Estonia drops €10m-a-year ferry aid as Tallink warns ships may leave the flag

The Estonian government has removed nearly €10m ($11m) a year in passenger shipping aid from its 2027-2030 budget strategy. The local ferry operator Tallink and the Seamen's Independent Union of Estonia have warned that ships and jobs could move abroad as a result.

The government approved the strategy and the draft 2027 state budget on 28 September. The aid had stayed in the forward spending plans even after parliament rejected it in 2025.

Tallink chief executive Peep Jalakas said the withdrawal makes reflagging more likely, although the company would not rush a decision. "This could put both jobs and the long-term future of Estonia's maritime sector at risk," he said. The company regularly considers moving ships off the Estonian flag, he said, but he would not say how likely that now is.

What costs are the operators facing?

"Fuel costs, particularly for marine fuels, have nearly doubled compared with the beginning of the year," Jalakas said. Passenger shipping has also paid carbon taxes since the start of the year, which he said adds millions of euros to Tallink's costs.

Jüri Lember, head of the seafarers' union, estimated that reflagging a single ship could cost Estonia around €10m a year in tax revenue. In December 2025 he said the ferry Victoria had been operating at a loss on the Tallinn-Helsinki route because cargo and passenger volumes were too low.

What does the government plan instead?

Infrastructure Minister Kuldar Leis said Estonia is seeking state aid clearance from the European Commission for a different programme, supporting companies that use more environmentally friendly fuels. "If we receive that approval, the plan is to once again seek funding from the state budget for the following years," Leis said, putting the expected amount at about €10m a year. The 2027 budget draft forecasts a deficit of 4% of GDP. "In every area, we have to cut back on the one hand while looking at how to remain competitive on the other," he said.

The support was introduced in 2020, when Covid-19 border closures halted regular passenger services. In August 2025 the Ministry of Climate announced a €2m allocation for passenger shipping companies covering support to the end of that year. Reform MP Mart Võrklaev opposed continuing it. "The pandemic is over, the company is once again profitable, and therefore spending taxpayer money is no longer justified," he said.

This story is part of the Maritime Briefing of 9 October 2026.