The Finnish Transport and Communications Agency Traficom has decided to impose a public service obligation on five domestic routes between the capital, Helsinki and regional centers.
Under EU rules, a public service obligation can be imposed on routes that are necessary for the economic development of the area it serves. This means that, if necessary, access to these routes may be restricted to a single carrier and its operational losses may be compensated.
The public service obligation in force between 1 April and 31 December 2021 covers routes from Helsinki to Joensuu, Jyväskylä, Kokkola-Pietarsaari, Kemi-Tornio and Kajaani airports. Savonlinna is to be added to the list later.
Actions will safeguard connections adversely affected by the decline in air traffic caused by the coronavirus epidemic.
Traficom Director Pipsa Eklund says the decision was necessary to protect the interests of economic and social development in the regions.
Traficom intends to launch a call for tenders to select an air carrier that can be subject to a public service obligation on the designated routes and that is open to all EU air carriers that can meet the criteria of the public service obligation.
The tendering process will be supported by an appropriation of EUR 11.5 million for air transport in Parliament’s latest amending budget.
Business needs
Chairman of the Swedish People’s Party and Minister of Justice Anna-Maja Henriksson was pleased with the change and said in a statement on Wednesday that it will help businesses in these areas cope with the effects of the coronavirus crisis.
“Finland lives on exports and it is important that Finland has enough airports, good connections and access to different areas,” Henriksson pointed out.
“Companies are dependent on customers getting into their territory and quickly accessing Europe and the world from their territory,” he adds.
400 million loan to Finnair
At the same time as regional airports are starting to search for air carriers, the Finnish state is preparing to make available to Finnair EUR 400 million in the form of an unsecured hybrid loan.
The structure of the loan is such that Finnair can use the funds if its cash or equity falls below the limit defined in the institution’s terms and conditions.
At the end of the third quarter of this year, Finnair’s equity was EUR 940 million and cash and cash equivalents EUR 725 million.
Finnair’s CEO in a press release on loan arrangements Topi Manner, noted that the airline entered the pandemic with a strong balance sheet and cash register. And now wants to make sure it survives this exceptional period, and pursues a strategy to unite Asia and Europe.
He described the loan as an important factor in ensuring Finnair’s financial stability if the recovery in air traffic is slower than expected.
The hybrid loan provided by the state requires the approval of the EU Commission.
Source: The Nordic Page