Latvia's Cabinet says 'no' to small airports

  • 2008-03-12
  • By TBT staff
RIGA - Latvia's government has decided to freeze plans to develop two regional airports as part of its newly acquired determination to crack down on public spending and rein in inflation.
At the government's meeting on March 4, the Transport Ministry asked for 2.6 million lats (3.7 million euros) needed for necessary upgrades at the airports in Liepaja and Ventspils.
Transport Minister Ainars Slesers, who spearheaded the boost in passenger volumes at Riga International Airport, now wants to spur growth at regional airports so that Latvians can fly between cities like Daugavpils and Ventspils 's a journey that is now a long, uncomfortable car ride.

Last year the government shelled out 1 million lats to develop Liepaja's airport, and Slesers told his colleagues that the funds were well spent. The airport regained its status as an international terminal last summer, and flights to Copenhagen and Hamburg are breaking even. Some 32,000 passengers passed through the Liepaja airport in 2007, and the target is 80,000 this year.
However, the minister added, the domestic route 's Liepaja-Riga 's needs more support. Slesers asked 1.5 million lats for Liepaja, and 1.1 million for Ventspils' terminal, which is still in its embryonic stage.
The funds, the minister said, could come from privatization revenues, though this money is intended for the stabilization fund, which the government created last October as a counterweight to rising macroeconomic imbalances.

The debate was tense. At one point, Prime Minister Ivars Godmanis admonished Slesers for speaking out of line. "I have not given you the floor," he snapped.
According to another report, the prime minister expressed astonishment that a ticket from Liepaja to Riga costs 1 lat, including value-added tax. "And you want us to pay 14 lats per passenger," he asked airBaltic CEO Bertold Flick, who was present at the Cabinet meeting.
For his part, Slesers adopted an uncompromising tone. "I'm going to be harsh," he told the Cabinet. "If we don't make a decision, then flights to Liepaja will cease."

The other ministers vacillated. On the one hand, they acknowledged the success of the Liepaja investment; on the other, coffers are bare, and Latvia is under pressure from all quarters, particularly by Brussels, to spend less as inflation continues to climb.
As Finance Minister Atis Slakteris said, "Liepaja is a successful project, but the stabilization fund that we bound ourselves to create…is a bigger priority."
He added, "I support the idea conceptually, but there's no money. The reserve fund is desperately needed to stabilize our financial system."
So if Slesers wants money, he'll have to get in line, like all other ministers, for the stabilization fund, Slakteris said. 

The government owns 52.6 percent of airBaltic, while the remaining stake belongs to Scandinavia's SAS. Thanks to Slesers' energy 's and, many would argue, illegal discounts to large carriers 's Riga Airport has become a thriving passenger hub, with airBaltic one of the two primary beneficiaries.
AirBaltic served over 2 million passengers in 2007, up 41 percent year-on-year. Flick said in January the company was particularly proud of results in Liepaja and said that the number of passengers there could double this year.

Liepaja city councilmen intend to attract EU convergence funds for the terminal, but government money is needed to cover airBaltic's losses on the domestic route.