Tallinn Airport wants state aid to lower airport fees

"Otse uudistemajast": Riivo Tuvike.

While Tallinn Airport is making ends meet, it has been forced to dial back. The company has also put in for state aid to be able to lower airport fees, CEO of Tallinn Airport Riivo Tuvike told Toomas Sildam on ERR's "Otse uudistemajast" webcast.

"Our number of passengers fell to 1 percent compared to the same time last year in April," Tuvike said.

Tallinn Airport remains a financially sound company and does not require support for daily activities at this time, he added.

The company forecasts sales revenue to fall by €20 million this year. According to Tuvike, this would have meant a loss of €11 million had the company not cut costs.

"In the first phase, we have gone over our operating costs and saved some €5 million there. That said, labor expenses make up 41 percent of our expenses base," the CEO said. "We have been using the unemployment insurance fund's salary instrument. We have cut salaries by 30 percent across the board between April and June."

To increase revenue, the airport has applied for state aid to lower airport fees in order to attract airlines.

Global experience suggests lowering airport fees works, Tuvike explained. "For example, economy airlines have asked European airports to abolish fees altogether."

"Oslo has lowered its airport fee to zero. Vilnius is also subsidizing aviation to help the number of connections recover," Tuvike said, adding that a notable cut in airport fees could only take place in cooperation with the state. "No airport could do it independently. It can only be done together with the state."

Tallinn Airport estimates that its last year's passenger figure of 3.3 million could be restored by 2022 as it will take time before airlines return to Estonia.

"We are forecasting 1.5 million passengers this year. That is estimated to grow to 2.2 million next year and return to last year's volume by 2022," Tuvike said. "Should there be a second wave [of the coronavirus], recovery could take longer, in which case we would be talking about 2023."

"Having talked to airlines, none have said they will close shop. Rather, everyone is weighing their options. What we've felt from economy airlines is that they are waiting for an incentive from us," Tuvike noted. "We will try to recover as many connections as possible."

The CEO said that customs will also change in aviation to create trust in passengers. For example, all places of sale at Tallinn Airport sell protective masks and offer disinfectant. "That is where airlines and airports are making efforts to restore trust. One such effort is for wearing a mask during flights to become the new norm. To contain the risk of catching the virus even a little," Tuvike said.

He also said that the selective flights ban laid down in Estonia is exceptional in that other countries have either banned or allowed all flights. The ban also cannot keep people from reaching destinations. "It is possible to fly to Stockholm and Brussels through Helsinki," the airport executive said. He described the ban as understandable, however, as its aim is to limit traveling and avoid it becoming a mass phenomenon.

Tallinn Airport plans to continue with investments concerning both the terminal expansion and the Pärnu Airport development. Tuvike said, however, that current forecasts suggest Pärnu Airport cannot become financially viable, while it could be used to attract economy airlines in the future.

Nordica investment

Tuvike supports rescuing national airline Nordica and placing €30 million in it.

"The Nordica group has found a highly profitable niche. They are operating flights for major airlines," Tuvike said, adding that saving Nordica means saving a profitable business.

Additionally, Nordica's planes are just the right size for our region, he found.

According to the CEO, Nordica's role is connecting Estonia to the rest of the world. "The important thing about saving Nordica is to ensure the existence of a national airline in a situation where other airlines decide to dial back their flights," he said, recalling the example of Vilnius where the bankruptcy of a local airline meant there were very few direct flights from Lithuania for many years.


Download the ERR News app for Android and iOS now and never miss an update!

Editor: Marcus Turovski

Hea lugeja, näeme et kasutate vanemat brauseri versiooni või vähelevinud brauserit.

Parema ja terviklikuma kasutajakogemuse tagamiseks soovitame alla laadida uusim versioon mõnest meie toetatud brauserist: