The St. Petersburg Times   Issue #1270 (36)
Friday, May 11, 2007

Local Business


New Petersburg-Tallinn Train Link Cancelled

Staff Writer

Russian Railways (RZD), citing economic factors, cancelled its St. Petersburg-Tallinn rail link just weeks after restarting the service.

Coming on the eve of Victory Day celebrations, however, the move was seen as the latest twist in the dispute between Russia and Estonia over the relocation of a Soviet war memorial in Tallinn. The spat appears to be spreading to affect trade and transportation links, with a pro-Kremlin youth group agitating for a boycott of Estonian goods by St. Petersburg retailers and consumers.

“From May 26, for commercial reasons, including the extremely low passenger numbers and subsequent losses incurred, we are planning to cancel the running of the train,” RZD said Tuesday in a statement.

The operation, co-run with Estonian partners, lost almost 390,000 rubles ($15,000) in April, RZD said.

Daily rail services between St. Petersburg and Tallinn resumed March 31 after a four-year break.

There are no plans to end rail services between Moscow and Tallinn. That route carried more than 10,000 passengers in April.

Estonian investors were skeptical Wednesday about RZD’s commercial arguments for ending the St. Petersburg service.

Tiit Pruuli, a member of the board at GoRail, the Estonian company that operates the service jointly with RZD, told the media the explanations presented by the Russian side appear far-fetched and lacking credibility.

“We reopened the route on March 31 following a four-year break, and the interest towards the revived route has been very substantial and forecasts promising both among the Russian and the Estonian travel agencies,” Pruuli said in a press-release distributed by GoRail on Tuesday. “Numbers of customers have increased during the month of April already, and we do not see any plausible commercial motive behind the cancellation of the route.”

“They cite an economic reason but it is difficult to believe that,” said Alar Pinsel, CEO at GoRail.

Pinsel said most of the funding for the project had come from the Estonian side and that it would take time to turn a profit. “The high season will only start in the summer, so of course it would start doing better,” he said.

Despite the setback, GoRail is still hopeful that it can convince RZD to change its mind. “Right now we are hoping that this train will stay,” Pinsel said.

Since the memorial dispute flared up, politicians including First Deputy Prime Minister Sergei Ivanov have demanded a boycott of Estonian products.

Ene Palmiste, a manager at Tallinn-based travel agent Travel Experts, reacted with dismay to the moves.

“First of all, I think that the idea from the Russian side is a very regrettable one and I truly hope that this is not going to happen,” she said.

She brushed off suggestions that the route would not prove economically viable. “There is no business in the world that is profitable from the moment of its opening,” she said.

Palmiste also said travel between Tallinn and St. Petersburg was restricted due to an air traffic agreement on flights between the cities not being ratified. Asked who used the train link, Palmiste said it was still too early to tell but that French tourists and European package tour operators had shown particular interest.

“I don’t think that this disagreement will have a long-term effect on the tourism between Estonia and Russia. Russian tourists are able to see past the propaganda,” she said.

In the meantime, an increasing number of St. Petersburg retailers continue removing Estonian goods from the shelves of their stores as part of a protest against the relocating of the World War II memorial.

Okay, one of the city’s largest retailers, announced Thursday it will no longer sell Estonian goods. Earlier this month, local retail chain Nakhodka also said it had stopped distributing Estonian products.

Alexei Tsivilev, deputy head of the St. Petersburg branch of Young Guard, the youth wing of the pro-presidential United Russia party, said nearly 30 more smaller retailers had joined the boycott of Estonian products.

Last week, the Young Guard produced a Russian-English sticker featuring the slogan “We Do Not Sell The Estonian Goods [sic]” and its activists are campaigning among local retailers and their customers, urging them to reject Estonian goods. “More than 1000 stickers have been produced and distribution is going well,” Tsivilev said.



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