Competition ousts Nordica from home market

Nordica aircraft Photo: Konstantin Sednev / Postimees

Estonian airline Nordica will stop operating under its own name and drop five loss-making destinations from October. Is this the end of our national airline?

To some extent the answer is yes as Nordica will no longer be shaping its own route network, sell tickets or take business risks but will concentrate entirely on operating flights under the name of subsidiary Regional Jet. This effectively makes Nordica a subcontractor working for other airlines and local governments.

Nordica will be dropping five unprofitable connections from Tallinn in late October: to Vienna, Kiev, Trondheim, Copenhagen and Vilnius. The remaining direct flights to Stockholm, Brussels and Warsaw will be operated by Polish airline LOT from July 1. The latter will take care of tickets and business risk; in other words, making sure the planes are full. Nordica will simply be flying for LOT for an hourly rate. The preliminary agreement will see the aircraft retain Nordica’s colors.

Member of the board of Nordica Kristi Ojakäär said changes are due to the fact that simply flying from Tallinn is losing the airline money. “Nordica is obligated to ensure profitability and sustainability – that is the owner’s expectation. Sharp competition and overselling of flights from Tallinn are keeping us from hitting those targets,” Ojakäär said.

Return possible

Nordica’s data suggests its aircraft should be booked to 120 percent capacity for the firm to just break even.

The airline will keep its fleet, pilots and other necessary elements. This means that it will be possible to reopen flights should foreign airlines leave the Tallinn market for some reason and destinations important for the people of Estonia become unavailable.

Nordica, that has until now been using the ticket system of partner LOT, will develop its own commercial platform to have the ability to sell tickets independently in the future.

So far, Nordica has been responsible for seat occupancy rate and business risk as well as operated flights, like a traditional airline. Now, it is switching to a model it has been using on foreign markets also in Estonia: operating fixed-price flights for Scandinavian and Central European local governments and other airlines, like SAS and LOT.

Why do we need a national airline if it only flies abroad, or exports flights, which is something any privately owned airline could do?

No flights to Trondheim

“One might ask why a country needs an army,” Ojakäär answered, adding that Nordica will be needed should the situation at Tallinn Airport sour enough for other airlines to pull out.

Even though reorganization is extensive, Nordica will retain recent number of flights and crews. The airline will be contracting its ticket sales department, with fewer than ten people set to lose their jobs.

The news will hit people looking to fly from Tallinn to Trondheim the hardest as no other airline will offer that connection from October 26. The remaining destinations will be covered by competing airlines.