TALLINK SILJA REIGNS THE BALTIC

By Generation Research, 4 May 2009

The giant ferry Baltic Queen is Tallink Silja Line’s new weapon in attracting Baltic Sea passengers travelling between Estonia, Åland, Finland and Sweden.

There are no fewer than 15 major routes operated by 12 different ferry/cruise companies in the Nordic/Baltic region and in 2008 the passenger total in this region reached 16.8 million (+3.3% on 2007) equal to 32.8% of the Nordic Baltic total (defined as passengers departing or arriving at any port of call in Denmark, Estonia, Finland, Latvia, Lithuania, Norway and Sweden) that reached 49.1 million passengers (-0.3% on 2007).
 
“The most popular route in the northern Baltic Sea is in fact the two-hour journey between Tallinn and Helsinki operated by Tallink Silja Line”, says Yngve Bia, President Generation Research, Sweden. “In 2008 nearly 3.2 million people travelled on this popular route, up +22.4% on 2007”.
 
In terms of passengers carried on the routes in the northern Baltic Sea, Tallink Silja Line is at the lead with a 42.7% market share (39.2% in 2007) ahead of Viking Line’s 34.7% (32.8% in 2007) share. 
  

“Interestingly, today we also have Asian travellers onboard, especially from China. They usually board in Helsinki having arrived by air from China, then travelling on to Stockholm. In view of this we now have Mandarin speaking staff and sales assistants onboard”, says Magnus Skjörshammer.
 
The Baltic Queen, claimed to be the Baltic Sea’s most modern and luxurious ship, made its maiden voyage from Tallinn, Estonia to Stockholm, Sweden on 24 April 2009. The Baltic Queen is now expected to serve this route exclusively and one that served 773,913 passengers in 2008 (+18.8% on 2007).
The Baltic Queen itself is a colossus measuring 48,900 tonnes and spanning 212 meters. The 927 cabins are top standard, including flat screen LCD-TV sets. The soft green colours dominating the cabins and the cabin walls contribute to the comfort and feel-good factor.
 
“The food onboard Baltic Queen is excellent and served in five restaurants”, says Bia, who was invited by SEB, Port of Tallinn and Tallink to join a short 1½ hour spring-time journey preceding the maiden voyage. “The main attraction is the Russian à la Carte Alexandra serving real Russian caviar, blinis and tarpocchi – a delicious Russian pancake”.
 
There is also plenty of entertainment onboard. The Manhattan Piano Bar is a classic, lightly decorated bar with jazz music in the background. Next door is the Cigar Club, the only place where one can enjoy a good smoke onboard – indoors, that is. This concept has proved very successful and the Cigar Club concept is today a regular feature on many of Tallink Silja Line’s ships.
 
On the way to Starlight Palace – a huge dancing area on two levels – one passes the Sea Bar. In addition to several restaurants there are five bars in total, a children’s world, an excellent sauna department, plus a modern conference room.
 
The main ferry companies competing on the northern part of the Baltic Sea are Tallink Silja Line with a total of 12 vessels, including the main new ship Baltic Queen with a capacity of about 2,800 passengers; Viking Line (7 ships with main ship Cinderella; about 2,500 passengers); Eckerö Linjen (1 ship; M/S Eckerö taking 1,630 passengers); Birka Line (1 ship; Birka Paradise for about 1,800 passengers); Royal Caribbean Cruises (1 ship; Vision of the Seas for a maximum 2,435 passengers), MSC Cruises (1 ship MSC Orchestra, about 2,550 passengers) and Ånedin Linjen (1 ship; M/S Birger Jarl taking 340 passengers).
 
Additional ferry and cruise companies plying the waters in the northern Baltic Sea include DFDS LISCO (between Klaipeda, Lithuania and Karlshamn, Sweden), Finnlink, Linda Line, Nordic Jet Line, RG Line and SuperSeaCat.
 
“The competition on the Baltic Sea is considerable, the market has matured”, says Kadri Land, Managing Director Tallink Silja Line.
 
As is well known, shopping is an essential ingredient on every cruise and Baltic Queen leaves no one disappointed.
 
There are three shops on the shopping street on deck 6. Beauty products are sold in the Cosmetic Boutique whilst the Boutique offers gifts, jewellery, clothing, accessories, electronics, toys, souvenirs, etc. 
 

The tax-free shop onboard Baltic Queen, referred to as the Supermarket, offers liquor, tobacco, sweets and fine food. There is a rich selection of fine wines from all over the world and all the main liquor and tobacco brands in the world are available, of course.
 
“In addition to the main liquor and tobacco brands of the world we have local specialty brands from Estonia”, says Magnus Skjörshammer, Director Business Development AS Tallink Duty Free.. “They sell extremely well, I must add”.
 
Notably, in 2008, Tallink Silja Line’s sales of souvenirs, jewellery, watches, electronics, toys, fashion and similar more than doubled and now represent 10.0% of overall sales. “In recent years we have put more emphasis on these products and so also on Baltic Queen”, says Skjörshammer.
 
“In recent years the ‘quality’ of the travellers on the Nordic Baltic ferry routes has come down somewhat with more senior citizens and back-packers travelling attracted by very affordable ticket prices. This is a similar development as seen in the Caribbean, for instance. As a consequence the spend per passenger is not at the level seen a few years ago”, says Bia.
 
Preliminary results unveil that in 2008 Silja Tallink Line advanced to the 6^th biggest duty free and travel retail operator in the world following a sales increase of +7.4% in Euro that equates to a growth of +15.7% statistically when calculated in US dollars.
 
This relatively new company was founded in 1989 and employs a total of 6,500 people today, of which 250 are engaged – on land or at sea - in the retail sales operations onboard the ships. Today, Tallink Silja has  20 ships in operation, of which 12 ply the waters in the Baltic Sea.
 
“Surprisingly little is known about this giant operator in duty free and travel retail terms considering it is a bigger operation than those found at Bangkok or London Gatwick airports, for instance”, says Yngve Bia. “Out of Tallink Silja Line’s 7.4 million passengers in 2008, 95% actually bought something in the shops onboard. I am sure many airports would love to have that level of penetration rate. With an average penetration rate of say 25% at an airport, this airport would need to have some 28 million passengers in order to reach the same number of shoppers as Tallink Silja Line”.
 
In total, the Nordic Baltic duty free and travel retail market comprises eight countries. In 2007 total Nordic Baltic – including 27 x ferry / cruise companies, 54 x airports and 18 x airlines – duty free and travel retail sales reached US$ 2.8 billion of which over half (53.2%) represented sales onboard ferries and cruise ships.
 
“The Nordic Baltic region – seen as a territory in itself – is, in fact, the world’s third most important duty free and travel retail market”, says Bia. “The eight countries in the region together represent 8.2% of global sales, only behind the UK with a share of  9.4% and South Korea at 8.8%”. 
  

The Nordic Baltic duty free and travel retail market is dominated by a handful of retailers. Inflight Service Europe with its pool partners, Gebr. Heinemann and Tallink Silja Line each has about one fifth of the total market. Inflight Service Europe totally dominates the inflight sales market with an 82.8% share, whilst Tallink Silja Line enjoys about one third (34.4%) of the ferry market. With its important retail operations in Copenhagen and Norway, Gebr. Heinemann has over half (51.6%) of the airport market.
 
The global financial crisis does not seem to have affected the ferry business in the Nordic Baltic region too much, according to Magnus Skjörshammer: “As I have said before, when times are difficult passengers prefer to travel short distances and closer to home. This obviously plays to our advantage.”
 The most pressing issue to many traders in the Nordic Baltic region is instead the current very weak Swedish Krona to the Euro. Over the past year the Swedish Krona has lost about 25% of its value against the Euro. The purchasing power of the Swedes travelling the waters of the Baltic Sea has come down a lot. “This is an issue we need to watch carefully every day”, says Pekka Kiihamäki, Supply Chain Manager Eckerö Linjen.