RIGA – Latvian national airline carrier airBaltic today signed a new fuel supply agreement with Statoil despite lodging an official complaint accusing the Norwegian oil giant of abusing its dominant position in the marketplace.

Jānis Vanags, airBaltic’s Vice President of Corporate Communications, confirmed the airline had complained to the Competition Council over the company’s plans to increase its service fees by 15 percent.

Statoil, which is among Latvia’s leading fuel traders, has been airBaltic’s chief fuel supplier for the past 12 months and the contract had been due to expire. Vanags said the airline was advised of Statoil’s intention to hike charges for fuel logistics including transport and storage services, during recent contract negotiations. However, Vanags said the airline had no choice but to sign off on the contract in order to avoid disruption to its services.

Refueling of aircraft has become more expensive and will be passed on to consumers.

“We simply have no other option. We have to keep on operating,” he said. “We’ve lodged a complaint with the Competition Council to establish whether they’ve [Statoil] abused their fuel monopoly.”

Should the 15 percent hike stand Vanags said the airline will have little option but to pass the cost onto customers.

“Unfortunately, our customers will have to cover it. Every cost we incur is transferred to the flight ticket,” he said. “That is why at airBaltic we really want to check the basis of why [service fee increases] have been proposed.”

Vanags asserts that Statoil’s decision to increase service charges, which are not pegged to fuel prices, had still not been adequately explained. Vanags said the decision comes at a time when the airline is actually experiencing rapid growth, thus increasing the profit turnover for the oil company.

“At the same time our business is increasing we are actually using more fuel and greater volumes of their service. The number of flights from Riga has increased 21 percent year-to-date and our Riga passenger numbers are up 35 percent,” he said.

Statoil disputes airBaltic’s claims, saying its fee increase is 12 percent not 15 percent. In a statement provided to Diena newspaper the company says its pricing policy is in line with changes in resource costs. StatoilHydro operates full-service Statoil-branded service stations throughout the Baltic region, as well as 15 fully-automated outlets under the 1-2-3 name. According to its website the groups currently controls 30 percent of the fuel market in Latvia.