Road Administration faced with tough decision on island flight procurement

A Transaviabaltika flight connecting Hiiumaa to Tallinn. The current fight is over the Saaremaa route.
A Transaviabaltika flight connecting Hiiumaa to Tallinn. The current fight is over the Saaremaa route. Source: (Eero Vabamägi/Postimees/Scanpix)

The 19-seater aircraft currently serving the air route connecting the Saaremaa capital of Kuressaare to Tallinn could soon be replaced by a 72-seater operated by Regional Jet, the winner of a recent public procurement. The latter's price tag, however, may end up leading to the organization of a new public procurement altogether.

Toomas Uibo, spokesperson for Regional Jet parent company Nordica, told ERR's radio news that the company is prepared to quickly begin operating the route with a bigger and newer plane.

The Road Administration, however, is in no rush to conclude a contract with the procurement winner.

"It's currently too early to say what will happen now,"  Road Administration Traffic Service Director Meelis Telliskivi told ERR. "We will review Regional Jet's tender again, and make our next decision accordingly."

According to Telliskivi, it cannot be ruled out that the Road Administration may organize a new public procurement in lieu of concluding a contract with Regional Jet.

"The argument is that the procurement included a state-imposed expected estimated cost — of €6,173," he explained, referring to the cost of one roundtrip.

Regional Jet is seeking an additional more than €2,300 per round-trip flight.

"We'll likely have a much better idea within a day or two," the Road Administration official added.

Disqualifications, winners, appeals

How did the island air link procurement reach this point?

Regional Jet sought €8,534 per roundtrip, while Lithuanian carrier and current operator Transaviabaltika offered to operate flights on the route for €6,023 per roundtrip. Based on price alone, Transaviabaltika was the clear winner.

The price, however, was not the deciding factor in determining the winner of the procurement. Nearly one third of the procurement results was based on the age of the aircraft to be used on the route, and it is here that Regional Jet with its seven-year-old aircraft left its competitor in the dust; Transaviabaltika's 26-year-old aircraft came up significantly short, and thus the procurement seemed to be decided.

"In accordance with the Public Procurement Act, there was a financial issue with Regional Jet that disqualified it from meeting the conditions [of the procurement], and based on this, a decision had to be made that it did not qualify," Telliskivi said.

According to the conditions of the public procurement, a tenderer's liabilities could not exceed the value of its assets, and by this metric, Regional Jet was facing a deficit of €2.4 million. With Regional Jet out of the running as a result, Transaviabaltika was declared winner of the procurement, however Regional Jet appealed the decision to the Public Procurement Review Committee.

The company stressed the fact that its parent company, Nordica, has sufficient assets — €27 million more assets than liabilities — and should Regional Jet encounter difficulties, Nordica would be able to step up. The Public Procurement Review Committee weighed these considerations before ultimately granting the win to Regional Jet.

The Road Administration initially turned to an administrative court regarding the matter, but has since come to terms with the decision.

"We ourselves have reviewed various European court decisions in the meantime, and we have reached the conclusion that such consolidation is possible," Telliskivi said.

Nyxair offering smaller plane

One airline to be left out of the Kuressaare route procurement entirely was Nyxair, as it can only offer a 33-seater aircraft, falling below the required 40-seat minimum set out in the state's conditions.

Nyxair CEO Jaanus Ojamets said that if the state really does end up announcing a new public procurement, it should reduce the minimum seat requirement this time.


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Editor: Aili Vahtla

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