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Executive Development Partner
In cooperation with:

Martin Gauss, CEO, airBaltic
» Interview
01/11/2017

ATN: In 2011 you became the CEO of airBaltic when the company was very close to collapse. Since then, you adopted a strategy of a hub model making Riga a base. Which were the challenges that you had to overcome back then and which are the challenges today considering the very unstable situation in Europe?

MG: In 2011 the situation was that the company was growing or had grown too fast and the yields were too low thus that was one of the reasons why there were massive losses. The second problem I had was that therewere many different aircraft types which didn't fit witheach other. So, there were two key issues: heavy losses and too fast expansion and then five different fleets. So, we changed it of course a lot over the years, now we have been profitable for quite a while, we have the C Series – the a new single aircraft type coming in.Currently we still have some Boeing 737 and Bombardier Q400Next Gen aircraft but all of them will be replaced til 2020.  We will have all Jet fleet and we will soon announce whether the additional jets will be C Series, but it will be definitely jets. The challenge now is actually that we are not growing as fast as we want to grow.  We are more restricted by the number of jets we have, rather than being able to sell the ticket because the business this year has been very good for us.

 

ATN: What is the percentage of the connecting passengers?

MG: We have about half- half so, half of the passengers  varies between summer and winter but we never grow below 40% so, normally it is 50-50, sometimes it is 52-48  and so on.  It's around the year that half of the passengers connect to Riga and half of them go from point to point.

 

ATN: Are you planning to increase that number?

MG: No, because we increase the overall passenger number already this year by 20% but the share has not changed so, we increase the transfer as well all the point-to-point traffic.

 

ATN: Although your airline model is a low cost one you have a business class.  Is that decision based on certain needs of your passengers? What is the percentage of the business class in your revenue figures?

MG: It is very different depending on the route and what we tried a couple of years ago  the business on some routes to see where this would have a positive effect, if we would only have economy and the effect was negative so we stopped the tests and today we have in all routes a business class. But we fly a model that sells the aircraft completely into the equal concept which means the whole aircraft is on sales and of course  business is available as well. If somebody books the business class seat then we will put the curtain behind row one and if more than 3 people are sitting in one row in business, if their is a fourth person in business class  the curtain goes behind row two and so on. That enables us to fly full economy if nobody books business class seats but if there is a business class, we are flexible and we can go with the curtain further to the back.  Business class is a full business class with hot meal, newspapers and dedicated cabin crew  while the economy is ultimately low-cost  where the ticket price starts from 19,90 Euros and then you pay for the whole for other extras like you have on the other traditional low-cost carriers. Over the years we have well positioned airBaltic as a hybrid low cost carrier to continue success in the very competitive European air transport market and it is working.

 

ATN: In December 2016, you became the launch customer of Bombardier CS300 and in a total you have ordered 20 aircraft . How important was for airbaltic to be the launch operator of a new aircraft?

MG: We became the launch operator of CS300 only later because there were other companies initially who were supposed to be but then they offered it to us and that came with a huge package from which we are still benefiting because we are still in the process of being the launch operator and we have all the support from  Bombardier  that we need on the aircraft introduction.Currently we have seven aircraft and the 8th is coming this year and the next year we are planning to recive six more, but by the end of 2019 to have 20 BombardierCS300 aircraft in our fleet. So, it has been a very good process , off course we detected technical nuances concerning the operations of the new engines, but it was all in accordance to the plan and it's offset by the positives and the support from Bombardier.

 

ATN: In August you received the 7th CS300 aircraft are you happy with  its performance?

MG: We are happy with all of them, there are now some engineering issues which everybody flying C Series has, but that's not distracting the operations that is more on the maintenance side, more care is been taken  but the aircraft itself  is actually very good  each time we take off with the C Series  we are saving real money because it's so much more fuel efficient and the  passengers love it, the crew love it  so if we could have all 20  today,  it would be even better.

 

ATN: What do you think about the new partnership between Bombardier and Airbus on the C Series?

 This deal is positive news for airBaltic as a customer of the CSeries jet, as it means that the airline has a stronger partner in the back now.  airBaltic took the decision in 2012 not to take the (Airbus) A319, but to go for the CS300 and now Airbus and Bombardier deal is a jet another confirmation that it was the right decision. With Airbus and Bombardier as partners now the C Series Programme is even stronger. airBaltic according to its business plan Horizon 2021 is carrying out discussions to identify the optimal solution to replace the existing 12 Bombardier Q400 aircrafts, starting with year 2020. airBaltic is in discussions with Bombardier for a further 14 CS300 jets plus options to replace its turboprop planes.

 

ATN: airBaltic had set a new world record as its newest CS300 turnaround as for the first commercial flight took only 50 minutes after delivery from Canada. Which were the challenges for this accomplishment?

MG: We wanted to show that there is no problem to take the aircraft from the factory in Montreal, bring it to Riga and prepare for the first commercial flight in short time. The aircraft just needed fuel and the crew needed to change, but we had already prepared the seat pockets in Montreal so that the magazines and all the things were there, so we just had to do what we do when the aircraft arrives from another flight: you do a 30 minutes turn around and the only difference was that the aircraft when it comes from the factory is ready for service and that's what we wanted to show and then it was just 50 minutes before  it  went on to the scheduled flight.

 

ATN: In July 2017, airBaltic carried 393 312 passengers or 21% more than in the same period of 2016. Have you reached your goals so far and which are your goals for next year?

MG:  We have succeeded what we wanted in terms of growth, we had a 15% increase on the seats available on sale and we were growing for 20% more passengers carried so we are definitely exceeding our target on the passenger side and on the revenue side so we will report a very strong year. This is supported by the good economy situation because we have a low fuel price, we have a low-dollar that helpsso we have a lot of tourism coming in and a lot of people flying out so the growth this year  was better than planned.

 

ATN: airBaltic started using a new way to communicate products and services for customers in digital platforms – Facebook Dynamic adverts for travel (DAT). Is that working so far and do you believe that digital platforms could take the costumer service to another level?

MG: We introduced it in June for the key airBaltic destinations and we see an increase in bookings coming from this. So, we are looking in different layouts which we test different  things with it. It is a bit early to speak about concrete results, but what we see now is that there are more and  more bookings coming in. So if it didn't work we would stop it but at the moment it looks promising.

 

ATN: You have a number of codeshare agreements. Are you planing to have more codshares with other airlines? Would you be interested in joining an airline alliance in the future?

MG: We do not want to join an airline alliance because we are still a small carrier and we would have all the disadvantages of being in an alliance: mainly costly  IT systems and  so on, but of course we are in the sales process if somebody  who isn't  in an alliance  and wants cooperation can come to us. We have 21 codeshare agreements  now and we will not stop having more codeshare agreements if they make sense for us, so that's something that works very well but joining an alliance would be considered only if the  airline belonged to somebody else. 

 

ATN: Do you have any last thoughts that you would like to share with our readers?

MG: They should all come to Latvia and visit this beautiful country up in the north and to see our operation and our hospitality.

 

 

 

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