Mar 4

The economic cost-benefit analysis of the development of Kärdla, Kuressaare, Ruhnu and Tartu airports

Are airports outside of Tallinn worth investments? The aim of this project was to analyse ways of improving the air traffic safety, user convenience and accessibility of Kärdla, Kuressaare, Ruhnu and Tartu airports.

The analysis was based on the comparison of the cost effectiveness of three scenarios, following the European Commission’s guidelines for cost-benefit analysis. Costs and benefits were considered from the point of view of both the company (the effect of the investment on the company’s financial indicators) and society in general (including time and cost savings of the travellers, environmental effects, improvement of flight safety and regularity etc.). A risk and sensitivity analysis was also carried out in order to assess how the results are affected by changes in initial assumptions of the analysis.

The project’s financial net present value turned out to be negative while the economic net present value was positive. This means that although the enterprise by itself would suffer losses if the project were implemented without EU support, the investment is profitable from the society’s point of view.

The full cost of the investment was 242 million kroons according to the Transportation Infrastructure Investment Plan. The results of the analysis supported funding of the project from the European Regional Fund.

The study was commissioned by Tallinn Airport.