Over the last two years, we have opened a number of destination in the CIS, mainly Russia and Ukraine, but in spring 2006 also Baku and Tbilisi. Looking at the development in a perspective of three years, the recovery of the markets to the former Soviet Union has been astonishing. To Tbilisi, Baku or Simferopol, we have during the first months of operation similar passenger numbers as to Berlin, Hamburg, or Vienna in 2003. Moscow had an increase of 700% over the same period. It is only natural, that we are looking at more destinations in the East. Riga is still far away from the 2.2 million passengers and 38 destinations to the East in 1990. Unfortunately, we are still not allowed to operate to non – EU destinations from Lithuania, because we don’t have a Lithuanian majority ownership.

Looking at the destinations to Western Europe, the highest market growth, we have on routes, which are parallel operated be Low – Cost competitors. I am happy to say that our prices, our schedule, service and quality allow us to compete very successfully with these airlines and we are profitable on all routes which we operate in competition to low– cost airlines. I like the clean business concepts of our competitors, as a passenger however; I prefer our service and quality. What allows us to stay competitive in our pricing is our unit cost, which is below that of most low–cost airlines.

You may be surprised seeing that another carrier operates some of our flights. We have made agreements with a number of airlines which can perform flights for us. So whenever we are short of own aircraft, due to late delivery or technical problems, we will not have to cancel flights. We decided to go this way after problems we experienced in May, when one of our aircraft was damaged by a truck in Moscow and another aircraft,needed an engine change and passengers suffered long delays and cancellations. All these airlines have the necessary certifications and get thoroughly audited by us, as well as in some cases by the Latvian CAA. We would rather offer our customer a product which is 100% airBaltic, but in our opinion it is better to have a flight operated by a partner–airline, than to burden you with intolerable delays or cancellations. Safety remains our priority and we will not use any airline, which does not comply with our safety - standards.

I wish you a good flight!

Bertolt Flick
President &CEO