Is this still true? possibly....but, despite the fact that it has proven really hard for a national airline sector to take-off in Lithuania (FlyLal's bankruptcy was followed by that of Star1 Airlines and the closure of AirBaltic's, Air Estonia's and Skyway's Vilnius mini-bases), traffic numbers are back on the rise (getting close to pre-2009 levels). The explanation is very simple and it is the same that is happening all over Europe when a flag carrier has gone bust (for example, Malev), low cost airlines step in.
Wizz Air, to the rescue
In the case of Vilnius it has been mainly Wizz Air, that opened a base in 2010, and Ryanair, that offers flights to 9 destinations from the Lithuanian capital.
Having low cost carriers fill the vacuum left by collapsing network carriers might not be a solution everyone likes, as low cost carriers are far from fulfiling the flag-carrying role that was usually reserved to national network carriers, premium passengers might also ressent the lack of a full-service airline on most routes...but, hey! this is the reality of the market and this is a substitution process that I would expect to see in more places in the near future, as msot European network airlines are a legacy of an era that is not coming back!