While Latvian national carrier airBaltic is closing down one route from Tallinn, among 19 Europe-wide, the airline will still introduce several new routes this year, Svet noted.

Where necessary and in risk scenarios, the Estonian government can guarantee flight connections via tenders.

Latvian airline airBaltic, which plans to issue an IPO, announced last week that it will cancel 19 flight routes this year.

The given reason for the cancellations was long maintenance wait times for its planes' engines.

The airline posted a €49 million loss in the first nine months of last year, which its CEO, Martin Gauss, attributed to previous debts and losses incurred during the pandemic.

So far as airBaltic flight links to Estonia go, the airline has said it will cancel direct flights to Dubrovnik, Croatia, and also cut the number of departures to Copenhagen, Denmark.

Minister Svet stressed that despite these cancellations, airBaltic is to open three new routes this year — to Reykjavik, Tirana, and Barcelona — and also will boost the frequency of its flights to Riga, Munich, and Palma de Mallorca.

"In other words, when discussing specific decisions, we need to look at the bigger picture. Overall, the number of airBaltic's routes from Tallinn will not fall, but rather increase, this year," the minister said.

Every fourth passenger going through Tallinn Airport currently travels airBaltic.

Aviation expert Sven Kukemelk said last week that if the Latvian government were to inject more funds into the airline, pressure to reduce flights from airports other than Riga – in other words the view would be that the Latvian state should not subsidize flights from airports in other countries, even in neighboring Estonia.

Estonia has no real plan for that scenario materializing, Kukemelk added.

Every fourth passenger at Tallinn Airport travels with Air Baltic. Aviation expert Sven Kukemelk said last week that if the Latvian government were to inject more funds into Air Baltic, there would be pressure to reduce flights from outside Riga. He also claimed that Estonia has no real plan for such a scenario.

Minister Svet disagrees with this assessment. He noted that since Nordica ceased its operations in the Estonian capital, Tallinn Airport's strategy has been to avoid relying on a single, large airline partner.

He said: "This approach is necessary for two reasons: First, to ensure that our negotiating position with any airline is not too weak and that we do not become too overly dependent on them."

"Second, that we could protect ourselves against situations in which an airline experiences things going more badly, cuts its routes, changes its pricing policy, or even goes bankrupt," he went on.

So far, this strategy has been successful, according to Svet.

The airport has three to four larger airline partners, plus several smaller carriers operating fewer departures, which he said ensures a diversity of destinations and maintains competitiveness in terms of ticket prices.

Svet noted that airlines typically review their routes at the end of the year, deciding which to cut or add.

"In considering the complex situation in international aviation and the fact that we have lost all eastern connections, it can be stated that Tallinn Airport's strategy is working, and we should focus on strengthening it rather than setting up a new national airline," he said.

The very fact that airBaltic is opening some new routes from Tallinn demonstrates that the airline still sees growth potential in the Estonian market, Svet added.

"They are not flying out of altruism, nor at the state's request. They are flying because people are ready to buy tickets, and Tallinn Airport's ability to manage itself efficiently and offer favorable conditions is part of our strategy to maintain external connections," the minister continued.

"Let us not forget that flight connections are part and parcel of a market economy. In some cases, we have routes with two competing airlines. If one airline drastically reduces its flights due to internal factors and not due to a lack of passengers, we can assume that another carrier will step in, take over those customers, and earn that revenue, possibly via a different pricing strategy," Svet outlined.

The minister pointed out that in worst-case scenarios, the state can directly order specific routes via tenders, in a way similar to how the Tartu-Helsinki connection is currently operated.

Svet said: "Such an option is always available to the state, but once again we are seeing that passenger numbers are growing, new destinations are being added, and when it comes to airBaltic, they also recognize the importance of the Estonian market. With this we are maintaining a stronger relationship with them, continuing to develop it, and we hope that their IPO will come through, bringing in additional capital to implement their business plans," the minister went on.

Svet: Competition first and foremost ensures connections

Risk scenarios are always accounted for, he added. "The state always considers this possibility in theory, but right now, the situation shows that we are more likely to see new opportunities rather than limitations."

"We in the government believe in the market. At the same time, we must always be prepared for situations where the market does not function or does not function adequately. In such cases, the state must ensure that essential services and external connections are maintained for people," he said.

Minister: Cuts also impact on airport operations

In aviation, the state's priority is to develop Tallinn Airport, Svet reiterated. The main concerns are covering security-related costs, ensuring the quick handling of baggage, and increasing terminal capacity, he noted.

"We can see that the current tense situation brings additional pressures. We are discussing how to ensure that the airport's infrastructure meets these growing demands," Sevet continued.

Tallinn Airport, as a profitable state-owned company, is also affected by budget cuts, he noted.

"It is therefore key that we successfully sell off the remaining planes from Nordica. This could spark a discussion about whether some of the proceeds could be directed toward the airport's development. So far, we've seen that the airport's strategy has been successful," the minister continued.

The sale of used planes from Nordica, which belong to the state-owned Transpordi Varahaldus company, is underway, with specific offers expected from around the world.

The next steps will be determined once the offers are received, Svet concluded.

The state-owned Nordica was declared bankrupt late last year, ending months of speculation about its future. Attempts to float it via an IPO draw a blank.

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