Growing concern over Croatian PSO tender
The Croatian government is yet to begin tender procedures for awarding Public Service Obligation (PSO) flight contracts to airlines despite the existing four-year agreement with Croatia Airlines and Trade Air expiring in late March. PSOs make European funds available for unprofitable, primarily domestic, routes which are vital for the economic development of the region they serve. The call for tender for a renewed PSO contract period and the information notice, which must be published in the EU’s official journal, is six months before the projected start of any new concession. Croatian officials are warning that parts of the country could be “isolated” as no funds will be made available for the upkeep of domestic services.
Last year, the Croatian government held talks with the European Commission in an attempt to increase funding for PSO flight contracts in the country. “Getting by train to Slavonia takes four and a half hours in the best of cases, while by bus some five hours are needed. You will get faster from any destination in Europe to Zagreb then from Zagreb to Osijek. With the start of the 2020 summer season, Osijek will no longer have any domestic flights”, the member of parliament, Domagoj Hajduković, said yesterday. “With the start of the summer season, Osijek will have no domestic services and Trade Air has closed bookings past March 29. Even if the government begins tender procedures for a new PSO contract today, the flights would start no earlier than September”, he added. For its part, the Croatian government has not commented on the matter.
The current PSO contracts in Croatia cover the national carrier's routes from Zagreb to Dubrovnik, Split, Zadar, Pula and Brač, as well as from Dubrovnik and Split to Osijek. It also includes Trade Air's services from Osijek to Dubrovnik, Split, Pula, Zagreb and Rijeka, as well as from Rijeka to Dubrovnik and Split. The Croatian national carrier receives 11.4 million euros in annual compensation for the domestic services. The largest amount, 4.2 million euros per year, goes towards maintaining flights between Split and Zagreb, where the airline is remunerated some 22 euros per passenger carried, although the largest compensation per traveller is on the Zagreb – Pula - Zadar service, totalling 177 euros. The value of Trade Air's PSO contracts amount to 2.5 million euros per year. The largest share of the subsidies goes towards the upkeep of the Osijek - Zagreb service (1.3 million euros per year), where the airline is compensated approximately 599 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 last year. 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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