Four EX-YU markets plan airline subsidies in 2022
The central governments in Slovenia, Macedonia, Serbia and Croatia will be offering subsidies to airlines for the launch of new routes or the upkeep of existing services from 2022 onwards. The Slovenian government plans to extend incentives for airlines serving the country. The Head of the Slovenian Chamber of Tourism and Hospitality, Fedja Pobegajlo, noted, "We have taken the initiative for carriers to continue to be subsidised. We think this is very important if we want airlines to continue to return to Ljubljana Airport and foreign markets to be reconnected. We need to compete with nearby airports such as Venice and Zagreb”. Lufthansa, Air France, Turkish Airlines, Air Serbia, Wizz Air, LOT Polish Airlines and Swiss have all so far benefited from the financial incentives.
The Macedonian government has allocated 1.1 million euros in its 2022 budget to subsidise airlines for the introduction of new routes. It will mark the fourth consecutive time the state has offered subsidies for the launch of new destinations, with all three previous tenders won by Wizz Air, which was the sole carrier to apply for the financial assistance. The current subsidy contract, which runs until next year, had to be halted in 2020 after Wizz Air was unable to deliver on the agreement as a result of the coronavirus pandemic. Based on pre-pandemic data from 2019, Skopje Airport’s busiest unserved routes were New York, followed by Brussels, Amsterdam, Melbourne, Paris, Chicago, Dusseldorf and Ankara. Although Wizz Air serves a number of European destinations from the Macedonian capital, the majority are to secondary airports.
The Serbian government has begun tender procedures for ten routes of public interest which are to be launched from January 1, 2022 and run until December 31, 2023, including seven from Niš Constantine the Great Airport and three from Kraljevo’s Morava Airport. Interested airlines will be able to operate all ten routes or a selection of destinations which have been divided into four separate groups. Group one includes flights from Niš to destinations in the European Union - Hahn, Cologne, Ljubljana and Athens - as well as from Kraljevo to Thessaloniki. Group two encompasses flights from Niš and Kraljevo to Istanbul, group three comprises of operations from the two to Tivat, and group four involves domestic flights between Belgrade and Niš. All routes will be maintained twice per week, with exception to the Belgrade - Niš service which will have four weekly rotations. Four of the ten routes will be maintained on a seasonal summer basis between June and September, including those from Niš and Kraljevo to Tivat, from Niš to Athens and from Kraljevo to Thessaloniki. The contract for all ten routes is valued at around 23.8 million euros over the two-year period. Flights to destinations in the EU will be covered to the tune of 13.1 million euros, to Istanbul amounting to 6.7 million euros, to Tivat 971.000 euros and the domestic service will be subsidised with three million euros over two years.
The Croatian government has issued a much-delayed tender call for twelve Public Service Obligation (PSO) flight contracts for a period of four years, which will come into effect on May 1, 2022 and run until March 28, 2026. PSOs make European funds available for unprofitable, primarily domestic routes which are considered vital for the economic development of the region they serve. The previous four-year contracts expired back in March of last year but have been extended ever since due to the coronavirus pandemic. No further terms and conditions have been outlined in the latest tender call, which runs until December 24, 2021. The previous contracts were awarded to Croatia Airlines and Trade Air. The routes which will be compensated and maintained as PSO are: Dubrovnik - Zagreb – Dubrovnik, Split - Zagreb - Split, Zagreb - Zadar - Pula - Zadar - Zagreb, Zagreb - Brač - Zagreb, Osijek - Dubrovnik - Osijek, Osijek - Split - Osijek, Osijek - Zagreb - Osijek, Rijeka - Split - Dubrovnik - Split - Rijeka, Osijek - Pula - Split - Pula - Osijek, Rijeka - Zadar - Rijeka and Osijek - Zadar - Osijek. The value of the new PSO contracts has not been disclosed. Under the previous deal, Croatia Airlines received roughly 11.4 million euros in annual compensation for the domestic services, while Trade Air was the beneficiary of 2.5 million euros per year.
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