The capital cities of Finland and Estonia could be linked by a 50-mile undersea rail tunnel, cutting the surface transport journey between them from around two hours to just 30 minutes, according to a preliminary study into the ambitious project from Swedish engineering consultancy firm Sweco.

Although it likely to be a couple of decades before the transport project is completed, subject to financial backing, a new high-speed connection between Helsinki’s Pasila station with Ulemiste station in Tallinn will impact travel dynamics between the two cities with single fares of around €36 (£26) being suggested in promotional literature.

Both Finland and Estonia have tentatively agreed to further explore proposals for the multi-billion euro project as part of a memorandum of understanding signed by ministers this week to improve connections and bolster the economic area formed by Helsinki and Tallinn’s more than one million people.

Politicians believe the project would boost trade and the economies of both countries, but its cost of completion could be a major issue. Sweco suggests the rail link could be built for between €9 billion and €13 billion (£6.6 billion - £9.5 billion) and will likely need additional external investment to become a sustainable project, according to analysts.

The undersea rail connection would reduce the journey time for some eleven million working commuters between the two countries to just 30 minutes versus the current two hour ferry crossing across the Gulf of Finland. It will also provide an alternative to the air services that are currently provided between Helsinki and Tallinn.

Forecasts suggest the new link would stimulate demand between the two countries and could treble travel and boost trade between the cities in its first decade of operation. This could see around 25 million journeys by 2040, based on a provisional 2030 opening.

Helsinki and Tallinn Mayors have been discussing the project since Estonia joined the European Union just over ten years ago, but hit has gained fresh impetus following the publication of the draft study.

The planned €3.6 billion Rail Baltica high-speed train line, which will run from Tallinn to Poland and link into western Europe’s rail networks from 2025 has also garnered stronger interest from Finland and could, through the undersea rail link, also potentially connect Helsinki onto the European rail network in the future.

Schedule data from OAG shows a fairly stable annual air capacity offering between the two cities, although levels have fallen since the mid-to-late 2000s. Between 2012 and 2014 around 275,000 annual seats were provided in this market, a figure that rose 2.7 per cent in 2015 to over 280,000.

Although historical data shows Air Finland, Blue1, Estonian Air, Finncomm Airlines all previously served this market over the past ten years, Finnair is currently the sole provider of scheduled flights with up to 88 flights per week on offer during 2016 using a mix of ATR turboprop and Embraer jet equipment.

According to MIDT data, an estimated 180,000 passengers a year are currently flying between Helsinki and Tallinn, but with an approximate point-to-point demand of just 35,000 passengers in 2014 it is clear that the majority of these passengers are using the route to fly on to other destinations.

Over the past 12 months only 18.0 per cent of the estimated passenger demand between Helsinki and Tallinn was local traffic with connections via Finnair’s Helsinki hub accounting for 81.8 per cent of the demand. The main O&D markets for these passengers were London Heathrow, Gothenburg, Paris Charles de Gaulle, Malaga and Oulu.