At midnight Croatia becomes the newest star of the European Union
At midnight Croatia will become the 28th member state of the European Union, ushering in new rules and regulations in the Croatian aviation industry. The new business environment will have an impact not only on Croatia Airlines but Croatian airports and foreign airlines operating to the country as well. The Croatian government approved a final cash injection into Croatia Airlines late last year so as to avoid anti subsidy measures enforced by the European Union. Joining the 27 member bloc does not exclude Croatia Airlines from government subsidies, but does make it much harder to come by and requires approval from the European Commission.
Since European Union based airlines will be treated as domestic carriers in Croatia from July 1 their taxes will be reduced. Similarly, Croatia Airlines will be considered a domestic carrier when operating to any European Union member nation. Furthermore, the Croatian carrier will have more freedom to operate within different EU markets. According to legislation, all EU airlines may operate air services on any route within the EU. However, this move is often too costly for legacy carriers to undertake. It is this legislation that could also harm Croatia Airlines. Low cost airlines registered in EU member states will be able to easily set up bases in the country. Ryanair has already jumped at the opportunity by opening a base in Zadar just a few months ago.
Croatian airports will be the big winners from the country’s European Union membership. EU accession naturally brings with it more investment, tourism and business. In January 2007 Bulgaria and Romania joined the European Union thanks to which the airports in Sofia and Bucharest flourished. In 2006, Sofia Airport handled 2.2 million passengers. This number jumped to 2.7 million in 2007, an increase of 24%. Wizz Air created its Wizz Air Bulgaria subsidiary in 2006, a year before the country joined the EU. At Bucharest’s Henri Coanda Airport, the EU impact was even greater with numbers jumping from 3.5 million in 2006 to 4.9 in 2007, a 40% increase. Croatia’s costal airports have already benefited from numerous pre-membership funds which have been allocated to the development of airport infrastructure.
Do you believe European Union membership will benefit the Croatian aviation industry? Send in a comment with your thoughts.