The need for additional funds stems from the freezing of Estonia's base public transport budget in 2020.

"In previous years, the shortfall in public transport subsidies has likewise been funded from the government's reserve," the Ministry of Regional Affairs and Agriculture said. "Public transportation continuing at the same volume is crucial for people who depend on buses, trains or other public transport to get to school and work."

Minister of Regional Affairs and Agriculture Piret Hartman (SDE) explained that the projected budget deficit for public transport this year is €19.8 million, of which the ministry itself will be covering €1.6 million.

"This is a very important step, thanks to which bus, train, ferry and air transport can continue operating at current volumes," Hartman said. "This has been a big concern for us, and it's clear that the current organization of the public transport system needs to be reviewed so that we won't have to request funds from the state reserve in the middle of the year in the future."

The public service contracts concluded with transport operators for the organization of public transport are long-term, and by law, support for regular services is calculated taking into account the actual expenditures and revenues of regular services in preceding years, as well as changes in the consumer price index (CPI). Since 2020, the CPI has gone up 41 percent, and fuel prices likewise an average of 50 percent, the ministry noted.

In bus transport, this year's shortfall is related to operating costs, which have gone up 3.9 percent on year. Estonia's regional public transport centers and local governments have requested additional funding from the ministry to cover the increased cost per kilometer of bus services, additional transport volumes due to the leap year as well as the costs of using bus stations and ticketing systems.

In air transport, new contracts will enter into force this year on three domestic air routes. The public service contracts for these air routes do not provide for cost indexation. Operators do, however, have the right to request compensation for increases in aviation fuel prices and airport fees. The latter went up in 2023, and under current contracts, operators must be compensated for these increases.

In rail transport, costs have gone up by 12.7 percent on year. The primary driving factors behind these increases arise from the increase in railway infrastructure fees and the need for additional workforce in preparation for the introduction of new trains into service. Rail transport is covered by a ten-year direct contract with AS Eesti Liinirongid (Elron), which is intended to cover costs related to state-ordered transport volumes that Elron does not recover through ticket sales.

In ferry transport, costs have gone up 10.2 percent on year due to the increase in ferry contracts' period charges and port fees, the ministry noted.

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