Croatia targets greater PSO funding for airlines
The Croatian government is holding talks with the European Commission in an attempt to increase funding for Public Service Obligation (PSO) flight contracts in the country. PSOs make European funds available for unprofitable, primarily domestic routes which are vital for the economic development of the region they serve. The existing four-year PSO contracts in Croatia, which expire on March 28, 2020, are currently held by Croatia Airlines and Trade Air, which won a European tender to maintain ten routes inside the country. The new tender is expected to be launched towards the end of this year. The Croatian government has not revealed by how much it is seeking to increase PSO funding.
The current PSO contracts in Croatia cover the national carrier's routes from Zagreb to Dubrovnik, Split, Zadar, Pula and Brač, as well as Trade Air's services from Osijek to Dubrovnik, Split, Pula, Zagreb and Rijeka. The Croatian national carrier annually receives 10.3 million euros in compensation for the domestic services. The largest amount, 3.6 million euros per year, goes towards maintaing flights between Zagreb and Split, where the airline is remunerated some 184 euros per passenger carried. The value of Trade Air's PSO contracts amount to 2.6 million euros per year. The largest share of the subsidies goes towards the upkeep of the Osijek - Zagreb service (1.2 million euros per year), where the airline is compensated approximately 564 euros per passenger.
Rijeka Airport has urged the Croatian government to do more to include the city in its PSO contracts. "We cannot be satisfied with the PSO concept because Rijeka Airport receives crumbles from these contracts. Pula and Zadar airports handle between 50.000 and 70.000 passengers solely as a result of the PSO routes", the Deputy of the Primorje - Gorski Kotar County, Marko Boras Mandić, said recently. Croatia Airlines carried 227.681 travellers on its domestic services during the first half of the year, representing a decrease of 3.1% on the same period in 2018. The average cabin load factor on these routes stood at 64.7%, down 3.3 points.
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