Competition authority: Saaremaa aircraft procurement age restriction valid

A Transaviabaltika flight connecting Hiiumaa to Tallinn. The current fight is over the Saaremaa route.
A Transaviabaltika flight connecting Hiiumaa to Tallinn. The current fight is over the Saaremaa route. Source: (Eero Vabamägi/Postimees/Scanpix)

The Public Procurement Review Committee (VAKO) has overruled a complaint from Lithuanian air carrier Transaviabaltika, finding that a clause setting a ceiling on airplane age in the new round of procurement on the Tallinn-Kuressaare flight route, which links Estonia's largest island with the mainland, to be a legitimate demand, which does not distort competition.

The authority overseeing the procurement, the Road Administration (Maanteeamet) added the maximum age requirement of 20 years, to any aircraft plying the route in the new procurement round, in October, following a proposal by economic affairs minister Taavi Aas (Center).

The requirement has been the subject of a dispute which has held up the latest procurement round further, following the end of Transaviabaltika's last contractual period last summer. Transaviabaltika has provisionally remained as service operator since then; other potential bidders include Regional Jet, a subsidiary of Estonia's Nordica.

Transaviabaltika brought its complaint regarding the maximum age of planes – its own fleet includes planes manufactured in the 1990s and thus a few years outside the limit – on December 30 last year, with VAKO dismissing the complaint on Thursday.

The VAKO found that the Road Administration had convincingly argued that including the age requirement of the aircraft in the procurement was not an arbitrary decision, but a thought-out consideration.

The authority also said that according to Eurostat data, 83 percent of aircraft used in Europe in 2015 were under 20 years old, and only 17 percent above 20 years of age, meaning the requirement was in-line with European norms.

The VAKO's decision can be challenged within ten days, at an administrative court. Otherwise, it will come into force and the public procurement proceeds, with a new deadline of February 5.

In its complaint to VAKO, Transaviabaltika alleged that the aircraft's age requirement would be used to procure the state-owned company, Regional Jet OÜ, which has the only newer aircraft out of three companies interested in procurement. VAKO did not accept this argument.

"The fact that the contracting authority draws up its own details when drawing up the technical specifications cannot be regarded as an unjustified obstacle to the opening up of public procurement, even if it reduces competition. The contracting authority need not define the subject matter of the contract in such a way," the VAKO said.

The VAKO also denies that there is concrete evidence that only three companies are involved in the procurement.

The Road Administration itself justified the inclusion of the maximum age in the procurement, as requested by the Saaremaa rural municipality as well as minister Aas, in order to improve the quality of air service, which VAKO found justified.

The Road Administration also estimates that newer aircraft are more economical, as well as being environmentally friendly. 

In addition, it is not possible to install ever-changing navigation equipment on older aircraft, the Road Administration claimed in its communications with VAKO.

The Road Administration's director, Priit Sauk, told ERR mid-week that while the procurement process can continue, issues with its conditions remain, and that a new round of procurement was not inconceivable.

Sauk noted that, at best, the Kuressaare line will receive its new aircraft in April.

The original procurement, estimated at €26 million, was announced in December 2018. One factor was that Transaviabaltika's 19-seater Let L-410 Turbolet planes were too small, and, after the Lithuanian firm saw its contract initially renewed, this was reversed with the decision to award the contract to Regional Air/Nordica instead, only for this to be canceled as well.

Transaviabaltika continued operating the route under its original contract to June 1, and had offered to up its frequency of flights as a way to alleviate the limited places available.

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Editor: Andrew Whyte

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