Privatisation Stalls at Three Main Lithuanian Airports

The privatisation of the three main Lithuanian airports seems to have stalled. Vilnius, Kaunas and Palanga airports were merged into the corporatised SE Lithuanian Airports SE in 2014 and costs were pared accordingly in preparation for a concession deal. The company, and the government, have been keen to attract the right ‘type’ of concessionaire, namely seasoned operators rather than financial speculators.

They identify strong passenger growth, the lack of a national flag carrier that might inhibit foreign carriers (though the potential demise of Small Planet Airlines must be a concern) and the presence of Lufthansa (though the two largest airlines at Vilnius are the LCCs Ryanair and Wizz Air) as reasons to attract investors. The Star Alliance also has a reasonable share of capacity, at 19% of seats. The catchment area of two of the airports, Vilnius and Kaunas, overlaps into neighbouring countries that have poor connectivity, especially Belorussia.

Source: OAG

On the downside, Lithuania has a continuing net migration problem as young people in particular seek better prospects elsewhere in Europe, and tourism development is still low key.

The common factor to at least two of these potential deals (Sofia and Lithuania) is, surprisingly, Manchester Airports Group in the UK, which has re-emerged as an aspiring investor since its bid (with partial shareholder IFM Investors) for the Chicago Midway Airport lease collapsed in 2013.

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