Passenger bus carrier "Norma-A" LLC, operating under the brand "Ecolines," will cease all commercial bus routes in Latvia starting April 18 due to a lack of state support and rising costs, the company informed the LETA agency. At the same time, the Road Transport Administration (RTA) decided to provide compensation to another carrier.
Currently, the company operates domestic commercial routes on the Riga–Ventspils, Riga–Rezekne, Riga–Balvi, Riga–Baldone, and Riga–Jiguri routes.
The company explained that this decision was extremely difficult, as more than 1.5 million euros have been invested in the development of commercial routes in Latvia over the past few years.
Supporting Where Not Needed
Andris Podgorny, Chairman of the Board of "Norma-A," emphasized that the state, despite a lack of funds, continues to allocate them to routes where passenger traffic is sufficient for commercial carriers to operate without subsidies, instead of supporting routes where transportation is impossible without subsidies.
The company notes that Latvia still lacks a clear and sustainable state strategy for the development of commercial routes. Commercial routes operate alongside state-subsidized ones, and their schedules often coincide, creating unequal competitive conditions.
At the same time, administratively fixed ticket prices are set on subsidized routes, which do not reflect the real market situation and cost levels. This significantly limits the ability of commercial carriers to flexibly adjust prices and respond to rising costs, further reducing their competitiveness.
The company also reported that for more than four years, a compensation mechanism for transporting passengers on commercial routes entitled to state benefits or free travel has not been established, resulting in the state accumulating obligations to carriers amounting to several hundred thousand euros.
Moreover, the measures implemented by the Road Transport Administration (RTA) to regulate the commercial transport market have required significant time and financial resources, yet a clear and understandable concept for the further development of the market has still not been developed for industry participants.
Additionally, recently significantly increased fuel prices have greatly raised the cost of transportation, making the continued operation of commercial routes economically unjustifiable, which accelerated the decision to cease operations in the domestic commercial transport segment.
Representatives of "Norma-A" note that the responsible institutions — the Ministry of Transport and the RTA — have still not made effective decisions to address these issues, and industry participants still lack clarity regarding future regulations and support mechanisms.
The company urges the responsible authorities to begin targeted actions to develop clear and sustainable regulations in the field of commercial passenger transport, ensuring equal competitive conditions and a transparent compensation system.
"Norma-A" will continue to carry out international passenger transport and will also assess the possibility of returning to the domestic market, provided that the regulatory environment is organized and equal competitive conditions are ensured.
RTA Decided to Provide Compensation to Another Carrier
The Road Transport Administration (RTA) has decided to provide compensation to "Lux Express Latvia" LLC for transporting passengers with travel benefits, the administration informed the LETA agency.
The calculated compensation from the RTA in the amount of 670,398 euros relates to the period from May 2, 2024, to December 31, 2025, however, the decision stipulates that payment will be made upon the fulfillment of a number of conditions.
In particular, "Lux Express Latvia" must provide documents confirming the payment of value-added tax (VAT) on the full cost of the tickets sold, approved for compensation, as well as documents confirming the accounting of lost revenues from transporting passengers who were granted benefits according to the Cabinet of Ministers' regulations.
The RTA's decision also stipulates that the amount of compensation paid may be revised depending on the established facts regarding the fulfillment of these conditions.
After the conditions are met, the decision on the payment of compensation will be submitted for approval to the Public Transport Council.
As reported, the Public Transport Council supported the payment of compensation to commercial carriers "Daugavpils autobusu parks" LLC and "Liepājas autobusu parks" JSC for transporting passengers with benefits for previous periods on March 31 of this year. In particular, it was decided to pay "Daugavpils autobusu parks" 118,327 euros, including VAT, and "Liepājas autobusu parks" 83,441 euros, including VAT.
Compensation applications have also been submitted by "Ventspils reiss" LLC, "Galss buss" LLC, and "Norma-A" LLC, operating under the brand "Ecolines." A decision on compensation for these carriers has not yet been made.
As previously reported, on October 16 of last year, Saeima deputies adopted in the final reading the amendments to the Public Transport Law developed by the Ministry of Transport, which provide for compensation to commercial carriers for transporting passengers with benefits.
In turn, the government approved on December 22 of last year the Cabinet of Ministers' regulations establishing the procedure for compensating commercial carriers for transporting passengers with travel benefits.
The amendments provide for the expansion of the compensation mechanism, including commercial routes, and also define the procedure for calculating compensation. The regulations specify that the amount of compensation should not exceed the level of the subsidized regional tariff or the actual cost of travel if it is lower than the subsidized tariff. The part of the travel cost exceeding the subsidized tariff is paid by the beneficiary of the benefit.
