Catastrophic Consequences for the Industry: Carriers Call for the Resignation of the Minister of Transport 0 27

“We are categorically against what is happening in the field of passenger transport and consider it our duty to inform the Prime Minister that such a policy from a responsible ministry with utopian solutions and experiments will lead to catastrophic consequences for the industry, and most importantly, the planned reform will harm the residents of the regions, who will actually have to think for themselves about how to get to work, to a doctor, or at least to a store,” said the president of the association, Ivo Ošenieks.

He specifically pointed out that, for example, the plan to use nearly 50 units of 'transport on demand' to service a quarter of Latvia's territory does not seem serious. The idea of transferring passengers to trains is also questionable, considering the density of the railway network in the country.

“Instead of systematically addressing the issue of tariffs under long-term contracts and stabilizing the situation in the industry in light of rising costs, the ministry chooses the path of experimenting with the mobility of the population,” Ošenieks noted.

The association emphasizes that the Ministry of Transport, when submitting budget proposals for the current year in the fall, acknowledged in the media the risk of terminating existing contracts due to insufficient funding; however, instead of indexing the already existing contracts, which is cheaper, funds were requested for new contracts with 'market-level wages for drivers.' This, in the opinion of the association, indicates a conscious choice by the minister of the most expensive scenario, allowing for the bankruptcy of existing companies.

According to the industry, the strategy of 'waiting for the bankruptcy of carriers and conducting new procurements' is not justified either economically or financially, as new carriers will objectively request higher tariffs. The association notes that in the last procurement organized by the ATD, there was a significant increase in the proposed prices — €1.37–1.82 per kilometer compared to the average long-term price of €1.11.

“This means an additional burden on the state budget in millions of euros, as well as the risk of service interruptions in the regions. Such behavior — allowing the existing system to collapse in order to build a new and more expensive one in its place — is an abuse of public funds and a violation of good governance principles,” the association emphasizes.

Passenger carriers stress that they have proposed a number of solutions, such as revising tariffs under long-term contracts within the allowable 10% according to the Public Procurement Law, with a corresponding increase in the budget base, or changing the indexing procedure to conduct it annually instead of once every four years, as is currently the case.

It is also noted that on January 7, another meeting was held with the Minister of Transport, during which no answers were received to the key questions of the industry: when and how the issue of revising tariffs under long-term contracts in the regional route network will be resolved, and whether funding is provided in the budget to compensate for losses in order to ensure the full provision of services and avoid the threat of bankruptcy for companies.

The association also points out the minister's lack of interest in dialogue with the industry. According to them, this is evidenced by the authoritarian communication style of the minister and the ATD with carriers. “The communication of the minister and the ATD at meetings with the industry is based on unilateral decisions, ultimatums, and threats of fines, rather than constructive dialogue,” the association states. It is also noted that questions that have been repeatedly sent and discussed in person require resubmission in writing, but the ATD does not respond to them.

“Such an approach, with an obvious delay on the part of the ministry and the ATD throughout the past year, has created tension in the industry and hinders the search for an urgent solution,” the carriers emphasize.

The association also reminds that the planned reduction of the route network by 16% across the country will affect the accessibility of regional connections and the mobility of residents, especially in rural areas. The technical mileage of carriers will significantly increase, which will raise their costs for 'empty' kilometers.

As previously reported, after the meeting on January 7, the Latvian Association of Passenger Carriers stated that regional public transport operators are again considering the possibility of holding a protest due to the lack of tariff revisions under long-term contracts.

On August 12 last year, industry representatives held a protest outside the Cabinet of Ministers building, calling for compensation for the rising costs caused by unforeseen emergencies. On September 16, an event titled 'One Hour Without Public Transport' was organized to draw attention to the insufficient funding of the industry.

Carriers demanded compensation for 10% of the losses incurred due to the conditions of long-term contracts from July 1, 2022, to August 31, 2025.

The Latvian Association of Passenger Carriers unites 25 carriers across the country.