Why Estonian national carriers failed: The Cases of Estonian Air and Nordica
Lepik, Mihkel (2026)
2026
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-202602112579
https://urn.fi/URN:NBN:fi:amk-202602112579
Tiivistelmä
This thesis focuses on Estonian Air (and Nordica, it’s successor), the former national airline of Estonia, and investigates the reasons behind in its failure.
Estonian Air had important role forming Estonia from post-soviet to member of European Union. Connecting Europe to Estonia and vice versa was necessary and no better way to achieve that than with local airline.
Financially difficulties where part of Estonian Air history, but it was expected and prior 2004, the decision to support the airline was simple. Even with negative finances, the airline helped local economy from bringing tourist and potential businesses onto the country.
In 2004, Estonia joined EU and with that was a member of Single European Aviation Market
(SEAM).
With SEAM new rules and ways of doing business arrived. Times of financial irresponsibility supposed to be over, cause government handouts where practically now illegal. Joining SEAM also meant sudden surge of competition and advantages, that Estonian Air had by operating from also state-owned Tallinn Airport disappeared. In hindsight, those rule changes ended up being too much for Estonian Air and the company failed. Estonian Air was still handed state aid, by the government of Estonia, but unsurprisingly it was ruled illegal by European Commission.
What went wrong and why is the main question I am trying to find answer to.
As an Aviation Business student, studying the government decision-making of a small national carrier and the role of the rule setter - EU played with its regulatory policies in the financial collapse of Estonian Air.
Estonian Air had important role forming Estonia from post-soviet to member of European Union. Connecting Europe to Estonia and vice versa was necessary and no better way to achieve that than with local airline.
Financially difficulties where part of Estonian Air history, but it was expected and prior 2004, the decision to support the airline was simple. Even with negative finances, the airline helped local economy from bringing tourist and potential businesses onto the country.
In 2004, Estonia joined EU and with that was a member of Single European Aviation Market
(SEAM).
With SEAM new rules and ways of doing business arrived. Times of financial irresponsibility supposed to be over, cause government handouts where practically now illegal. Joining SEAM also meant sudden surge of competition and advantages, that Estonian Air had by operating from also state-owned Tallinn Airport disappeared. In hindsight, those rule changes ended up being too much for Estonian Air and the company failed. Estonian Air was still handed state aid, by the government of Estonia, but unsurprisingly it was ruled illegal by European Commission.
What went wrong and why is the main question I am trying to find answer to.
As an Aviation Business student, studying the government decision-making of a small national carrier and the role of the rule setter - EU played with its regulatory policies in the financial collapse of Estonian Air.