we now have four waves in our airport now, we have actually had noticeable increase in labour costs. We added extra security area for transit passengers. We redesinged our core services to be able to connect passengers between two flights in just 25 minutes. We feel this is something really remarkable. As our terminal will reach its maximum capacity this year, we are opening a new point-to-point terminal in the end of 2013. We are also extending the runway by 600m, adding a new taxiway, extending the existing one, with CAT II operations in both directions on the runway."
Q) What are the main challenges impacting development in TLL and Estonia in general?
A) "Estonia ranks very high in economic freedom, openness of society, IT development, innovation, freedom of press etc. But the weakness most often pointed out is the insufficiency of airline connections. The message to airlines is very simple: this market is underserved. This is why we have worked so hard to host Routes Europe, to bring the airlines here, to explain, prove, demonstrate over and over again what we have to offer.
Q) Can you detail you recent network additions that have supported your recent rapis growth?
A) "Last year new routes were opened to Bremen (Ryanair), Girona (Ryanair), Liverpool (easyJet), and Trondheim (Estonian Air). This year we have seen new routes to Vienna (Estonian Air), Manchester (Ryanair), Hannover (Estonian Air), Tbilisi (Estonian Air), and the Finnish towns of Jyväskylä, Kajaani and Joensuu (all Estonian Air). The top destinations are Helsinki, Stockholm, Riga, London and Copenhagen."
Q) What are the key network targets for the forthcoming years?
A) "Easy! We even published our wishlist in the Routes Europe Welcome Kit! It reads BER, FCO, MAD, AGP, IST, CGN, ZRH, BUD, HAM, BCN and MXP."
Q) How is the airport working to attract new airlines and route expansion from existing operators at the airport?
A) "For a small airport, Routes is a very important tool. To be honest, large airlines don’t often even find time for us. And in a small country, the airport has an obligation to the nation. We are very well aware, that we are an unknown destination and we work every day to catch up, but we still have a very long way to go. Hosting Routes Europe is one huge step forward for us achieving these goals."
Q) Why did you choose to host Routes Europe and what do you expect to achieve from hosting the event?
A) "The case is that we know perfectly well, why Tallinn and Estonia are a perfect travel destination, and why Tallinn Airport is the cosiest airport in the world. But the aviation community is slightly less aware of it yet. So we shall correct that mistake over the next days."
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