The Croatian government has adopted a decision to offer twelve Public Service Obligation (PSO) flight contracts for a period of four years, which will come into effect on October 25, 2020 and run until October 26, 2024. PSOs make European funds available for unprofitable, primarily domestic routes which are vital for the economic development of the region they serve. The previous four-year contracts expired on March 28 but have been extended until October, with the Croatian government late in launching tendering procedures for the new round of subsidies. The new PSO contracts will see the addition of two new routes. The exact terms and condition will be outlined upon the launch of the Europe-wide tender, which is expected to run for several months. The previous contracts were held by 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. Compared to the previous four-year period, new additions include flights from Osijek and Rijeka to Zadar. However, funding for services between Osijek and Rijeka have been dropped.
The value of the new PSO contracts has not been disclosed. Under the previous deal, Croatia Airlines received 11.4 million euros in annual compensation for the domestic services. The largest amount, 4.2 million euros per year, went towards maintaining flights between Split and Zagreb, where the airline was remunerated some 22 euros per passenger carried, although the largest compensation per traveller was on the Zagreb – Pula - Zadar service, totalling 177 euros. The value of Trade Air's PSO contracts amounted to 2.5 million euros per year. The largest share of the subsidies went towards the upkeep of the Osijek - Zagreb service (1.3 million euros per year), where the airline was compensated approximately 599 euros per passenger.
I still don't understand what was the reason for this delay.
ReplyDeleteLaziness from the ministry.
DeleteAnon 09:10
Delete+1000
As very good government with a lot of experts they predicted Covid 2019, unlike every other amateur government on the world.
DeleteWhen will the government understand that OSI isn't viable as an airport, it's time to shut it down.
ReplyDeleteDisagree.
DeleteFew times weekly to SPU and DBV is ok domestically and should be PSO supported. ZAG route is completely pointless though. Also, there is a gasto demand. Actually OSI is the only airport in HR that could sustain proper gasto routes compared to tourist routes along the coast. They just need to lower their fees and offer marketing incentives that last longer than a year, same as all other exyu airports do.
Furthermore, dont forget all cargo ops at OSI.
DeleteYet the airport struggles both commercially and financially. There is no point with BEG, TZL, BNX around.
DeleteOsijek's chance was before Tuzla and Banja Luka started growing. The moment they got flights OSI was dead. Area around Osijek is economically weak and dying out with many people moving out every year. Markets around TZL and BNX are much bigger and economically more stable. OSI can't compete with that and we've seen that from all the airlines that suspended flights from there over the years.
DeleteEven maintaining OSI-ZAG is a joke because of limited connectivity on OU. They should have rather subsidized VIE and offered connections onto OS' network.
Both Tuzla and Banja Luka are smaller markets. Osi is just extremely badly managed and fees are too high. Exactly because of so many people having moved away from Slavonija there is demand for VFR in particular.
DeleteIn what universe are Banja Luka and Tuzla smaller markets than Osijek? Both have much more people living there today and both have a lot of gasto demand as seen by the growing passenger numbers at both airports. Look at the population of Osijek and compare it to the other two and then look at their respective areas. Continental Croatia is not densely populated.
DeleteActually OSI seems to be the cargo hub in Croatia. There was more registered cargo in OSI than in ZAG in 2019! Very interesting.
DeleteThis reminds me of ZAG airport in Spain having more cargo than bigger BCN.
Apparently, closing OSI is definitely not a good idea. It's simply a more cargo airport.
Ok, I will provide more explanation. First of all, Banja Luka and Tuzla took actual and potential pax away especially from Osijek. If Osijek gets a better management and or lower fees they will be able to get these pax back.
DeleteOsijek's pax structure and market is very widely stretched and clearly multinational making positive use of motorway network in Croatia and Hungary respectively in 3 directions, to the north, east and west.
Speaking about the market dont just think of Slavonija and northern BiH but also large parts of Vojvidina incl Sombor area and especially most of southern Hungary to which Osijek is much more convenient compared to BUD airport - if there was a noticeable passenger operation at OSI. Pecs/Baja/Szekszard conglomerate area does not even have a commercial airport. Not even mentioning potentials to get pax from BEG+ZAG catchment areas with an attractive LCC service on offer (clearly not speaking of just 1 expensive EW to STR or 1 W6 route).
International marketing cooperation and approach would be beneficial too and I could particularly think of cooperation w southern Hungarian areas and markets, e.g. marketing for OSI there. For that to happen OSI needs a development plan strategy and investment money, something that is not there at the moment, but cannot be excluded for the future forever.
Aha so much potential and such a market but somehow whoever starts flying from OSI ends up suspending flights. That just means that the market is simply not there. As for TZL and BNX I think they cater mostly to passengers from their own country/region.
DeleteFace it, the market is not there. If it was OSI would at least have one non-subsidized route that would do well. Even FR ran away from there but stayed in BNX.
OSI is a cargo airport. Please do some checks.
Delete2019 cargo figures:
OSI: 13460kg
ZAG: 12881kg
LJU: 11093kg
BEG: 25543lg
As you can see the figures are impressive!
So OSI is second in ex YU in terms of cargo traffic?
DeleteOn my opinion, it is. OSI is not even a capital city. On their official LinkedIn page it says they are mainly focused on air cargo and not passenger one:
Deletehttps://www.linkedin.com/company/osijek-airport
Take LGG airport in Belgium as another very good example of a city not being a capital but has lots of cargo.
Anon @ 15:09, so 13t in the whole year? Impressive figures indeed!
DeletePassengerwise, as said above, they are lacking both a strategy and a plan.
DeleteWe all agree that passenger wise, the airport is struggling but not cargo. Cargo brings good revenue, too. Here you have more info about OSI:
Delete"Osijek Airport is primarily constructed for cargo traffic, due to Croatia's favourable geographic and transport position. One of the examples is that the airport's appron can handle larger freighter aircraft such as the B747 and A330."
It makes sense, now. I don't think anyone here actually realised it. They were mainly focusing on passenger figures.
We all agree that passenger wise, the airport is struggling but not cargo. Cargo brings good revenue, too. Here you have more info about OSI:
Delete"Osijek Airport is primarily constructed for cargo traffic, due to Croatia's favourable geographic and transport position. One of the examples is that the airport's appron can handle larger freighter aircraft such as the B747 and A330."
It makes sense, now. I don't think anyone here actually realised it. They were mainly focusing on passenger figures.
Can an airline outside of Croatia apply and win to operate PSO routes? I mean an airline from the EU?
ReplyDeleteTheoretically yes. In practice government won't award it to a non-Croatian airline.
DeleteDepends if there is a condition like elsewhere such as x number of planes must be based in the country or y number of crew must speak a certain language etc. That way they could exclude any non-Christian company if they wanted to do so.
DeleteStupid autocorrect. Any non Croatian company...
Delete@Anonymous 09:29, hahaha it made me laugh anyway. Wouldn't be surprised if our Government decided to make that move lol
DeleteI still don't think routes like ZAG-DBV and ZAG-SPU should be subsidised.
ReplyDeleteZag - Spu PSO is ok.
DeleteZag - Dbv is entirely self sustainable but OU would not want to miss out on that money.
I would have assumed there would be more traffic between ZAG-SPU than ZAG-DBV considering the size of the cities, catchment area etc.
DeleteIf Zagreb Dubrovnik is entirely self sustainable, shouldn't the government, based on the reports of the money you can earn on that route, cancel it from the PSO routes?
DeleteNowadays many people use the fast but expensive motorway between Zagreb and Split.
DeleteI'd be interested in a comparison P2P vs connecting traffic on that route. Think it's now mostly transfers.
There is a clearly higher frequency and mostly Airbus ops to DBV indicating there are more pax on that flight compared to SPU
DeleteMost of these subsidies are there to financially support the biggest leech in Croatia: OU.
DeleteI wonder if Trade Air will apply again.
ReplyDeleteOf course they will.
DeleteDoes it not say anything about capacity such as frequency per day or week and minimum seats of airplane? Didnf they want to increase some routes to at least ATR42?
ReplyDeleteThey didn't say anything. They will have those details in the tender documents.
Delete"The exact terms and condition will be outlined upon the launch of the Europe-wide tender, which is expected to run for several months. "
Maybe OU should get 2 dedicated Dash Q300s for domestic PSO ops? 50 seats are perfect, same as AT42, and they can most likely use the same pilots as for the rest of their Dash Q400 fleet.
DeleteI hope this time they dont forget about islands and especially Brac/Hvar as they usually do. A 2 times weekly ZAG BWK might be sufficient in summer.
ReplyDeleteBut in a proper PSO there should be ZAG ops in winter and direct services especially to VIE and MUC will be a cash cow in summer without any competition on those routes.
BWK airport now has the infrastructure but stupid politicians still did not connect the two islands with a ferry, ferry will have to be adjusted to plane schedules whenever needed.
By making BWK an official airport for both touristic islands the market and traffic numbers should double.
+1000
DeleteAdd to that a small suggested 1100m airport (enough for Q400 operation) at Korcula that was to also serve Peljesac (or even Mljet)
I doubt that q400 can use 1100m airport but Let410 can do it easily. But stupid things about Let410 i subsidies for ZAG-OSI, 600 eur for one passenger? Entire airplane over 11000 eur? What is cost of 747 pee hour?
DeleteWhat are the conditions? As Croatia is EU country these rules must be transparent..or not?
ReplyDeleteIt says: "The exact terms and condition will be outlined upon the launch of the Europe-wide tender, which is expected to run for several months."
DeleteIs there anywhere to be found what were the conditions for last PSO?
DeleteDid you try to google it?
DeleteSure. What about you?
DeleteYes, when I want to know something, I first try to google it.
DeleteSo, you were not able to find it or what?
Were you able?
DeleteSo happy for BWK. I'm sure we'll see more developments following the current expansion.
ReplyDeleteThat said, Croatia has an excellent, domestic network which only contributes to its GDP and boosts local economy. Domestic travel is extremely important in a country whether it's air, water or ground. In the Balkans and Eastern Europe, there are few countries with a good air domestic network.
This is pure exaggeration and money wasting.
ReplyDeleteOU will receive
- "undisclosed" (is it allowed at all to be "undisclosed"?) amount of money for PSO?
- 34 mil EUR of illegal help (pre-corona help)
- "zajedincko oglasavanje" fund money
- corona cash help
How come that route Dubrovnik - Zagreb – Dubrovnik is not financialy viable in the summer? It is simple a lie and wasting tax payers money.
Taking in consideration Croatian EU membership, huge diaspora, NATO membership and huge touristic potentials OU stil can't survive without Government money. Probably one of the worst management in Europe.
It will be disclosed when tender is launched.
DeleteA lot of people don't actually read the article. It says all details will be disclosed when the tender starts.
DeleteIf it is always so transparent can you please provide here the conditions of previous PSO tender?
DeleteCan't wait to see them
Pretty sure Google can help.
DeleteDon't be so sure
Delete599 eur per passenger for OSI-ZAG? Wow! You can fly to Japan for that price!
ReplyDeleteAnd we had here KVO-VIE supported with approx. 180 EUR per passengers that was soooo critisized!
Double standards as always.
Most useless route ever.
DeleteYou honestly don't see the difference between subsidizing domestic route and gasto one?
DeleteIs KVO-VIE a gasto route?
DeleteThere is a difference but only in your mind.
DeleteCroatian PSO routes are for Croatian citizens living in different parts of Croatia.
Serbian PSO routes are for Serbian citizens living in different parts of Europe.
Simple as that.
Croatian citizenship is not required to buy tickets and fly on PSO routes. Stop lying.
DeleteYou are the only one who undertood it on that way.
DeleteCongratulation.
Anon 15h27 and anon 16h39 +1 each!
Delete-Croatian PSO routes are for Croatian citizens living in different parts of Croatia.
Delete100% not true. Foreign citizens living outside of Croatia can use those routes without any restrictions or proof of citizenship.
Do you always understand everything so literally or this blog is exception?
DeleteBig majority of people who use these PSO routes are from Croatia (Croatian citizens), logically.
However nobody said that people who aren't Croatians can't use them. That was the point you mistakenly added.
And to avoid any word games you might add - the same applies for Serbian citizens and routes sponsored by Serbian Government.
But 599 EUR - it is unbeliavable!
Delete:-)
Balkan as its best!
599 EUR means massive government subsidy of OU. There is no other way to make it legal.
DeleteAnon 23:19
DeleteThis is for Trade Air. They use hungary Let410 (airplane and crew). Although Let410 is great airplane with its unique characteristics (STOL, cheap to buy, convertible in passanger, utility, cargo) here there is no sence to use it in this way. Exactly this is not problem in airplane but in greed for money (high subsidies) and avoiding any risk (ACMI rented instead owned)
Zadar-Rijeka? 2.5 hrs by car with little traffic.
ReplyDeleteThat is a foolish PSO addition.
Absolutely agree.
DeleteIt is actually a shame what they get money for.
Most Croatian PSO routes are totally fine and justifiable, but not this one and also not OSI-ZAG.
DeleteEspecially ZAG-DBV in summer or ZAD-RJK
DeleteLooolll
Pointless. Troll.
DeleteIts Croatian money for the strategic Croatian flagship airline.
ReplyDeleteNo. It's EU money for mismanaged airline which had all preconditions to become big player and in reality is minor, irrelevant feeder with bad and political management and heavily excessive administrative workforce which live only by subsidies provided by both croatian tax payers and EU funds
DeleteIs it possible to have a PSO route that is not domestic?
ReplyDeleteYes it is but it is rare.
DeleteA 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.
DeleteGood. I'm happy they finally came to their senses and adopted a decision to launch a tender. It's a shame though that not more routes were included. I know Rijeka was eager to have several PSO routes since they don't have as much benefit from them as other airports.
ReplyDeleteWhat domestic routes would be beneficial from Rijeka?
DeleteSPU and DBK for sure, OSI most likely.
DeleteThe rest, including ZAD, don't make much sense.
Only SPU and DBV, that is for sure.
DeleteMaybe Silver Air applies. They are the only non Croatian airlines flying domestic flights (in summer).
ReplyDeleteI hope they don't apply with their 19 seater. Really hope for a 40-50 seater this time enabling cheaper ticket prices.
DeleteHow is the PSO budget set by the EU? I mean does the EU take in the size of the country, population, GDP? Or is it negotiated directly with the government?
ReplyDeleteI believe it's negotiated directly with the government but the metrics you listed are taken into consideration.
DeleteGood luck
ReplyDeletePSO in Croatia is used exactly for the purpose it is intended for.
ReplyDeleteWhat are generally the loads on these domestic Croatian flights?
ReplyDeleteI have little to say about PSO routes within Croatia because they are of no interest to me. However, I would comment on OSI as an airport.
ReplyDeleteIt is simply not viable to count parts of Serbia as it's catchment area because the border procedures on the Croatian border are complicated to assess in terms of waiting time. During high season and around holidays, Batrovci crossing is a nightmare, and looking around for those smaller ones like Šid or Ilok, requires too much of a detour and time. It is challenging to make plans, let alone be sure that one will reach the airport in time for a flight when there is a border crossing between you and an airport where one could wait from 30 minutes to God knows how long.
From Novi Sad or Belgrade, Osijek is simply no-go. There are simply too many other far more convenient options in Belgrade, Niš, and Timisoara. We could place Sombor in the "perhaps" category. Can they count on the impoverished Slavonia region and Western Vojvodina? I seriously doubt so. I would not count on Hungarian passengers in larger numbers as South Western Hungary is well connected to Budapest, where choice is abundant among LCC and legacy carriers.
Regards.