Aktsiaselts Tallink Grupp - NASDAQ OMX Baltic

Sweden—Estonia Routes
Regular traffic between Sweden and Estonia commenced 15 years ago. After a promising start in 1990,
traffic on this route was severely affected by the sinking in 1994 of the passenger cruise vessel Estonia operated
by the now bankrupt Estline company in the Northern Baltic Sea region. Passenger, private car and heavier cargo
unit traffic has, however, almost doubled since 1998 and the average annual growth of passenger numbers has
been approximately 27 percent since 2001. Up to 70 percent of Swedish passengers visiting Estonia arrive by
ferry.
Currently, we are the only operator of passenger and cargo services with daily departures between Sweden
and Estonia. We operate a total of four vessels from two different destinations in both Sweden and Estonia.
Despite the two different ports at each end, we view both destinations effectively as one since Stockholm and
Kapellskär on the one hand and Tallinn and Paldiski on the other are located close to each other. Regular bus
services to and from three different locations in Sweden, provided especially for the use of our cruise passengers,
allow us to serve Swedish customers located outside the Stockholm region.
Stockholm—Tallinn Route. Following a positive start and development on the Kapellskär—Paldiski route
since 1998, we started operating the Stockholm—Tallinn route in January 2001. On the Stockholm—Tallinn
route (directed through Mariehamn, Åland, to obtain the tax-free status for onboard shop sales), we currently
operate two cruise ferries, Victoria I and Regina Baltica, with one daily departure by each cruise ferry at
5:30 p.m. from each port. The duration of the voyage, including a short stop at Mariehamn, Åland, is
approximately 16 hours and the ferry arrives at its destination the following morning. The main product is a
mini-cruise with two nights onboard the vessel and a day at the destination, although one-way trips combined
with a hotel package or a private car trip around the Baltic region are becoming increasingly popular. Ro-ro cargo
is transported on the car and cargo decks of both Victoria I and Regina Baltica. In response to the growing
demand for capacity on the Helsinki—Tallinn route and particularly on the Stockholm—Tallinn route, we expect
to introduce the New Cruise Ferry in the spring of 2006. This will allow us to operate the well-equipped highquality
2,500 passenger sister vessels Victoria I and Romantika on the Stockholm—Tallinn route, and the 2,800
passenger New Cruise Ferry on the Helsinki—Tallinn route. We see potential for growth in passenger numbers
on the Stockholm—Tallinn route and expect that the transfer of Romantika to this route will attract additional
passengers and, by means of a larger offering of high-quality cabins and services, generate growth in both
passenger volumes and revenue.
Kapellskär—Paldiski Route. We entered the Sweden—Estonia market in 1998 by commencing regular
traffic on the Kapellskär—Paldiski route, where we currently operate one cruise ferry, Vana Tallinn. Vana
Tallinn also has a car/cargo deck similar to our other cruise ferries. In addition, we operate the ro-ro cargo vessel
Regal Star on this route. Vana Tallinn departs once daily from Paldiski at 10:00 a.m. and once daily at 9:00 p.m.
from Kapellskär, effectively completing a one-way voyage in only 11 hours and a round trip every 24 hours.
Traffic on the Kapellskär—Paldiski route is not directed through Åland, which means that tax-free onboard shop
sales are not available on this route. Compared to the Stockholm—Tallinn route, the demand for tax-free sales in
shops on the Kapellskär—Paldiski route is comparatively low and, in our view, the value that customers place on
faster transport between Sweden and Estonia is comparatively higher.
Future Potential Routes
Following the delivery of the New Cruise Ferry, Regina Baltica (currently operating on the Stockholm—
Tallinn route) will become available for traffic elsewhere. In addition, the chartering agreement for our cruise
ferry Fantaasia has ended and the vessel is currently in maintenance. We are at present considering whether to
introduce any of the following new routes in the near- to medium-term.
Sweden—Latvia Route. A new route between Sweden and Latvia would provide Swedish passengers with a
new Baltic cruise destination, Riga, which is the largest city in the Baltic region. The route would also offer
another easy access by sea from the Nordic countries to the Baltic countries and serve the increasing tourist flow
to the region. At the same time, passengers and cargo could be transported to the north in an estimated travel time
of approximately 15 hours. Both passenger and ro-ro cargo traffic volumes between Sweden and Latvia have
increased significantly over the past few years. We therefore view this route as offering good potential for
expansion and growth, and we could start operations in early 2006, subject to completion of necessary
negotiations and regulatory issues. Following the recent cessation of operations on this route by Riga Sealine, no
ferry operator is currently offering passenger transport on the Stockholm—Riga route.
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