Cluster: Estonian ministers must bang on the right doors in Brussels

On image from left: Jan Palmer (CEO XFLY), Riivo Tuvike (CEO Tallinn Airport), Risto Mäeots (CEO Magnetic MRO), Ivar Värk (CEO EANS), Ardi Ratassepp (CEO Post11) during panel discussion, June 17, 2020

Companies that are members of the Estonian Aviation Cluster must lay off up to 500 employees as a result of the crisis, cluster general manager Kristo Reinsalu said during a panel discussion on Wednesday. Reinsalu said that in 2019, aviation accounted for 4 percent of Estonia’s GDP and earned the state €392 million in tax revenue. He also noted that Estonia is the only EU member state not to have supported aviation during the current crisis. As a result of the coronavirus pandemic, aviation companies’ work volumes will decline by 70 percent on average in the period from June through September, and by 50 pecent on average in the period from October through December.

Tallinn Airport CEO Riivo Tuvike said that the aviation sector must be supported, because as things stand, other European countries are gaining a competitive advantage. Both Tuvike and Ardi Ratassepp, CEO of E-commerce supply chain service provider Post11, said that the state must start selling aviation more, and cited as a good example active measures efforts by Riga Airport in connection with its Asian market.

Risto Mäeots, CEO of Magnetic MRO, Total Technical Care and asset management organization, pointed out that market shares are being redistributed in aviation now. Airbus, a global leader in aeronautics, space and related services has just approved Magnetic MRO’s Tallinn plant to produce elements for planes. “The aircraft manufacturing sector, whose volume is approximately $400 billion per year, is more open to new suppliers than ever before,” Mäeots said. “We badly need political support to bring a piece of this to Estonia. We succeeded in launching the manufacture of cabin components for Airbus on our own efforts, but if we want to have truly sizable manufacturing operations of components ⁠— for Airbus, for instance ⁠— in Estonia, the ministers must bang on the right doors in Brussels.”

Jan Palmer, CEO of Leading Long-Term Strategic Capacity Provider for commercial airlines in Europe XFLY, said that Estonia should do its homework with the aviation cluster and decide where it needs air connections and of what quality these connections should be. “In the planning of air routes, countries base themselves on the strategic need to first and foremost support their own economy,” Palmer explained. “It  makes no sense burning taxpayer money by flying in tight competition, wing to wing.”

Estonian Air Navigation Services CEO Ivar Värk highlighted the digitalization of aviation as an effective solution that would benefit operators and passengers alike. “Today we can see that the only solution is digitalization, in order to be able to offer a quality service with few resources,” Värk said. “Both when it comes to Estonian airspace, at small airports, as well as in Finland and elsewhere via cross-border cooperation between Estonia and Finland.”

The Estonian Aviation Cluster has requested the state provide wage compensation to aviation sector businesses through at least the end of 2020. Together with discounts on rent and lower fees for operators, the size of the necessary state aid package is approximately €32 million.

Members of the Estonian Aviation Cluster include Tallinn Airport, Estonian Air Navigation Services, Nordic Aviation Group, Magnetic MRO, Axinom Eesti, Xfly, Airest, NA Advisory, Pakker Avio, Skeleton Technologies, Operose Labs, Ospentos International, Threod Systems, the Estonian Aviation Academy, TalTech, Qstep and Hepta Airborne.

Source: ERR News (https://news.err.ee/1103934/cluster-estonian-aviation-sector-companies-to-lay-off-up-to-500-employees)