Montenegro to launch subsidised PSO flights

Montenegro is poised to enhance its air connectivity through the introduction of subsidised Public Service Obligation (PSO) flights, aiming to support year-round services on routes deemed essential for the nation's economic and social interests. The initiative is widely viewed as a way to bolster flag carrier Air Montenegro, which has faced growing scrutiny over state aid, a practice which is becoming harder to justify as the country advances toward EU membership. However, Jelena Kljajević, a member of parliament from a governing coalition party, said, “This is not subsidising airlines, this is an investment in the connectivity of Montenegro. With this law, we are creating an institutional mechanism that makes us more competitive, more accessible and more legally aligned with EU practice”.

The proposed amendments to Montenegro's Air Traffic Law, currently under parliamentary review, seek to establish a legal basis for PSO routes. These routes would be serviced by airlines selected through public tenders, receiving subsidies to operate flights on specified routes for a defined period and amount. The Montenegrin Ministry for Transport has indicated that one of the PSO routes will be Brussels. It noted the primary goal is to improve air accessibility, particularly during off-peak seasons, thereby supporting tourism, which constitutes approximately 35% of Montenegro's GDP.

The CEO of Airports of Montenegro, Roko Tolić, has given his support for the measure. “Explaining aviation-specific criteria or the technical process behind introducing PSO routes might be difficult for the general public to understand, but what matters is that this decision serves Montenegro’s long-term connectivity goals”, Mr Tolić said. He warned, however, that the more challenging part is still to come. “It’s not easy to identify which routes truly qualify as being of public interest, those where market conditions don’t justify year-round service but where demand still exists. Once selected, these routes will need to be presented and justified to the European Commission, which ultimately decides whether the PSO model and the proposed destinations meet legal requirements. This is not a wish list. Montenegro won’t be able to subsidise just any route. We have to follow a structured and compliant process”. Mr Tolić acknowledged that Air Montenegro stands to benefit the most from the new model, as the country’s only home-based airline. “This is a big opportunity for Air Montenegro. As the only carrier based in the country, they will be first in line to compete for the subsidised routes when tenders are announced”, Mr Tolić concluded.