This week brought two significant developments. First, it became clear that airBaltic’s so-called “Baron Münchhausen plan” will not be enough to secure another round of state funding, and the airline will instead have to present a realistic and viable business strategy. The second—and arguably more encouraging—development concerns the Rail Baltica project, with Prime Minister Andris Kulbergs expressing his readiness to assume a leadership role in coordinating the project across the Baltic states.
Does this mean Latvian taxpayers can finally hope that their money will no longer be spent irresponsibly? BNN asked political analyst Filips Rajevskis, co-owner of the media company Mediju tilts.
“The previous government—particularly during former Transport Minister Švinka’s tenure—simply handed €30 million to airBaltic without any conditions. There was no business plan whatsoever. They simply transferred the money, and that was it. Now airBaltic is back with essentially the same request—still without a clear strategy explaining how the airline intends to operate without continuous state support.
The problem is not that the government cannot afford to provide the funding. The sums involved may not even be astronomical. The real issue is legal. Under European Union rules, governments are prohibited from continuously subsidising airlines. State aid for airline operations is simply not allowed,” Rajevskis explained.
When BNN suggested that, if Latvia’s national airline constantly depends on government funding, perhaps it would be better to shut it down, Rajevskis firmly disagreed.
“Both the Prime Minister and the Finance Minister have made it clear that closing the airline is not on the table. The real issue is managing the company according to economic reality.
The Prime Minister raised a perfectly legitimate question: where are the 10 million passengers projected in the airline’s business plan supposed to come from? Latvia has 1.8 million inhabitants, Estonia 1.3 million, and Lithuania about three million. Where exactly will those ten million passengers appear? It would mean virtually everyone in the Baltics—including infants and elderly people—would have to fly more than once every year.
The same applies to the proposal to purchase 100 aircraft. What is the business justification for such a fleet?
What is encouraging is that the Prime Minister genuinely wants to understand the fundamentals of the business and ensure that the airline’s management and its shareholder—the Latvian state—are speaking the same language. At the moment, there is no common understanding of how the company should operate in order to survive—or even whether it is capable of surviving without continuous state support. Those are the fundamental questions that still remain unanswered.”
Asked whether Latvia is finally seeing a Prime Minister who examines major projects in detail instead of simply accepting whatever information ministries or state-owned companies provide, Rajevskis replied that the previous approach had been even worse.
“They simply took the documents, classified them, and that was the end of the discussion.”
Another issue raising serious concern is the Rail Baltica project, particularly public claims that construction costs per kilometre in Latvia are reportedly two to three times higher than in Estonia.
Rajevskis believes that comparison is misleading.
“That information is inaccurate. It has been promoted by the RB Rail joint venture, and similar figures have also appeared in statements by the Prime Minister. The problem is that Estonian politicians are not receiving the full picture either.
At this stage, only one thing is absolutely clear: there is broad consensus that the main Rail Baltica line must be built. Everyone agrees on that. It is equally clear that completing the project by 2030 is impossible.
Nevertheless, Rail Baltica will move forward. The main line will be built, and the project itself will not be cancelled. Additional European Union funding will be sought, but what is urgently needed is a realistic implementation plan to ensure that this strategic rail connection with the rest of Europe is eventually completed.”
Asked whether anyone will ultimately be held accountable for the project’s problems, Rajevskis referred to recent comments by Finance Minister Māris Kučinskis, who said that law enforcement authorities are already investigating questions surrounding allegedly overpriced contracts for railway switches and tracks.
“In situations like this, some people naturally look for ways to divert attention away from their own problems. If, as the Finance Minister has publicly stated, law enforcement agencies are already investigating, then there will undoubtedly be individuals eager to shift responsibility elsewhere rather than answer for their own decisions.
An interesting new development is the statement by the former Minister of Transport on X, suggesting that Latvia should consider taking legal action against RB Rail to recover damages allegedly caused by years of excessive engineering solutions, project delays and inflated design decisions.”
Finally, asked how he views Prime Minister Andris Kulbergs’ willingness to assume a leading role in coordinating Rail Baltica across the Baltic states, Rajevskis was unequivocally positive.
“I would even argue that he is currently the only Baltic leader who truly understands the project’s technical details. That is largely because he previously chaired the parliamentary inquiry into Rail Baltica.
It is clear that he genuinely wants this project to succeed. For him, it has become something of a matter of personal honour to get Rail Baltica back on the right track as quickly as possible.”
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