*** Translated with www.DeepL.com/Translator ***

We call the Riigikogu (the Parliament) to intervene in the problem of airlines leaving Tallinn and unreasonable increases in air fares and to adopt a decision to improve flight connections to Tallinn Airport - to ensure at least the same level of flight connection diversity and cheap flights as Riga Airport. We ask the Riigikogu in its decision to make it a precondition for demanding dividends from Tallinn Airport that the demand for dividends must not lead to the closure of air routes and must not lead to a lack of low-cost flights to Tallinn.

EXPLANATION: On 25.11.2022, the Minister of Economy, Riina Sikkut, signed a written decision of the sole shareholder obliging Tallinn Airport to pay dividends on behalf of the State. As Tallinn Airport already pays taxes to the state and also operates regional airports, obliging the same company to pay dividends is in fact a disguised additional taxation of air passengers.

Tallinn Airport has delegated the dividend requirements of the Minister of Economy to airlines - by announcing a 33% increase in airport charges. Already in December, Ryanair closed 2 routes from Tallinn (Edinburgh and Liverpool), announced the complete closure of a further 6 routes (Billund, Paris, Dublin, Malta, Naples, Nuremberg), and cut frequencies to Berlin. Wizzair announced the closure of routes to Venice, Rome and Naples. Norwegian announced the closure of its Stockholm route.

Ryanair explained the reasons for the route closures in a press release 3.02.2023:

"These cuts are a direct consequence of Tallinn Airport's illogical decision to increase its charges excessively, by 33%."

"These new ill-conceived charges are extremely high and will make Tallinn, Estonia's main airport, completely uncompetitive compared to its European counterparts, which are lowering charges in order to recover and increase traffic/connection after the pandemic. At the same time, Tallinn's reckless decision to raise charges by 33% is causing huge damage to Estonia's tourism, connectivity, traffic and jobs, as these summer cuts show".

Tallinn Airport's sole and primary function is to provide air connections for Tallinn and the rest of Estonia to the rest of the world. The airport must also ensure that up to 200 000 Estonians living abroad have favourable opportunities to visit their home country as often as possible. The airport must ensure that cultural institutions, restaurants and hotels are well supplied with tourists. The airport must ensure travel facilities for Estonia's own tourists.

Low-cost airlines are the most vulnerable group when it comes to raising airport charges, as their business model is built on serving a price-sensitive group of travellers. In circumstances where an unreasonable increase in airport charges may not affect the low-cost airlines, it will put the sustainability of low-cost airlines at risk. Therefore, the low threshold of low-cost airlines to the deterioration of the economic environment in Tallinn is understandable.

Tallinn Airport has not and has not had the need to increase airport charges in order to meet the needs of the business as an economic entity. Its three-quarter operating profit before depreciation and amortisation (EBIDTA) was €4.3m in 2021 and €5.3m in 2022, its three-quarter net profit was €2.4m in 2021 and €3.2m in 2022. The whole problem is not due to economic reasons, but to a serious mismanagement from the Ministry of Economy in the form of dividend payouts.

ON THE AIRPORT BUSINESS MODEL Airports operate a business model where aviation services typically generate losses and ancillary activities generate profits to cover these losses. According to the International Council of Airports, airports earned an average of:

• 40.2% of their revenues from aviation
• 59.7% from ancillary activities

The most important revenue categories were ancillary activities:

• 26.4% - sales activities (tax-free trade, etc.)
• 20.9% - car parking services
• 15.2% - income from the rental of real estate and other assets

PS Tallinn Airport's business model has the peculiarity of covering the costs of regional airports (Tartu, Kärdla, Pärnu, Kihnu, Kuressaare and Ruhnu) in addition to its own revenues.