Tuesday, January 29, 2008

Airline competition

Today, FlyLAL, the Lithuanian national airline, announced that they will offer cheap flights from Riga to 14 European destinations via Vilnius, Lithuania.

For many years, each of the three Baltic airlines was content with serving its own country. Quite little competition and expensive air tickets.

Things started changing around the time when Baltics joined European Union in 2004. Because of EU's open airline market, the Baltic airlines were now free to fly wherever in EU they wanted (and every EU airline was free to fly to Baltics). Air Baltic, Latvia's airline, was the first to use that. One month after Baltics joining EU, they launched a number of flights from Vilnius, Lithuanian capital. Three and a half years later, Air Baltic is the biggest airline in both Latvia and Lithuania.

Lithuania's FlyLAL (formerly known as Lithuanian Airlines or LAL) looked confused for a long time. A few months ago, they tried to sue AirBaltic for an advertising stunt in which AirBaltic had paid Google to show AirBaltic ads to people googling for FlyLAL. It looks like that lawsuit went nowhere...

Now, FlyLAL is finally trying to outcompete AirBaltic in Latvia with cheap tickets. The airline competition (from Ryanair and others) has already lowered the ticket prices in Latvia substantially. With one more competitor entering the Latvian market, the cheap tickets are there to stay...

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