In 2022 the Ministry of Transport and Communications of the Republic of Lithuania, together with external consultants, prepared a plan to promote flights to destinations which have strategic importance for Lithuania. Now, Lithuanian Airports are introducing a new incentive model and launching an international call for application from airlines to participate in the selection process for the operator of scheduled flights between Vilnius (VNO) and London City (LCY) airports.
Airlines can submit their proposals from today until 9 June 2023, 15:00 (Lithuanian time). All submitted proposals will be evaluated according to the criteria which are set out in terms of call. Given that this route is of particular importance to business passengers, the selection criteria also aim to ensure that flights are operated at times and frequencies convenient for this segment of passengers.
It is expected that the contract with the airline which will submit the best offer, after all necessary qualification checks and the preparation of a joint business plan, could be signed by this September and flights could start in the autumn.
"This is the first time that flights to a strategic destination for Lithuania have been initiated under a risk-sharing partnership model. Among the various flight promotion alternatives, this model has been selected as the most appropriate to increase Lithuania's air accessibility. The City of London is the first destination to be launched, as it is important for the business community and tourism development," said Minister of Transport and Communications Marius Skuodis.
According to Aurimas Stikliūnas, Interim CEO of Lithuanian Airports, this new incentive model is based on a long-term partnership between Lithuanian Airports and the airlines that will operate the flights - an investment agreement between Lithuanian Airports and the airline will be concluded for a specific destination for a maximum of 15 years.
Both parties will bear the financial risks associated with the operation of the flight and will share the financial benefits generated by the flight during its implementation. This sharing of financial risks and benefits will be based on the terms and conditions set out in the joint business plan between Lithuanian Airports and the airline submitting the best bid.
"The launch of this investment model is a very important strategic development for the country as a whole, which I believe will shape the best practice for the promotion of future destinations under the model. In the future, with additional funds in the national budget, this will provide a solid basis for planning the development of routes going forward. It should be well understood that the promotion of business flights, given the size of our domestic market, the size of existing demand, is directly linked to additional investment by the country itself. This was stressed by foreign consultants in the model analysis, and we also see it in our assessment of European aviation trends," says J.Stikliūnas.
It should be recalled that LOT Polish Airlines is the winner of a public tender launched in 2018 to allow States to support critical flights within the European Union. The flights between Vilnius and the City of London started on 1 May 2019 and will run until 30 September this year under a contract with LOT Polish Airlines. The project, which runs from 2019, is one of the few regulatory exemptions from the European Commission allowing an airline to receive state aid for the operation of a flight. The funding of this model cannot be extended after the United Kingdom leaves the European Union, as it can only apply within the EU.
More information about Risk Sharing Partnership (VNO-LCY) can be found here.