The first thing that you notice when coming into the office of Martin Gauss, CEO of airBaltic, are the dozens of tiny scale model airplanes on one of the tables.

The model planes, all of them A220-300s and arranged in two big groups, are an exact like-for-like representation of airBaltic’s fleet, including the three aircraft sporting special Baltic flag livery.

“These are the planes that are already in our fleet” explains Martin Gauss, CEO of airBaltic while pointing towards one side of the table, “and those other over there are the orders and options that have not yet been delivered” he adds while pointing to the other side.

Martin Gauss, CEO of airBaltic, with a scale model of the Latvian-flag liveried A220-300

Right in the middle and moving towards the first group are two A220s…”Those are two planes that have officially been accepted, but not yet delivered” Mr. Gauss quickly clarifies.

I had come all the way to Riga, Latvia, to learn, first hand and direct from its CEO, about the latest developments at one of Europe’s most interesting airlines.

To be clear, like most of the airline industry, airBaltic is coming out of a terrible two years, in addition to the pandemic, which volatilized most of its income, 2022 has brought about the Russian invasion of Ukraine and the effective closure of some of the airline’s key markets.

Nevertheless, airBaltic is on track to get back to 2019 traffic and revenue levels. The airline expects to close the year at around €470M of revenue, slightly short of the €500 it posted three years ago. Geopolitical turmoil has taken its toll when it comes to Riga’s role as a hub airport, but connecting passengers still account for a remarkable 35% of traffic (down from about 50% previously). It seems that Riga is still a suitable transit point for those travelling, for example, between the Nordic area and places like the Caucasus, Dubai and the Mediterranean.

If the 2023 continues on a positive tune, we may see an IPO in 2024 and further fleet increases.

There are 80 model planes in Mr. Gauss office. 50 of them represent the A220-300s airBaltic is going to end this year with, but there are also outstanding options that should allow the airline to keep growing over the years to come.

airBaltic has been diversifying away from its original Riga base and in recent years it has opened secondary hubs in the neighbouring Baltic capitals, Vilnius and Tallinn, followed, only a few months ago, by another one in the city of Tampere, Finland. Additionally, several aircraft are now operating under wet-lease arrangements for other airlines, such as the Lufthansa group. Not an ideal situation, since revenue from those aircraft is, in principle, lower than those operating under its own brand, but something that helped also smoothed out those external shocks.

The airline remains committed to its hybrid business model, with the introduction this winter season of a new Business Lite product that will be essentially its current business class without ticket change flexibility - and non-aligned policy (although it counts a couple dozen bilateral codeshare agreements), some of its most unique and interesting projects are happening in the digital world.

airBaltic’s Planies world

To be clear, I am aware that the word NFT has been a bit hyped of late and, I must confess, when I first heard about the Planies my first reaction was a bit skeptical.

Yet, at the same time, blockchain technology has some real and useful applications (as we were able to discuss not long ago in the podcast with the co-founder of blockchain travel app development firm TravelX) so I got intrigued.

So, what are the Planies and why there’s way more than meets the eye behind this project?

Martin Gauss himself took the time to give me a practical demonstration of how the whole process works and the benefits that can accrue to Planies’ owners.

So, basically, the Planies are an NFT collection of aircraft-themed cartoons. They come in many variations, since each of them is generated electronically by combining some 180 pre-defined traits.

Planies’ issuance has been limited, by design, to 10,000 and this is where things get interesting.

Why would you spend money to mint a Planie?

At first glance it is not cheap, starting price is always 0.075 ETH or about $112 at the time of writing this (including the ETH transaction costs), but there is some return to this investment and I am not talking just about the expectation of flipping it later at a higher price (although this can happen too!)

If you mint a new Planie you are then able to “stake” it, that is, you can link it to your airBaltic Club account. This will provide you a whole range of benefits, starting by the immediate accrual of frequent flyer points. It doesn’t matter whether you fly or not or what you do for that matter, every day you will have 20 points automatically credited to your account.

At the end of the year you will have 7,300 points, even if you don’t earn points in any other way, just by owning a Planie. This is about the quantity that is needed to get a free flight through the use of points. So, if you are likely to fly on any of the routes operated by airBaltic within the next 12 months, the $112 investment may already make sense.

In addition to collecting the minting fee, there’s also a 7.5% creator’s fee (like royalty rights from future Planie uses) which would go eventually to airBaltic.

This would become more relevant if airBaltic succeeds in turning the Planies into a brand of their own (think children’s books or animation films). In fact, while you possibly get the most out of the Planies by staking them, collectors from around the world that are not on airBaltic Club may want to get one too.

In any case, airBaltic plans to keep offering other benefits to the Planies owners. With numerus clausus in the supply side, the expectation is that once the 10,000 Planies have been minted, the only way to access a future airBaltic Club super-tier will be by purchasing a Planie in the secondary market.

Once you acquired a Planie, you get the rights to that specific Planie permutation too (although you would need to stake it and, therefore, withdraw it from the secondary market, in order to benefit from the loyalty programme benefits).

How to purchase a Planie?

The process to acquire a Planie is quite straightforward. There’s a specific Planies site where you can either mint a new Planie or stake the ones you already have. You can then either use your wallet to pay with ETH or pay with your credit card (the service is provided by Crossmint). We went through the process of purchasing a Planie together with Mr. Gauss. The whole process took just a few minutes and, I must admit, besides the cost-benefit considerations, there was a playful element to it.

Whether the market will appreciate the intrinsic value of the Planies or not is an open question at this point, but at the time of this writing it seems that most Planie holders are keeping them to themselves. Only 0.5% of the nearly 3.3k Planies minted so far were listed in the Opensea marketplace and open to receive bids. Mr. Gauss mentioned in our conversation that there is the expectation that all 10k will have been minted by the spring of 2023.

Obviously, airBaltic’s Planies team has done the calculations and knows already what sort of revenue can be expected and also what sort of benefits it can offer in return. Mr. Gauss emphasized that while this is financially self-sustaining project, they expect to deliver benefits to their customers too, the goal is that this becomes a win-win that creates value for all.

More importantly, airBaltic sees this also as a vector for innovation and Mr. Gauss is a firm believer in that blockchain technology will become embedded in many of the processes that we go through in our daily lives, be it ticketing or membership of certain communities (such as loyalty programmes) without most people really needing to know the nuts and bolts of this technology, pretty much the same way most of us don’t know how our smart phones recognize who we are or where we are at all times.

Mr. Gauss also assured me that with Ethereum having dramatically reduced the amount of energy its transactions consume, these NFT transactions are no more taxing on the environment than, for example, printing a boarding pass.

In any case, the current project doesn’t seem to come out of a sudden impulse or the desire to make headlines at the crest of a fad. airBaltic has been experimenting with NFTs already for quite some time. Much earlier it had already launched a “Latvian cities” NFT collection (essentially images depicting different Latvian cities).

That collection had certainly a much more localised appeal, but, I was informed at the meeting, is now sold out. Each owner of one of the “city NFTs” is also receiving three Planies. So, even if the number of Planies is capped, if and when airBaltic launches another NFT initiative, it could potentially reward the pre-existent Planies community, adding to the hypothetical upside of the offering.

One way or another, at a time when airlines are starting to look at blockchain applications with curiosity, airBaltic seems to have a good head start!

By the way, if interested in airBaltic and its product, check out also this flight report of my A220-300 flight from Barcelona to Riga on business class.

Planies and plans: an interview with Martin Gauss, CEO of airBaltic