Ministry mulls extra funding boost for Tallinn Airport

Tallinn Airport is seeking more funding to run its regional airports and provide security and emergency services. The climate ministry hopes that next year's national budget will cover at least part of the shortfall, but an increase in airport charges is also an option.
Anneli Turkin, a member of Tallinn Airport's board of directors, said that Tartu, Pärnu, Kuressaare, Kärdla, Ruhnu and Kihnu airports are part of the country's regional policy.
"They are not commercially self-sustaining," he said, adding that the airport becomes self-sustaining once it reaches one million passengers. "That is why regional airports are 100 percent state-funded," she added.
At least in theory; in practice, costs have risen higher than the €2.3 million in public support, which means that the regional airports will generate a loss of €1.26 million for the group only this year and another €1.4 million next year.
She explained that in many parts of Europe, the costs of airport security and rescue operations are often paid by a state to airports.
"There are countries where security and rescue services are provided by the state. There may be government entities at the airport that provide that service," she explained. "And so it is also a service that the state can refinance without regard to state aid rules."
Estonia has also taken advantage of this opportunity and pays €7.76 million per year for airport safety and rescue services. However, the company will be about €3.6 million short this year and €4.7 million next year. Tallinn Airport is hoping for more money from the state.
Raising airport charges as an alternative to more support funds
"Alternatively, if the owner decides that it is not in a position to increase the targeted funding, we can introduce a partial charge from 2025," she said.
A simplified calculation could be €1-2 per passenger. Increasing airport charges would also help pay for regional airports. She said there is little to save there, as most of the costs are related to security anyway.
The company made a net profit of over €8 million last year. Turkin forecasts a profit of €5 million for this year, with the possibility of a drop next year.
"For the first time, the country has included a dividend payout in the 2025 budget," she said, adding that the airport has not paid dividends in the past. "We have also discussed with the owner whether a dividend payout is possible at this point in time."
The Ministry of Climate hopes to get extra money from the national budget
Sander Salmu, deputy secretary general for the Ministry of Climate, confirmed that the ministry is aware of the airport's concerns. He said that they are discussing all options. He mentioned lowering the dividend, increasing state funding, and requiring the airport to raise fees.
"As is well known, the national budget is negotiated and agreed upon in August-September," Salmu said.
So far, Climate Minister Kristen Michal's own party, Reform, has said it is not worth bringing additional requests to the budget talks. Salmu, however, said he would not close the door on the possibility of extra money, as the limit must also be set on the increase in airport charges.
"Most importantly, we need to be competitive with airports in our region," Salmu said.
"It is premature to say that raising airport fees is the only solution. We will show in the negotiations that we are not only talking about connections to Tallinn itself, but that regional airports provide connections to our islands, for example," Salmu said.
--
Follow ERR News on Facebook and Twitter and never miss an update!
Editor: Mait Ots, Kristina Kersa