Ministry overhauls management at Riga International Airport

RIGA - The Transport Ministry has replaced the top managers at Riga International Airport in an effort to give new impetus to the ministry's ambitious expansion plans for the terminal. Long-time chairman Dzintars Pommers was replaced by Krisjanis Peters, an assistant to Transport Minister Ainars Slesers, over reported disagreements on the airport's discount policy for carriers.

Slesers, who was instrumental in introducing the discount system in 2004, has come under fire from small airlines and Latvia's competition council, which recently ruled the system illegal.

But Slesers has been unfazed by the criticism, and plans to proceed realizing his ambition of turning Riga into a regional travel hub between Eastern Europe and the East. The shake-up at the airport attests to his determination.
That plan received an added boost last week after the carrier Concors opened a 10 million euro repair hanger at Riga International Airport, will be able to repair up to 60 Boeing-737 and A-320 airplanes and more than 100 airplanes of the average size.

Speaking to journalists last week, Peters said his priority would be adopting the airport's development plan, which in its most ambitious form calls for raising passenger turnover to 10 million per year by 2015.
Last year Riga International Airport handled nearly 2.5 million passengers, up 33 percent year-on-year. The number of flights grew 16.2 percent to 40,100.

But after three years of stellar growth, the airport is in need of massive funding. Peters, who last year did a brief stint as transport minister after Slesers was forced to step down, said one possibility is creating a public private partnership. The airport is scheduled to submit its investment proposals to the government this month.
According to the most recently announced plan, the airport intends to invest 200 million lats (285 million euros) in building a new terminal for non-Schengen zone passengers, extending the landing strip, and building a new baggage handling terminal and registration zone.

Commenting the airport's current status, Peters told the Bizness & Baltija paper that the terminal suffers from many of the same problems that many Latvian business have encountered: primarily, a deficit of workers. He added that social guarantees for airport is also insufficient.

Asked about the discount system, Peters said he would search for a "golden mean." He said the system has justified itself and Latvia has benefited tremendously. "We are, for the most part, right, and we just need to change the legal formulation a bit," he said in reference to the legal battle to preserve the discounts.

In November last year Latvia's Competition Council ordered to abrogate the discount system 's which essentially gives large airlines a per passenger fee reduction on the basis "the more you bring into Riga, the bigger the discount." The lowest discount is 10 percent for 25,000 passengers, while the largest is 80 percent for 250,000 passengers carried a year.
The system, which went into effect on Nov. 1, 2004, enabled Latvia to attract major discount carriers such as Ryanair and EasyJet and thus boost passenger turnover numbers.

The council said the system creates five-fold price differences. "The airport's offence is imposing different tax discounts on equal airport's services. Due to the airport's tax discount system, in several routes there are considerable difference in expenses for competing airlines and unequal opportunities to launch new routes and compete," a competition council official said at the time.
The airport naturally appealed the decision to administrative court, where it located right now.

As part of the shuffle at the airport, Andris Ozols, head of the Latvian Investment and Development Agency, was appointed chief of the airport's council. He said it was necessary to revise the airport's plans to raise the number of passengers and to reassess whether it would be realistic to reach the 10 million-mark in the future, the Baltic News Service reported.