Ryanair prepared to launch domestic flights in Croatia
Ryanair has said it was “quite prepared” to launch domestic flights within Croatia, noting it could do so without subsidies. All domestic routes within Croatia are currently subsided through the Public Service Obligation (PSO) scheme, which make European funds available for unprofitable domestic routes which are deemed vital for the economic development of the region they serve. The existing four-year PSO contracts in Croatia, which expired 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. Due to the coronavirus pandemic, the Croatian government has not begun tender procedures for a new four-year contract and has simply extended the existing deal currently in place, however, it is expected to issue an open call later in 2021.
Commenting on the matter, Ryanair’s CEO, Eddie Wilson, said, “At the moment, all the domestic routes are subsidised. Seems bizarre that you must pay an airline to fly up and down Croatia when Dubrovnik is such a nice place to go to. We would have no difficulty flying internally with zero subsidies. We have just done that in Ireland, where there was one of these Public Service Obligation routes, which is just a way of channelling money to airlines. Why should the taxpayer pay for that on 300 euros fares to Dubrovnik in the height of summer when commercial airlines can do that for no subsidies? We would be quite prepared to do those routes”.
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. Croatia Airlines annually receives 10.3 million euros in compensation for the domestic services. The largest amount goes towards maintaining flights between Zagreb - Pula - Zadar, where the airline is remunerated some 177 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, where the airline is compensated approximately 599 euros per passenger. Other than Croatia Airlines and Trade Air, no other carrier has ever applied to operate PSO routes within the country. All of them are restricted to a single operating carrier.
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