Tallinn Airport is a good example of a peripheral airport in a difficult position: Estonia has a small population, competing airports are too close, and flying here is expensive. Does the current crisis mean that sooner or later flights to Tallinn will start to be cut?
At the moment, fuel shortages are affecting Western European countries more, such as Spain, the United Kingdom, and possibly Germany. This is because about half of Europe’s aviation fuel is actually imported from elsewhere, and those countries have been more dependent on it.
Our region — the Baltics and Scandinavia — depends more on local refineries that mainly use Norwegian fuel. Most airports have long‑term contracts with suppliers; for example, the Baltic states are supplied by the Orlen Lietuva refinery in Lithuania.
We do not currently see aviation fuel running out in the Baltics in the near future. Of course, the situation is volatile and may change, but this year I do not really see fuel shortages as a problem. The issue is rather the price.
Could airlines stop flying to Estonia because of expensive fuel?
It may affect route profitability to some extent. Fuel makes up about 30 percent of an airline’s cost structure, and if it has become twice as expensive, the impact is obvious.
Certainly, not all of this can be passed on to passengers, and companies themselves will have to absorb part of it. According to my calculations, a doubling of fuel prices could add about 20 euros to a ticket price. Given the overall level of ticket prices, I don’t believe many people will stop flying because of that.
In the end, the most important factor is the passenger—if there is demand, airlines will fly. Estonia’s problem is simply that there are so few of us here. If there aren’t enough passengers, airlines will adjust their route networks.
At the moment, a pleasant change at Tallinn Airport is Hungary‑based airline Wizz Air, which has opened quite a few new routes. However, we remember the situation a few years ago when Ryanair opened parallel routes to Naples and Rome alongside Wizz Air, and Wizz Air was unable to compete. Could this happen again?
Ryanair, Wizz Air, and other low‑cost airlines, such as EasyJet, compete with each other constantly. Ryanair’s tactics against competitors are fairly well known, and they have used them in other countries as well. It’s hard to say whether this will happen again in Estonia. So far, Ryanair has not announced plans to open the same routes as Wizz Air, but theoretically it could happen at some point.
What is important, however, is that Wizz Air has changed its strategic direction. Whereas previously they saw Eastern Europe, Poland, southern countries, as well as the United Arab Emirates and Italy as their core markets, since last year they have regarded all of Eastern Europe, including the Baltics, as their home market. This is one of the reasons why Wizz Air has wanted to expand here.
We are only happy about this and are doing everything on our side to help them succeed. The key word again is that if there are enough passengers, the routes will remain. As a positive note, I can say that on the Rome route, for example, Wizz Air added flights and now flies four times a week instead of the original three.
AirBaltic is struggling—they have to repay very expensive bonds and did not hedge fuel prices. Have there been signals that cuts are coming in Tallinn?
AirBaltic has publicly stated that it is cutting capacity in Latvia by five percent. They have also made some adjustments in Tallinn, but I can’t say whether it is exactly five percent. This is not limited to airBaltic — when fuel prices rise, all airlines review route profitability and make adjustments if necessary.
Tallinn can’t compete with Riga or Helsinki. Do airlines have a formula for deciding where it’s worth flying and where it isn’t?
They certainly have formulas. The most important component of that formula is the potential number of passengers. The absolute maximum for Tallinn Airport is about one million residents, or slightly more, which is roughly Estonia’s population. In Latvia and Lithuania, that number is three million or more. This is the reason why Tallinn has almost half as many destinations as Riga or Vilnius.
At the same time, in the first three months of the year, our passenger numbers grew by four percent. For the summer season, seat capacity was planned to be as much as 17 percent higher, although this has since been slightly adjusted due to fuel prices.
We are still talking about 12–13 percent growth compared to last year. The European average growth is about 4.6 percent, so our growth is actually very high.
I am even a little worried about whether the Estonian consumer can absorb this volume. Statistics from the first three months show that aircraft load factors have dropped by two to three percentage points. This suggests that more capacity was added to the market than passengers were able to consume. Overall, however, airlines do consider Tallinn important.
Isn’t this mainly due to Wizz Air’s arrival and their new routes?
Wizz Air is an important factor, but not the only one. AirBaltic, SAS, and others have also added capacity. Wizz Air has simply arrived most visibly and with the biggest step, but everyone has expanded.
Tallinn Airport also has to operate regional airports in Pärnu, Kuressaare, Kärdla, and Tartu. These are loss‑making units for you. If it were purely up to you, would you close Pärnu Airport immediately?
From a purely economic standpoint, only Tallinn Airport is profitable; everything else requires subsidies. The rule of thumb is that an airport reaches break‑even at around one million passengers.
Our regional airports will never reach such numbers. So from Tallinn Airport’s perspective, they should be closed economically — but there is a regional policy dimension here.
Regional policy is implemented by the government, which decides where airports should be located. Looking at the facts, Estonia probably has the most airports per capita in all of Europe, and that is too many for a country of our size.
We have to count every euro, because we don’t pump oil out of the ground. We need to take a hard look at the airport network and optimize it. A corresponding analysis is underway at the Ministry of Climate, and in June the issue will be taken to the government to make longer‑term decisions.
It is clear that Kuressaare, Kärdla, and Tartu will not be closed, because they have a clear function or, in Tartu’s case, support from the city. The most complicated situation is at Pärnu Airport, where millions have been invested but there are no regular flights…
I agree that there are daily scheduled flights in Kärdla and Kuressaare, and Finnair flies to Tartu. In Pärnu, however, there are no regular flights. We also have an airport on Ruhnu, which is very important, especially during winter ice conditions. Pärnu really is the place with the least activity.
There are recreational pilots there, but that’s not worth counting. In winter, an aircraft occasionally flies from Pärnu to Ruhnu, depending on ice conditions, but not in summer.
The Estonian state has decided to support Tallinn Airport instead, in order to keep fees low, rather than create its own airline. At the same time, people ask why taxpayers should support leisure travel to Egypt or Dubai—after all, that’s money leaving the country.
In a way, that is a valid question. For us, the first priority is connections to hub airports such as Warsaw, Amsterdam, London, or Helsinki. About 60 percent of our passengers fly to those seven or eight hubs.
The second priority is leisure destinations with two‑way movement. A good example is Italy — Estonians want to go to Rome, but quite a few Italians also want to come to Estonia. That brings tourists in.
The third category is destinations that represent purely outbound tourism. These are not a direct priority for us; they arise when an airline has a spare aircraft and an opportunity to fly.
It’s important to note that although we do have an airport fee discount program, it does not apply to flights to Egypt, for example. Airlines pay regular fees there; we do not directly stimulate that traffic.
Was the Kuressaare–Helsinki route opened this summer for the same reason—because Finnair simply had a spare aircraft?
I think that was certainly one of the arguments. The aircraft had, so to speak, a gap in its schedule, and they were looking for somewhere to fly. Kuressaare, close to Helsinki — about a 45‑minute flight away — is a fairly logical choice. Finnair flies domestic routes in Finland very frequently, so flying to Estonia is convenient for them.
They could have chosen Pärnu, couldn’t they?
They did actually consider Pärnu. However, it was found that from Helsinki, Pärnu can be reached relatively quickly by car, and the risk of low load factors on the aircraft would have been too high. Going to Kuressaare by car, on the other hand, is a long process, so flying saves a lot of time. In the case of Pärnu, that time saving is not as significant.
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