airBaltic - Innovations for Business

It's called the Davos of Eastern Europe. So there's a very prominent crowd there, like eight prime ministers, 3,000 delegates, really serious people. And they came there to ask that question, Mr. Vanak, how comes AirBaltic is, you know, in this small country so successful? How comes you have this huge network for a city of just one million people? How comes you are roughly five times larger as an airline than you should be in your region of Central and Eastern Europe? And all these prominent people, like 3,000 delegates, they were really like wondering because they said, you guys, you know, you don't have the natural attraction of excellent climate in Riga. Okay. So, well, it's stable, but normally it's stable in the opposite way as it was yesterday. You see, yesterday is plus 27 in Riga, plus 20 in Barcelona. Today morning, 22 in Riga, plus 15 in Milan. It's normally the opposite and very stable. Okay. So you guys, okay, you have a nice intimate city, but it doesn't have that, you know, the status of the huge metropolis, you know. Nice green, intimate, but not that huge. It cannot, you know, draw millions of tourists like New York or London does. Well, nice beach, 500 kilometers of, you know, nonstop sandy beach with very nice, you know, pine forests. But, you know, you can be on that beach maybe one or two months during the year. Most of the year, you know, Latvians boast that, you know, Latvians say, you know, we are like the land where you can walk on the water like Jesus. So, well, it's frozen. It's really, you know, hard water. So, and that's for the most of the year. So it's all taken together. It doesn't really add up. How comes that this microscopic airline grew so large? So, well, our response is that we really try hard. We are really the small guy and we really try to achieve tremendous results through innovation, big and small. I will go into that. Maybe we'll start with a little video. And if somebody wants to, you know, go with a gift from AirBaltic right away, you can maybe mention a couple of innovations that you know from AirBaltic. Anyone? Any volunteers? One cool thing that you know that AirBaltic started as the first airline in the world? Online check-in? Maybe. Yes, just I have to check it, you know, myself. Yeah, we were definitely among the first ones, but I'm not sure if we were the first one in the world. Christmas presents. Yes, Christmas. We're big about, you know, celebrating. I think you get a nice model of Bombardier C series aircraft. It's actually the first, we will be the first airline in the world to fly this technology. So it's coming later this year. So here you go. I think a round of applause. And here we go with the video. Maybe we're walking in shoes that are a little too big, but that's just because we are young. I mean really young, but despite our age, we are famous. Famous for our creativity. Do you know why? Because we know how boring it can be to find yourself in the wrong company. That's why we created a seat buddy option. Don't you hate it when you get a meal you don't like? We made an app in which you can create your own. We know how wonderful it can be to surprise your other half, so we started to offer roses on board. We also know how fast the world is going digital, so we were the first to accept Bitcoin. And of course, we know that there's a million things to do instead of waiting, so we are very punctual. And you know the best part? We have plenty more funky things to come. Okay, thank you. I see more people joining the raffle for business class tickets. But well, it's you know these nice and funny things I will tell a little bit more. You can ask me really open questions. Which of these worked? Which of these didn't? But to go into this fun area that we saw in the video, you really have to get the fundamental innovations right. One of the fundamentals is that you have to have the right equipment as an area. You know you have to have the right equipment as an airline. You have to really go into the latest aircraft technology. So to make sure your fuel burn is low. Then it's alright. Also the costs are low. That's why we are the first airline in the whole world to get this C series aircraft. This is a picture from last week. This is as the airplane is being built in Canada. It will join our fleet later this year. So all in all 20 pieces. Very nice airplane. So one other fundamental that has to be really right is as an airline we have to be punctual. So that's why I was very nervous. I know many of you are marketing people. But for me it was really important to start at 11.15. So we have it in our DNA. Not only we are the world's most punctual airline. And it's based on data. Not on the qualified jury evaluation or anything. So we are the world's most punctual airline for two years in a row. And no other airline has done it in history. So one year after the other we achieved that. Again based on data. Yet another fundamental thing is your product. So for us as an airline you have to be fundamentally innovative in the way how you fly. In the way how you connect markets. Connect dots on the map. So we are constantly evaluating around 150 to 200 airports that we could fly to. That could open up new market opportunities. And our latest strategy is that we have to connect two dots on the planet with maximum one stop in between. That's how we go about it. And of course when these fundamentals are right then you can start playing around with these little nice funny things. So then you can start for example start selling cars on board. Again we are the first airline in the world saying hey you know you fly on board you can buy a car. We found Mini Cooper for that. Our Facebook fans designed delivery for the car. And it was quite funny stories again with my cabin crew colleagues who are telling you know people get on board. They order a nice drink and then they start looking into the onboard shop. They say oh there is a car on sale. And they say why don't we buy it. The funny thing is the question is have you sold any? Our plan was to sell actually zero cars. So how many did we actually sell? Four cars in a month. But that was a good question I think you qualify for a business class ticket to Riga. For two. Lillian congratulations I think applause to Lillian. No joke no joke absolutely. So that's exactly the question. We were planning to sell zero cars but we were selling discount vouchers on board for 50 euros. And actually we made a round sum of money on selling these non-refundable discount vouchers. So and you know people were having fun playing around this product. They say you know they could really boast to the other fellow travelers. They say I just bought a car and they just spent actually 50 euros. For a discount voucher that would give them a guaranteed 3,000 euro discount. So but actually yes we were really surprised. Four cars were actually sold. It was really not really the original idea but it really worked well. It was mentioned earlier in the video that we started accepting bitcoin as the first airline in the world. Again it was a very nice thing in the beginning. We established a system where the payment is secure. But this product was very much hyped about. But you have to again be careful. You know as I mentioned we get the fundamentals right. We get the money right, it's not about where we earn money. These things is a little bit about noise making and with bitcoin is the same. We offer this bitcoin payment option for about two years already. Less than 1,000 people have used it. That's miserable for an airline that is selling 15,000 seats every day. every day, so 15,000 seats every day. But the amount of noise it generated, regulators started criticizing us. Central banks started criticizing us. They, you know, started evaluating our procedures, you know. And basically, they used their regulator muscle and their so-called, you know, publicity muscle to go against the small guy, air Baltic. And then, actually, you know, it creates a lot of pressure but also a lot of noise and publicity. You can start explaining what you do. You can start explaining your model behind this. Oh, the Dutch flower growers love it. Frankly, how many of you did know that this product exists? Ladies, no gentleman, no, no, no male participants here? What a shame. You know. Actually, I used my position in the company, basically, to set up this project. I love sending flowers to my wife. But, you know, sadly, I find in these audiences that, you know, mostly ladies know the product. But it's lovely. It can imagine. I was in another big business conference about two months ago, and I just asked, I asked the ladies, have you received flowers on board on air Baltic? And there was one. And I asked her, how did it feel? She said, actually, the whole airplane went, you know, burst out in applause. So it's like huge bouquet of flowers. It normally comes as a surprise. One of our team members would just bring it in. And you can really have it as a surprise. If somebody special is flying, you can order it online, on the ground, and then the flowers get delivered. Actually, KLM copied the same product for a month or two. But it somehow didn't pick up. I don't know what is it to do with. Probably it's because of the, you know, of the culture. We have a huge flower culture back home in the Baltic region. Could be that, that could be the reason. SeedBuddy, nice product, mentioned in the, also in the video, but Fox News loved it. You know, CNN loved it. You know, this huge hype. People didn't use it. Even for free. Basically it was like, if you can, if you buy your ticket on AirBaltic, and you're, for example, you are a Snow White, you can get seated next to seven dwarfs, okay? So that's how it works, you know? But people said, like, somebody said it's a, you know, matchmaking tool, which was not really, but people just didn't use it. And even for free. And for us, everything, we tried to make money out of everything. So if people don't use it for free, so basically we said, like, it probably doesn't work. People like that, you know, surprise of, or simply they don't pay so much attention to finding your matching, you know, fellow traveler. So people still like the element of surprise and seating. You know? No, it, we basically, it's, we are quietly, you know, phasing it out. So just because it doesn't work. And I specifically wanted to mention this, because, you know, when you come to marketing conferences, you get all the success stories, you know, straightforward, everything is success. No. It's, if you do a lot of experimenting, not everything is a success, but you really have to have the courage to experiment. Otherwise you don't hit the right product. Yes. Yeah, I was wondering if you mentioned that in examples that, you know, if you have a story telling that actually don't, you know, for the sales and the things that go with the car. So I guess when, you know, when that's, when you want to encourage any company, you need to also have the right metrics on encouraging. So how many do you actually sell? How many, how much, you know, exposure do you get? So is that something you inherently incentivize in your culture? I think it also qualifies for a gift. This is a very, I like this question. So it's the Bombardier C Series. I hope it's, you'll find it, you know. Yeah, okay. Here you go. Definitely. We have that culture where basically, first, if you have the metrics or, and if you have the culture. So we definitely have that culture where the cabin crew come up with the ideas, you know, for some how to improve the food, how to, for example, one of the cabin crew said, we have to, you know, offer organic honey to business class passengers, you know. And, you know, all of these ideas come from our team, you know, and a couple of them come from outside. So, and of course, if you say, okay, the car, the car thingy, you know, didn't work, you know, you know, it was a huge success, you know, on its own, but it actually incentivized the consumption culture on board. So people were, you know, it stimulated the buying behavior on board and actually people ended up buying 20% more sandwiches during that campaign. That's how we measure, we measure spend per head and we measure spend per flight. And basically, I will tell in the end, you know, where it boils down to. But again, there was a, this is a picture from the day before yesterday. We opened a new route, Reykjavik, we opened a new route, Reykjavik Riga. And somebody said, oh, hey, there is this new feature on Facebook, they can, you know, stream live sessions from wherever you are. And there's one very famous musician in the main market where we sell Reykjavik and this guy is a big fan of Iceland. And he wanted actually to be part of that, you know, new product, Riga Reykjavik route. And he said, I will give you an exclusive concert over Facebook just before my stadium concert in Reykjavik. And that was just crazy idea, but it was like, I was amazed to see that we reached actually 60,000 people in half an hour. And, you know, everybody had fun, you know. So we try out these new things. We also tried out, you know, experimented with food. We said, why don't we give people choice when they order food instead of, you know, doing that, you know, chicken or fish choice that the airlines have. And generally airlines have really crappy food. So we said, why don't we, you know, sell it and do it properly? We give people a choice of 70 meals. They do the normal thing that they do in the restaurants. They come in, you know, they order, they order online for us. And then basically they get their food delivered exactly the way they wanted on a tray in the airplane. I'll skip. So last two slides. Why do we do that? Because again, you know, being a very, very small business, very, very small carrier, we really need to spread the word. We really need to, you know, we need to scratch. We basically, we have to take every passenger literally by hand and then, you know, take them on board, you know, take them to the airport and, you know, make sure that they feel comfortable on, you know, on board Air Baltic and fly in our destination. So it's very, very small business. So we have to attract people. And these innovations help spread the word and attract passengers. And of course, we do that to make money. Yeah. Yes. I want to ask you a question about, I mean, the airline is quite competitive, which means everyone is operating in the same following. And what you do, okay, maybe you're a first mover, but in the end everyone will have it. And I think if you look at disruptive thinking and industries who are really innovative, for example, in the hotel industry, you see citizen, and you really said, okay, let's go to the customer experience and let's see how we can break the traditional way of experience with product in the hotel industry. How do you cope with that in Air Baltic? And in the end you will have the same product like Air Mars than everyone else. But how, on the long term, are you going to... So basically, yes, how do we cope with that? How do we, basically, how do we innovate constantly? Right? Basically, keep your feet... How often do you guys use Snapchat? Every day. Every day. The question is, when do I not use Snapchat? It's breakfast, it's lunch. Every couple of years a new platform shows up and has quickly declared the future of social media. Let me explain. First, there was Friendster. Then MySpace showed up. Huge airlines with huge operation. Sometimes it takes them between six to ten years to change fleets of technology. They cannot change clocks so quickly. We are small, you know, 30 aircraft. You know, change one system on board and then you can start these super modern satellite guided flights that are first in Europe, okay? We can, we are small. But as we start growing, it's a problem. Yes, please. I have a question about, I mean, how do you communicate with your clients? And I don't mean how do you tell stuff to them, like this one side of communication, but how do you actually speak with them? How do you get to know what they think? For example, the body system, but it's not working, but it's in system, it's like, did you, was it based on some kind of data or research before? Did you ask people who are flying, do they even want to chat while they're flying or do everyone just open their laptop and watch some movies and read books? So how do you get to those people that you take by hand, like you said, yourself? So how do we communicate with the clients? So I think we used every available channel, you know? So of course, being a small airline, you know, for me, and being based in Riga, it's quite simple. I get a call from the prime minister if something goes wrong on my service or from the transport minister easily, or also, you know, some people from the business community. You know, my mobile phone is on Google. They just pick it up and call. Then of course, we talk to them via the social media very actively. So we were, actually the first airline that really started responding to, if you remember this Iceland volcano case, we started responding to that over Facebook and Twitter from minute one, whereas other airlines who were really starters with that, they started 48 more hours later. So it's basically, you know, for us, well, I can actually even simplify that answer by saying like, the customers for us is the only source of money. So we really have to make sure that we hear them, that we listen to them. Sometimes we get things wrong. Yes, we sort of new product, then they, you know, they say they like, but they never use. If you go out, and that's an interesting thing. You ask your customer, you know, you go out on the street in Tallinn, in Riga, or in Vilnius where we operate, which is our home market, you ask them, where do you want to go next? Which is your next destination? They of course say Rio or New York, but they actually fly to Berlin and Reykjavik, you know. So you have to, you know, you have to make your, you have to have sound judgment about this. And, but the important thing is you have to experiment and you shouldn't be afraid of starting a new route and then dropping it later or starting a new product. And then dropping it later. That's the message, because if you don't do that, you don't have a chance also to succeed and also to be profitable at the end of the day. Hi, sorry, we will need to move on to the next presentation. Oh, I still have one business class. Take it to raffle, I think. Okay. Okay, one last, two last questions. Okay, so. 30 seconds each. Yeah, okay, over there. I was wondering, because I have this idea and I'm wondering why it still doesn't exist. So have you ever tried segmenting the plane? Like for instance, some people like to read, some people have kids, some people really don't want to sit with kids. That's what I see. And other people just like to chat. So maybe the seed buddy is too personal, but the segmenting, have you ever? Yeah, we asked if the seed buddy was doing exactly the segmenting, you know, quiet. But somehow people just didn't really take it up. Yes, one more question, yes, over there. Your advantage that you're a small company, you can react quickly on things, have new fresh ideas, but what are you going to do when you're going to grow? Because you're growing now, what is your plan for the future? Because then you don't have these advantages anymore. So basically over the next five years, we almost double in size, but then even with that, like with five, six million passengers, we're pretty sure we can still tackle that. But of course, if you ask this question, this growth question, should we merge with somebody bigger and can that culture then be merged into that bigger carrier? I'm not sure, I don't know. Yes, because I don't see a lot of these products, you know, still continued with an airline if you become part of a bigger group, like with 60, 100 million passengers, because then it becomes a mega factory. So now it's still like small boutique, you know, then that's beautiful. Yeah. This is still an international airline, it's a factory. That's the Sonian Air and that one is still there. You're super jealous of Aeromotive, but it's good work and about the questions. You can't, I mean, if you get the answers that people answer in one way, like this will fly to other, this station is just, you're asking the wrong question. You can never ask a person directly, where it's like, you're more social scientists. Okay, that was more like a comment, yes? Okay, thank you. Very good, I think I want to give my business class, ticket to the gentleman over here. Yes, so I have that privilege of choosing. Thank you so much and see you in the Baltic region.