Croatia’s Trade Air suspends domestic flights
Trade Air has suspended its domestic flights operating under Public Service Obligation (PSO) contracts after the Croatian government failed to conclude new ones with operators. The new agreements, involving twelve routes, were due to come into effect on May 1 and run until March 28, 2026. The Croatian government began tender procedures to select operating carriers back in November of last year. 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, held by Trade Air and Croatia Airlines, expired back in March 2020 but were extended until this May due to the coronavirus pandemic.
The tendering process for the new PSO routes closed in late December 2021. The Croatian government has given no explanation for the delay nor when the contracts could be awarded. Trade Air has returned a Turbolet L-410 aircraft it has been wet-leasing for the short domestic routes. The value of the new PSO contracts has not been disclosed either. Under the previous deal, Croatia Airlines received roughly 11.4 million euros in annual compensation, while Trade Air approximately 2.5 million euros per year according to the European Commission. The routes which are subject to PSO funding 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 airlines that took part in the latest PSO tender have not been disclosed, however, Trade Air and Croatia Airlines are both believed to have applied. Ryanair, which has a base in Zagreb and Zadar, previously said it would seriously consider taking part in the tender. Commenting on the potential of operating domestic flights in Croatia, Ryanair said last year, “We are waiting for the tender call for the PSO routes to be published. We will undertake a serious analysis of the terms and conditions. At this point, we can’t say definitively if we will take part in the procedure or not. Our decision will primarily depend on the proposed requirements. However, we would have to look into whether our aircraft, which have almost 200 seats, would be cost-effective on domestic flights within Croatia”. In 2019, the former Slovenian national carrier, Adria Airways, was preparing to take part in Croatia’s 2020 PSO tender process. However, the airline went bankrupt in late September that year. PSO routes are restricted to a single operating carrier.
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