Nordica: Return to Tallinn remains available option

At Tallinn Airport.
At Tallinn Airport. Source: Sander Koit/ERR

Nordica signed a new cooperation agreement with Polish flag carrier LOT last week, further reducing the company's involvement in the airline business on the whole, leaving ticket sales and customer service to LOT. This means that Nordica is applying its wet lease business model to the domestic market as well, leaving the entire commercial risk of its operations to other airlines.

According to head of the company's commercial business, Eero Pärgmäe, they are keeping their licenses to operate commercial flights from Tallinn, which means that a return to the passenger business is "always an option."

At the same time, this doesn't imply any great changes at Tallinn Airport: "Competition has become so much more dense in Tallinn that almost all routes now have several operators. Stockholm currently has four," Pärgmäe told ERR on Tuesday.

On top of that, all of the operators at Tallinn Airport have recently increased their capacity, he added. "Competition is fierce, people have plenty of choices, there are good offers."

The only route negatively affected at this point is the one to the Lithuanian capital of Vilnius. While an operator for the route remains, there is now no competition anymore, Pärgmäe said.

The way Nordica sees it is that its current business model change is an inevitability, rather than anything else. Larger companies have more to spend, they can drive a more aggressive price policy, increase the density of their flight plans, Pärgmäe said. This has had a negative effect on smaller airlines.

While the Estonian media have begun to compare the state of the current national carrier to that of defunct Estonian Air, which followed an almost identical business strategy, but went bankrupt in 2015, Nordica sees itself the victim of an ongoing trend towards consolidation in the airline market.

"There's a purge happening in the market, it's a sign of changing times," Pärgmäe said, pointing to some 10 companies in the same line of business that have had to fold over the last 12 months alone.

Still, despite difficulties, the airline market is expected to double over the next 15 to 20 years, Pärgmäe said. This is why it is important to be flexible, a reason why Nordica, among other things, is also planning to develop its own ticketing system.


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Editor: Dario Cavegn

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