The Croatian government is yet to begin tender procedures for awarding Public Service Obligation (PSO) flight contracts to airlines despite the existing four-year agreement with Croatia Airlines and Trade Air expiring in just two weeks. PSOs make European funds available for unprofitable, primarily domestic, routes which are vital for the economic development of the region they serve. The call for tender for a renewed PSO contract period and the information notice, which must be published in the EU’s official journal, is six months before the projected start of any new concession. The current PSO contracts in Croatia cover the national carrier's routes from Zagreb to Dubrovnik, Split, Zadar, Pula and Brač, as well as from Dubrovnik and Split to Osijek. It also includes Trade Air's services from Osijek to Dubrovnik, Split, Pula, Zagreb and Rijeka, as well as from Rijeka to Dubrovnik and Split.
Croatia Airlines plans to maintain all of its domestic routes this summer, despite a lack of PSO funding, with the understanding the cost will be retroactively covered. However, Trade Air, which wetleases a turboprop aircraft for its inter-Croatian routes, has no tickets on sale for any of its existing scheduled services, which link six cities in the country, past March 29. Despite warnings from local politicians that certain airports, most notably Osijek, will suffer from the government’s lack of initiative, the Minister for Sea, Transport and Infrastructure, Oleg Butković, has refused to directly respond to the claims, noting that politicians from the country’s largest opposition party are stoking unnecessary fear.
The Croatian national carrier receives 11.4 million euros in annual compensation for the domestic services. The largest amount, 4.2 million euros per year, goes towards maintaining flights between Split and Zagreb, where the airline is remunerated some 22 euros per passenger carried, although the largest compensation per traveller is on the Zagreb – Pula - Zadar service, totalling 177 euros. The value of Trade Air's PSO contracts amount to 2.5 million euros per year. The largest share of the subsidies goes towards the upkeep of the Osijek - Zagreb service (1.3 million euros per year), where the airline is compensated approximately 599 euros per passenger.
Comments
Strange.
Transparency-1: All awards, modifications and any
abolition of PSO routes, as well as the corresponding
calls for tenders, must be announced in the Official
Journal of the European Union (OJ EU).
Transparency-2: Air fares and conditions can be
quoted to users (in most cases maximum fares
are imposed)
Market failure: Market forces alone have failed to
create incentives for air carriers to provide scheduled
air services on the route.
No obstacle to market functioning: A PSO should
not limit the possibility for air carriers to provide
a higher level of service in terms of capacity and
frequency than minimum obligations required
under the PSO award. National authorities should
not interfere with the way the market fulfils these
obligations. In any case where more than one carrier
is interested to operate a route as an open PSO,
national authorities should not distribute frequencies
or capacities between those air carriers concerned.
Necessity: Routes are considered vital for the
economic and social development of the region
served (routes to an airport serving a peripheral or
development region or thin routes to any airport).
Proportionality & non-discrimination: PSOs are a
useful tool to enhance the contribution of aviation to
the overall competitiveness of the regions concerned.
They must be imposed in a non-discriminatory and
proportionate manner (e.g. no restrictions based on
passenger’s nationality or on the air carrier’s state of
origin, no selective promotion of specific air carriers/
airports).
No alternative: Inadequacy of alternative transport
modes connecting the route(s) under PSO.
EU law: Full compliance with EU Regulation 1008/2008
(compliance with national law only is insufficient).
Route-by-route basis: Necessity of PSO award
must be assessed for each route separately (no
network routes). A PSO cannot link two cities or
two regions, routes must be defined from airport to
airport. States may not make the award to one route
Geographic scope: A PSO route between an EU
airport and a non-EU (except EEA members) country
is not allowed. Intra-EU routes (not exclusively
domestic) are however allowed.
Or they are all poor?
How on Earth do you know that you will be chosen for PSO?
Not fixed, right?
Hypocrisy.