LATVIA: Passengers down, cargo up in Riga Airport

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In 2011, Riga International Airport reported its best annual results ever: it served more than 5m passengers, an all-time high for any Baltic airport. Now, the number of passengers keeps dropping, but the airport has found a new field of business: cargo. Eventually, the airport may even become an important pan-Baltic logistics centre.

Waiting for summer

The passenger drop was first reported in April, when it stood at -9% y-o-y. Now, the number has reached -11% y-o-y. On the other hand, other Baltic airports, while still far below Riga, have been growing. In April, Vilnius airport grew by almost 40% y-o-y, whereas Tallinn reported a 28.3% growth.

"There are several factors at play," says Aldis Murnieks, board member of Riga Airport, to news2biz. "First, airBaltic is optimising its flight network. Second, airlines that fly from Riga have now also started flights from Tallinn and Vilnius with similar destinations as from Riga. This means that we do lose some Estonian and Lithuanian passengers to these airports."

airBaltic makes up 61% of all flights in Riga airport; although its market share is down from 67% in 2011, any changes in the airline's schedule are bound to affect the airport's bottom line.

The second-largest airline in Riga, the Irish no-frills carrier Ryanair, has also been scaling down. According to aviation news portal anna.aero, by August 2012, Ryanair will have cut 21 weekly departures from Riga in comparison with 2011; in comparison, it will add seven departures from Lithuanian airports and only cut six departures from Estonia. Latvian cuts are the fourth-largest among the countries Ryanair flies to. Murnieks agrees that the 2011 figures indeed are becoming harder to achieve again. "We did not plan a huge growth: from the very start, we said that it would be a good year if we kept the same result that we had," he says.

"The current trend indeed is downwards, and now it is probably the time to revise our expectations downwards. I would not be so pessimistic just yet, though. The summer and the three hottest months are ahead; when they are over, then we will know for sure."

The airport has been attracting new airlines, although their volumes cannot offset the drop from the two largest airlines. The latest addition is the Spanish low-cost airline Iberia Express. It will fly to Madrid and back from 3 July until 15 September two times a week.

Boot camp for cargo

Until now, Riga has mainly been a passenger airport. Now, however, it is increasingly exploring another line of business: cargo.

In April, the airport reported an astounding growth in cargo: up 657% y-o-y, reaching 7,519 tonnes. It is an all-time high for the airport, which previously handled an average of 1,000 tonnes per month.

Much of the growth comes from one somewhat unlikely destination: Afghanistan. Starting from 2 April, two American companies, Kallita Air and National Air Cargo, have been sending NATO non-military cargo, such as food and supplies for stationed soldiers, from Riga.

In addition to a steady side income, the NATO deal could help the airport to reinvent itself.

"We now want to prove that we can also be a cargo airport," explains Murnieks. "Until now, we have focused on passengers without really working on cargo. We had some occasional charter flights, but there was no incentive to develop a logistics centre; the business did not demand it as there was nothing like it around."

Lockheed C5 Galaxy landing proves that Riga can
handle massive cargos. Photo: news2biz

"Now, the Afghanistan cargo is the perfect boot camp for us. We can train and learn how much cargo we can handle; we see what infrastructure we still lack and what we need to work on to become a serious logistics hub in the middle of the Baltics." In a spectacular, if rare, example of the airport's capacity, on 8 June it received a US Air Force Lockheed C5 Galaxy plane, one of the largest planes flying. Even with the airport's current infrastructure, the plane, capable of carrying up to 380 tonnes of cargo in a single flight, landed and was unloaded without any glitches or disruptions to the airport's usual schedule.

Moving to private customers

Still, as impressive as the figures are, they mainly come from a single customer. "The private cargo consists of small postal flights: one or two planes per day, four to ten tonnes, plus the occasional charter flight," Murnieks notes.

"The next step is to attract private cargo, as the NATO flights will eventually dry up. We already have companies which, having invested in warehouses in Riga Airport, are interested in further development in this field. What we must do is to show that we can handle the increased cargo flow."

If the airport succeeds in keeping its cargo flow, it is planning to invest in developing its cargo infrastructure during the next round of expansion.

"We have taken the first steps: we have set aside some warehouses in one part of the airfield. It makes sense to continue developing there, building refuelling pumps and aprons for parking large cargo planes."