Vilnius turning into loneliest capital in EU

Bloomberg

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It’s mid-afternoon at Vilnius International Airport in Lithuania, and employees outnumber passengers. The saleswoman at the Lietuvos Spauda newspaper shop, sitting among magazine, cigarette and candy bar displays, hasn’t had a customer in 30 minutes. There is little or no waiting at check-in counters, the public address system echoes in the nearly empty hall and getting a cup of coffee is a snap.

The Jan. 23 bankruptcy of Lithuania’s main carrier, FlyLAL- Airline, and reduced flights by others, made Vilnius the most difficult of the European Union’s 27 capitals to reach. Only nine can be reached by direct flights after routes to cities including London and Brussels were dropped.

Even President Valdas Adamkus almost missed the World Economic Forum in Davos last month when FlyLAL stopped. He took a chartered flight. "I’m very disappointed," said Swedish civil servant Max Liebermann, who was on a business trip in Vilnius. His 680- kilometer (422-mile) trip home across the Baltic Sea to Stockholm meant a stopover in neighboring Latvia first. "That takes up a lot of time."

Curtailed transportation is the last thing Lithuania needs at a time when the Finance Ministry forecasts a 4.8 percent contraction this year. And it may undermine leaders’ hopes of raising tourism-related revenue 15 percent from visitors to Vilnius, designated this year’s European Capital of Culture.

’Blow’ to economy

"A collapse of the national carrier measures up to a blow with a dagger" to the hotel and tourism industries, said Violeta Klyviene, the Vilnius-based chief Baltic economist at Copenhagen-based Danske Bank.

The state-owned Vilnius airport, about 20 minutes from the city center, still sports a Soviet-era entrance: a white façade decorated with bas-reliefs and a colonnade. A ground-level open parking lot stretches across the front. The government spent $44 million to improve jetways and expand the terminal in 2007 to accommodate the EU’s passport-free travel.

The jetways stood mostly unused on a recent day and there were only three planes on the tarmac, from AirBaltic, Austrian Airlines and LOT Polish Airlines. The number of flights in February is averaging 23 a day, less than half January’s 57. Flying to Paris or Brussels requires a detour through Prague or Frankfurt, adding between four and eight hours to the trip.

FlyLAL folded five days before Adamkus was scheduled to fly to Davos, prompting the head of state to call his country’s capital a "secluded corner" and the "most difficult European capital to get to." The day before Davos was to start, the president’s office contracted with Aurela Airlines, which owns six planes, to step in. Adamkus left the next day.

Estonia may soon suffer a similar fate. AS Estonia Air, the Tallinn-based carrier, is searching for an investor to survive, Chief Executive Officer Andrus Aljas said on Feb. 4. The company has reported a combined loss of more than 100 million krooni ($8.35 million) for the past three years, and it said on Feb. 11 it would cut the number of weekly flights to London from Tallinn to two from four from April. The FlyLAL-Airline bankruptcy was declared after the shareholder-owned company failed to secure credit from banks to continue operations and no strategic investor expressed interest in a takeover. To make matters worse, Riga-based AirBaltic, the region’s biggest airline, cut some flights to and from Vilnius.

Capital of culture

"We must put effort in attracting foreign investment," said Mantas Nocius, the managing director of the Lithuanian Development Agency in Vilnius. "Only that can help Lithuania endure difficult times."

At immediate risk is the Vilnius European Capital of Culture 2009, a title awarded each year by the European Commission, the EU’s executive arm. The program includes a yearlong series of music, art, literature and theater.

Organizers had counted on the events to bring in tourists and foreign performers to the nation’s capital city. FlyLAL was to be the carrier, said Albertas Barauskas, a spokesman for the Vilnius European Capital of Culture.

"We now must find another carrier and there’s nothing to choose from," Barauskas said. Boosting tourist numbers also seems "far too optimistic now." The Lithuanian government hopes to restore connections to key European cities. Transport Minister Eligijus Masiulis said on Feb. 11 he had reached an agreement with Brussels Airlines to begin flights to Vilnius on March 30.

"We’re having intensive consultations with a number of airlines," Masiulis said at a press conference. "We hope that the number of direct flights will be restored to previous levels by the summer and all this discomfort that both foreigners and Lithuanians are experiencing will be over very soon."

That’s not soon enough for Andreas Herrele, an Austrian businessman whose company invests in environmental projects. The only flight to Vienna is in the afternoon and cuts his business day in half, he said as he rushed to check in at the airport.

"Currently there’s no second choice," Herrele said. "All non-direct flights are more expensive and so time-consuming that it roughly accumulates seven to eight hours. If I miss the only flight, I have no other choice but wait until tomorrow."