€23m written off in settlement between airBaltic and Riga Airport

Late last year, a deal between Riga International Airport and the national air carrier airBaltic was reached over €23m owed by airBaltic. In return, airBaltic is to withdraw its complaints about allegedly discriminatory tariffs, reported Latvian Television's De Facto Sunday.

The conflict between airBaltic and the airport can be traced back to 2004 when Transport Minister at the time Ainārs Šlesers invited the low-cost airline Ryanair to set up shop in the airport. The company was offered a better deal than the other airlines.

Although the agreement between the airport and Ryanair was later reviewed, airBaltic still insisted that with its own payments it was forced to support the competitor and lose passengers.

airBaltic stopped paying the airport for services received. In 2011 the parties reached a €10m settlement, and a deferred payment plan was made for the airline. However non-payments continued. For example, airBaltic paid the airport security fees, but not the bills related to takeoff and landing fees.

The companies turned to court, and even though the numbers were not voiced publicly, De Facto has unofficial information that since 2011 the airport has not received dozens of millions of euro from the flag carrier airline, while airBaltic insisted that the airport owes it €50m as it had granted a better deal to Ryanair.

Now the two have reached an agreement over €23m, without any postponed payments. A source told De Facto that effectively airBaltic's debts were written off, and the case closed at the Ventspils court in January.

While the airport does not comment on the settlement, airBaltic are glad everything's over. "It would be unproductive that two companies belonging to one company would spend money on lawyers and put a burden on the court. It's good we have arrived at a settlement," said Jānis Vanags, airBaltic's Vice President of Corporate Communications. 

The settlement was signed late last year, and the state was informed behind closed doors. The state wasn't allowed to have a say on the matter as otherwise the move could be interpreted as illegal state support. 

An unnamed expert told De Facto that one of the risks posed by the settlement is whether other airlines, previously less vocal about the Ryanair deal, won't start asking for write-offs now.

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