Croatia launches tender to subsidise domestic routes

The Croatian government has issued a much-delayed tender call for twelve Public Service Obligation (PSO) flight contracts for a period of four years, which will come into effect on May 1, 2022 and run until March 28, 2026. 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 expired back in March of last year but have been extended ever since due to the coronavirus pandemic. No further terms and conditions have been outlined in the latest tender call, which runs until December 24, 2021. The previous contracts were awarded to 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. Rijeka Airport had previously urged the Croatian government to do more to include the city in its PSO contracts, but only gained one additional route.

Pre-pandemic average annual load factor on PSO routes in Croatia

Ryanair, which will have three aircraft stationed in Zagreb by the end of the year, has said it will seriously consider applying once tendering for the new PSO agreement begins. Commenting on the potential of operating domestic flights in Croatia, Ryanair recently said, “We are waiting for a 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.

The value of the new PSO contracts has not been disclosed. Under the previous deal, Croatia Airlines received roughly 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 roughly 2.5 million euros per year according to the European Commission. 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.

Existing PSO compensation per passenger


  1. Anonymous09:01

    Fingers crossed for Ryanair although it's a long shot

    1. Anonymous09:10

      I doubt Croatian government will select a foreign airline and give them money to fly domestic routes. No way.

    2. Anonymous09:12

      I think Ryanair could only make it work on Zagreb-Dubrovnik and Zagreb-Split routes. The others no chance with the B737 or A320. Most other flights even on Dash 8s are half empty. That's why they are PSO.

    3. Anonymous10:45

      Anonymous09:10 - where do you live? selection someone based on nationality would be illegal.

    4. Anonymous11:20

      Sure lol

    5. Anonymous12:18

      Main issue with Ryanair and these PSOs is what they say in the text. "However, we would have to look into whether our aircraft, which have almost 200 seats, would be cost-effective on domestic flights within Croatia”.

    6. Anonymous14:49

      Am I reading correctly? 599,17 euro compensation per pax on the Osijek - Zagreb route?

  2. Anonymous09:09

    Bravo Hrvatska!

  3. Anonymous09:09

    Unbelievable that the government kept all the routes from four years ago, some of which make no sense. Keeping Osijek-Zagreb with average load factor of 20% is ludicrous. It means there is no public interest for this route.

    1. Anonymous09:12

      Especially as the flight is operated with Let 410 aircraft which has load of 19 pax, meaning that on average there were 3,8 people flying there :D

    2. Anonymous09:16

      Government does not want to understand that OSI isn't viable as an airport.

    3. Anonymous12:19

      I don't think they really care much. They just copied and pasted the routes they had four years ago.

    4. Anonymous12:37

      If you all say it's such an non-sense. Why do you support osi-muc service wich will begin soon.

    5. JATBEGMEL13:44

      OSI could of gone with a specific PSO tender for it. Dash flights to a couple of European hubs would be money better spent rather than 600€ per pax to ZAG. Probably would be cheaper and of more use.

  4. Anonymous09:10

    PSO for DBV is really not needed especially in the summer.

  5. Anonymous09:11

    Dubrovnik/Split - Zagreb could easily be served by Ryanair, but then again CRO gov has the last word, and I think that there is no way of accepting Ryanairs application

  6. Anonymous09:12

    Good luck to OU, they should be awarded the whole lot. Keep Ryanair away!

    1. Anonymous09:13

      They will probably divide it between Croatia Airlines and Trade Air like last time, except Croatia Airlines should get the two new routes.

  7. Anonymous09:15


  8. Anonymous09:16

    I wonder if Trade Air will apply again.

    1. Anonymous09:19

      Of course they will.

    2. Anonymous10:03

      These PSOs seems to be working out quite well for Trade Air since they have been able to add 3 planes to their fleet since they got their first PSO contracts.

    3. Anonymous10:29

      The difference between Trade Air and Croatia Airlines is massive. One is a well run company making a profit and seeking expansion opportunities, the other a blood sucking leach, poorly run and on it's last legs looking for more taxpayers money.

    4. Anonymous10:36

      The Govt should sell OU to Trade Air - a very well run and managed airline. They would do a great job with OU

    5. What makes u think Trade Air people would want this? They have enough on their plate and couldn't be bothered. OU is an orphan of the Govt, unlike YU that is the Govt's favorite child. That is the only difference between OU and YU.

    6. Anonymous13:33

      You must be a first time poster, it is JU, never was YU, not even in Yugo times.

    7. Anonymous18:25

      Yes,the Trade Air is perfect company, on the beginning of covid he fired all of pilots, and then start to pay them by the hour , and now he have pay to fly captains...he is real aviator...

    8. YU or JU, same thing. First time poster? Lol!

    9. Anonymous22:39

      First time mistake. No worries mate, just own up to it.

  9. Anonymous09:17

    Ryanair could compete for Zagreb to Dubrovnik and Split. For others they have too large aircraft. Also I really don't get why PSO in summer for tourist destination. It is also in Serbia, you have PSO from Nis to Tivat, and Kraljevo to Thessaloniki

  10. Anonymous09:20

    599 eur per passenger for OSI-ZAG? Wow

    1. Anonymous09:24

      Most useless route ever.

    2. Anonymous09:48

      ^ especially considering the perfect highway between the two cities and the short distance.

    3. Anonymous10:07

      New Most useless route ever = Rijeka Zadar !

    4. Anonymous10:07

      If you think that is a lot take a look at the highest subsidised route in the EU: Calvi - Paris Orly - €8.648.250 each year!! The biggest PSO contract holder in EU is Air Corsica. It gets 40 million euros per year.

    5. Anonymous10:11

      Yes, but the difference is Calvi is on Corsica - an island. While Osijek is 280 kilometers from Zagreb connected with a highway.

    6. Anonymous10:26

      Rijeka to Zadar would be a lovely cheap sightseeing flight, thank you Government of Croatia.

    7. In addition to Zadar - Pula :).

  11. Anonymous09:25

    Good. I'm happy they finally came to their senses and adopted a decision to launch a tender after almost two years since the previous contract expired. It's a shame though that not more routes were included, especially from Rijeka.

    1. Anonymous09:43

      What domestic routes would be beneficial from Rijeka?

    2. Anonymous15:32

      RJK is linked domestically with SPU, DBV and OSI already and now the plan is to include ZAD. What other domestic routes can realistically be added? BWK?

  12. Anonymous09:46

    About time.

  13. Anonymous09:49

    Wasted opportunities. Some route are unnecessary while others not included would be really beneficial.

  14. Anonymous09:51

    How is the PSO budget set. I mean does the EU take in the size of the country, population, GDP? Or is it negotiated directly with the government?

    1. Anonymous09:55

      I believe it's negotiated directly with the government but the metrics you listed are taken into consideration.

    2. Anonymous09:58

      Some PSO rules:

      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/

      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.

    3. Anonymous13:37

      Interesting. Thanks man.

  15. Anonymous10:04

    Zagreb-Split and Zagreb-Dubrovnik shouldn't be under PSO having in fact that Croatia always has full planes on these lines, even in winter months. I think PSO for DBV and SPU is just an excuse to give some money to Croatia Airlines.

  16. Anonymous10:25

    Good luck Croatia Airlines and Trade Air. Hope they get those 4 year contacts again.

    1. Anonymous11:37

      They will. There is no doubt.

  17. Anonymous10:28

    Funny how the government finally publishes PSO about 10 days after OU complained about liquidity issues. Here come tax funds to save a parasite. Meanwhile, OU has downgraded around 30% of their AMS flights from A319 to Q400. Great way to compete with KL's double daily flight.

  18. Anonymous10:56

    Interesting that Adria wanted to bid while they were still around. Makes sense though. Their Saabs would have been perfect for some routes.

    1. Anonymous11:37

      They were desperate for any money they could get.

    2. Anonymous12:16

      True. But equipment for these flights was a good fit.

  19. Anonymous11:36

    It's crazy to think that it is cheaper for me to fly Zagreb-Podgorica with Ryanair than Zagreb-Dubrovnik with subsidized Croatia Airlines flights.

    1. Anonymous12:15

      That's why I hope FR applies.

  20. Anonymous11:41

    The sole idea of PSO is not bad, it may however be misused, if the public entity announcing PSO happens to be owner of an airline. Then you may see strange routes or excessive funding.

  21. Anonymous12:17

    Any chance Trade Air will reconsider its Turbolet lease and get a better aircraft if they win some contracts? ATR42 maybe?

    1. Anonymous14:48

      good idea, the suggestion also came from trade air. but the government has not commented on it. So no

    2. Anonymous15:27

      In summer it might make sense to have bigger aircrafts on these routes. But in winter, flying an average of 15 pax on an ATR 42 is a waste of money. Besides the L-410 burns about 300kg/hr, which is reflected on the lease cost I suppose. Any bigger turboprop would be much more expensive to lease, meaning the ticket price will go up. What about leasing a second aircraft just for the summer season?

  22. Anonymous12:17

    Watch OU get awarded all twelve routes

  23. Anonymous13:49

    OSI-ZAG route is ridiculous.
    You could rent a luxury mini van and drive the 12, or so people to ZAG every morning. It would be faster and cheaper than the flight.
    You could even pick up each pax at home as an added bonus.

  24. Anonymous15:44

    Or this trip report ;)


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