Tallinn Airport wants share of Nordica aircraft sales revenue

Tallinn Airport is concerned about the cost of running Estonia's small regional airports, which it has to with only the revenue it earns from flights in and out of the capital. Tallinn Airport also wants to be given a share of the money the Estonian state generates from the sale of Nordica aircraft.
Last year, Tallinn Airport saw record passenger numbers. However, it only made a profit of €0.5 million, while the company's regional airports recorded a €7.7 million loss due to asset write-downs.
According to Tallinn Airport, the financial burden of the airports in Tartu, Pärnu, Kärdla, Kuressaare, Ruhnu and Kihnu is increasing and may start to affect external connections as a result of airport charges.
"There is a shortage of planes and airlines are reorganizing or optimizing their route networks, diverting planes to those routes that are more profitable. Today, competitive fees alone are no longer enough, airlines are in fact expecting so much larger discounts and it is therefore through greater discounts that more airlines can be attracted here," said Tallinn Airport board member Riivo Tuvike.
Tallinn Airport would like the Estonian state to give it a share of the revenue from the sale of Nordica aircraft. The Ministry of Climate, which is responsible for aviation, has not ruled that out.
"Broadly speaking, at least from our ministry's point of view, the discussion could be taken from the perspective that the airport needs to invest in order to keep airport charges competitive, so to speak, and that is where the money is coming from, in the form of the sale of aircraft," said Sander Salmu, deputy secretary general at the Ministry of Climate.
Minister of Finance Jürgen Ligi (Reform) said the money from the sale of the Nordica aircraft would go back into the state budget. Ligi is also critical of Estonia's regional airports.
"It is not really economically worthwhile to maintain them and it should in theory be down to a separate regional policy option. Then again, the state aid rules need to be reviewed. But in general, yes, for example, when it came to the construction of Pärnu Airport, I had a critical question for the minister in charge of that: why are you doing that?" Ligi said.
According to aviation expert Sven Kukemelk, the problem is that Tallinn Airport has to bear the burden for maintaining non-profitable regional airports, while this year dividends are also being paid to the owner.
"One option would be bring these regional airports under separate entity, with Tallinn Airport doing the business of developing connections from Tallinn. This other entity would deal with how to ensure that the regional airports operate at the lowest possible cost base. The two tasks are inherently conflicting. One is revenue optimization, the other is cost optimization," Kukemelk said.
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Editor: Johanna Alvin, Michael Cole
Source: "Aktuaalne kaamera"