Interview: Why Nordica Is Going It Alone

Nordica CCO Deepak Ahluwalia explains why the Estonian carrier has taken the decision to start operating flights under its own AOC and IATA code for the first time.

Nordica was founded in 2015 following the failure of Estonian Air but has only just started operating under its own AOC. Can you explain a little about the airline’s history?

The Nordic Aviation Group was established in September 2015 by the government of Estonia with the goal of ensuring the availability of the flight connections that Estonia needs, and exporting our expertise to provide European communities with connectivity.

To be able to connect the Estonian market with as many destinations and countries as possible from the very beginning, it was necessary to enter a cooperation with an established airline.

 Adria Airways was the right partner at that time to gain access to 1,316 destinations in 192 countries through interline and codeshare agreements. However, we wanted to expand our offer and cooperation and saw a limitation with Adria.

From autumn 2016 until end of July 2021, Nordica had an extensive cooperation with LOT Polish Airlines. For its regular route flights and ticket sales, Nordica used LOT’s commercial platform that ensured partnership possibilities.

But we have now grown up and, as of August 2021, we are using our own commercial platform. This allows us to act independent and offer flights for excellent value for money to our passengers.

Why you have taken the decision to launch services under the Nordica brand?

Since the beginning of our operations, Nordica implemented the model of a virtual carrier where activities are outsourced to external partners.

The aircraft and crew were therefore provided by wet-leasing partners—the most important being our operational subsidiary Regional Jet, which more recently started doing business as Xfly. The commercial side of activities was outsourced to Adria, and later to LOT.

In the last couple of years, we concluded that our inhouse expertise, as well as changing environment in the aviation market, resulted in the necessity to launch our own AOC and own commercial platform. This is to guarantee our flexibility towards all our customers.

Your first route is a domestic service in Sweden (Gällivare-Arvidjaur-Stockholm). How did this come about?

We realized that Public Service Obligation (PSO) routes can become a viable part of our business as they provide the stable income to the company. As a result, we participated and won the tender to operate this route in Sweden and have been flying it ever since. We constantly monitor the market and participate in other tenders we deem suitable for us.

Why do you believe route procurements represent the greatest potential for Nordica right now?

 In the post-COVID landscape, many routes could fulfil PSO requirements as carriers falter and demand becomes weaker. Major airlines are likely bound to drop services on thin routes as their fleets are downsized, providing opportunities for Nordica.

In combination with our proven track of providing PSO services, appropriate fleet quality and passenger service system, we believe we have the right prerequisites for this business area.

As demand returns, do you foresee Nordica operating a scheduled network from Tallinn?

We are constantly using the set of analysis tools to determine the current set of necessary destinations and frequencies at Tallinn airport, comparing it with the present capacities.

 We are in the constant state of readiness to start routes as soon as we see that the current operators do not fill the requirements of the people of Estonia. After all, the task of ours is to insure the connectivity of Estonians to the world. As we speak, the most important markets are covered at least with the basic connectivity.

How do you see Nordica’s network evolving as the recovery continues?

As per our vision of the future, we can see the growing role of the PSO routes, especially among the routes which were struggling to break even before COVID and were operated by carriers on the full commercial risks.

Now, with the recovery prognosis spreading up until 2024, such routes will be especially important to monitor for us to step into the published on them tenders. In addition to PSOs we are constantly monitoring Tallinn airport operations as well.

Photo credit: Nordica