Tallink chief: CO2 tax will increase ferry ticket prices further next year

Paavo Nõgene.
Paavo Nõgene. Source: Ken Mürk/ERR

Paavo Nõgene, chair of Tallink's board of directors, admitted to ERR that ferry ticket prices have risen because life has become more expensive. With emissions trading regulations set to be extended to the shipping sector from the new year, further price increases are also on the horizon.

Ferry ticket prices have gone up because there are a lot more passengers. At the same time, the number of departures has fallen. Against this backdrop, is it at all realistic to suggest, that the Tallinn-Helsinki route might be of interest to some new carriers?

First of all, it has to be said that there are not yet as  many passengers as you say. The market has not recovered to 2019 levels. The Tallinn-Helsinki route was operating at around 80 percent capacity last month. It is possible that in the summer months there will be slightly more passengers, but a ferry line has to be able to cope for twelve months of the year. It is not because there are not enough passengers that this capacity has been reduced. And if there were enough passengers, then surely Tallink would have ferries available to sail from Tallinn. That's certainly not the point.

But maybe there are fewer passengers because ticket prices have gone up so much and people are choosing to sail to Latvia or Lithuania instead of Finland?

Ticket prices undoubtedly have an impact. All of life has become more expensive. People are now wearing the high euro interest rate around their necks, which affects their ability to consume. Food has become more expensive in the shops as have many other things. People may therefore travel less often, but in the current situation that is quite inevitable, because everything has gone up. Shipping companies have seen a similar increase in costs.

Are there low-cost carriers in world shipping, such as Ryanair in aviation?

On the Tallinn-Helsinki route, Tallink has positioned itself as a premium carrier.

Both our ships offer high quality. Some competitors are a little cheaper on a daily basis. Of course, there are days when demand is so high that their prices are similar to, or higher than, ours. But on the whole, Tallink has held the premium customer segment of the market.

When might another ship return to the Stockholm route? Are Swedes still reluctant to travel by ferry to Estonia?

First of all, we will have to wait and see how this summer finally turns out. At the moment, there are enough passengers for one ship between Tallinn and Stockholm. One competitor has withdrawn a ship from the Helsinki-Stockholm route for instance, which means that route has not been restored either. And we will certainly have to see what the impact of the CO2 tax is, which is set to apply from next January. Then there is an additional emissions levy, which will make all ferry tickets more expensive. The shipping industry does not yet have the kind of technology that would enable it to eliminate carbon dioxide altogether. This will certainly have an effect on the price of ferry tickets and we will have to see how the market reacts to that.

How much could a CO2 tax add to the price of a ticket?

It will change over time because the quota has to be purchased on the stock exchange. So, the emissions levy on ferry tickets will change over time. For the time being, we have put January's monthly tickets on sale, so that between Tallinn and Helsinki it (amounts to) €1.50 one way. Later on, the charges may be different, depending on what happens with the CO2 quota price on the stock exchange.

Carbon trading rules are expanding to more and more sectors. Does that mean that ferry tickets will unfortunately only get more expensive?

 This is where, how companies have been able to make their operations more energy efficient comes into play. Our two Tallinn-Helsinki ferries run on LNG (liquified natural gas). The Baltic Queen, which sails between Tallinn and Stockholm, will also undergo an emergency docking in September this year to add some equipment to make it more energy efficient.


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Editor: Michael Cole

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