Tallinn Airport has announced the establishment of a subsidiary company, AS Airport City, which will develop the airport's real estate business.

According to the operator of the Estonian hub, the move will make Tallinn a more attractive location for global aviation companies, increasing corporate and national revenues from aviation support services .

“The unique challenges the last few years have thrown at the aviation business made us realise that we needed to turn even more attention to boosting our non-aeronautical revenue. If you become too reliant on aviation income, you will leave yourself vulnerable,” said Riivo Tuvike, CEO of Tallinn Airport. The airport’s location on the outskirts of Europe, faced with a small population and under enormous pressure from airlines, means that the potential for increasing earnings from aviation is limited. 

Today, 71% of Tallinn Airport revenue comes from non-aeronautical sources, which has enabled speedy recovery from recent crises. Non-aeronautical revenue accounted for €36m of turnover in 2022. The exact figure in 2019 was €30m (63% of revenue). The critical source of non-aeronautical revenue is real estate development. Airport City will be a hub for business development projects that are designed to create infrastructure, a business environment and support services with even better growth opportunities for aviation-related companies looking to operate at Tallinn Airport

This is a significant step towards Tallinn Airport's goal of providing a more growth-ready infrastructure

Riivo Tuvike, Tallinn Airport

In the project’s first phase, aviation-related real estate will be developed on the runway’s south side, where €30m have already been invested and the first buildings are due for completion in 2025. This area is big enough for further development of 179,000 m2.  

In 2022 Tallinn Airport completed infrastructure investments which over the next 15 years will result in a six-fold increase in its commercial real estate, i.e. from 50,000m2 to 300,000m2. “With the successful implementation of our strategy, in 2033, real estate income will exceed earnings from aviation and non-aviation combined,” said Tuvike.   

According to Tuvike, the airport’s task is to connect Estonia to the world, and the development of clusters related to aviation companies around Tallinn Airport directly supports this. The main strength of the development project is its location near the city centre and at the hub of the city's most important transport corridors (roads, railways, air traffic). The airport's passenger terminal is the centre of attraction for the entire region. The establishment of Airport City will provide unique facilities and services for the airport's customers, including airlines, passengers, and partners. 

"Tallinn Airport owns 80ha of free land in Tallinn. This is a significant step towards Tallinn Airport's goal of providing a more growth-ready infrastructure, business environment, and support services for aviation-related companies wishing to operate there. This development will positively impact the Estonian economy, creating new job opportunities and boosting economic growth," said Tuvike. 

Commercial real estate will be divided into four districts, Nordway, Southroad, Eastfield, and Westgate, with the first phase of development set to begin at Southroad Airport. This phase will add 179,000m2 of additional space, compared to the current 55,000m2 of commercial space, and is expected to be completed in 2030. The area is suitable for companies operating in the MRO or logistical sector and considering proximity to city and transport corridors important for their businesses. 

Image: Tallin Airport