The Croatian government has yet to launch tender procedures for the renewal of Public Service Obligation (PSO) flight contracts, despite the current four-year agreement with Croatia Airlines and Trade Air expiring in late March. PSOs enable the allocation of European funds to support unprofitable, primarily domestic routes that are considered vital for the economic development of the regions they serve.
Under European Union rules, a call for tender for a new PSO period, along with the required information notice published in the Official Journal of the European Union, must be issued at least six months prior to the intended start date of the new concession.
Trade Air has not placed tickets on sale beyond March 28. Four years ago, the carrier was forced to suspend its domestic operations due to a similar delay in the government’s launch of the tender process. Croatia Airlines, on the other hand, continued operating most of its domestic services at the time and was later retroactively compensated for the associated costs.
Routes which are currently 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. There have been calls to reform the list of PSO routes, with Rijeka Airport arguing that its limited inclusion in the current scheme undermines regional connectivity and limits its potential to develop year-round air services.
According to data published by the EU, the current PSO contracts in Croatia are approximately valued at just over sixteen million euros per year in total, with Croatia Airlines receiving some 14.7 million euros. The exact amount varies annually, depending on the number of passengers carried. The highest compensation per passenger is recorded on Trade Air’s Rijeka - Zadar service, at 1.350 euros, followed by the Osijek - Zagreb route at 1.000 euros per passenger. However, due to relatively low traffic volumes on these services, the overall annual compensation remains modest. In contrast, the highest total annual compensation is allocated to the Zagreb - Dubrovnik route, amounting to over six million euros per year, reflecting the significantly higher passenger throughput on the service.
This is just crazy. I don't know what the government is playing here.
ReplyDeleteThey are not playing anything. They are just a useless bunch of do-nothing career politicians.
DeleteHear, hear! Just like in the rest of ex-Yu I might add.
DeleteThey did exactly the same 4 years ago when they also injected money into OU like this year.
ReplyDeleteTrying to find a way where Ryabair can't apply
ReplyDeleteRyanair never flies PSO routes (except I think one somewhere in Italy?) and it certainly would not bother with this stupid process for one or two routes.
DeleteInstead, they should just apply to fly split and Dubrovnik from Zagreb on commercial basis and totally screw OU
DeleteI feel like giving 6mil euros to Ryanair annually would get us way more than just 21pw ZAG-DBV
ReplyDeleteWithout doubt
DeleteI doubt Croatian government would select a foreign airline and give them money to fly domestic routes. No way.
DeleteThe thing is, and what politicians in the exyu area don't understand, is that Ryanair and other airlines in the EU aren't really "foreign". ZAG-DBV is a domestic route for Ryanair, Wizz Air or Lufthansa just like it is for OU.
DeleteIrresponsible.
ReplyDeleteTrue. Domestic routes are extremely important for a country and contribute heavily to its economy.
DeleteDomestic routes with two weekly rotations in the middle of the day, with one stop, and most of them are like that, are important for nothing and contribute to nothing. They are senseless and useless
DeleteOSI could be particularly impacted by this.
ReplyDeleteThese PSOs seem to be working out quite well for Trade Air since they have been able to add several aircraft to their fleet since they got their first PSO contracts. The lack of a new contract could have a negative impact on them too.
Deletewhat a stupid comment. lol
DeleteBut why? Why hasn't the government started PSO tender? It's not like the money would come from their pockets.
ReplyDeleteI actually think these delays are on purpose. They have started happening ever since Ryanair opened a base in ZAG.
DeleteI don't understand it too. Not sure what they are doing.
DeleteOMG what a ridiculous comment. The Government is incompetent and has always been incompetent with PSO contracts.
DeleteWhat does this government do all day so they forget this important way to give OU money?
ReplyDeleteI don't understand it too. Not sure what they are doing.
DeleteThere is nothing to understand. The Ministry is full of party-appointed useless career climbers who do nothing but take a salary and vote for the ruling party.
DeleteIs there any requirement to prove that a route is not commercially viable? If the idea is to connect cities that would otherwise not be connected then some justification should be made.
ReplyDeleteSubsidizing ZAG-DBV route is a bit crazy as a route is definitely commercially viable given the amount of frequencies and passengers.
The number of passengers is not relevant. In fact, the logic is the opposite: the PSO is necessary because connectivity is so vital for all these passengers.
DeleteWhat's more worrying that no one seems to care. Where are the airports and airlines to put pressure on the government?
ReplyDeleteYou think OU is in a position to pressure the government? They just got over 100 million from that same government. They are counting their lucky starts. Certainly won't complain.
DeleteAirport directors are mostly from ruling party. They are not going to do anything.
DeleteAirport directors don't care because the number of passengers is completely irrelevant to them. Zadar, Split and Dubrovnik have millions of passengers. Rijeka and Pula both have useless management so they don't care anyway. Osijek is the only one that should care but they are too unimportant for their voice to matter.
DeleteI hope they do revise the PSO contracts because I think some route are unnecessary while others not included would be really beneficial.
ReplyDeleteHopefully they work it out. These routes are important.
ReplyDeleteHow is the PSO budget set for each country?
ReplyDelete"The highest compensation per passenger is recorded on Trade Air’s Rijeka - Zadar service, at 1.350 euros, followed by the Osijek - Zagreb route at 1.000 euros per passenger."
ReplyDeleteThat's a lot of money for a 150 km flights.
No shot there isn't a provider who could fly that route for even a fifth of that
DeleteCould they just hire a biz-jet for like 8 passengers? Kad se troši, neka bude sa stilom.
DeleteWow 1,300 euros per pax between Zadar and Rijeka!
ReplyDeleteIt's a complete scam because there are many busses per day and tickets are under 15 euros.
DeletePlus the bus is faster and will take you from city center to city center.
Just another way to funnel taxpayer money into the failing airline.
Inform yourself before having an opinion. Croatia Airlines does not operate these flights, Trade Air does.
DeleteOh that makes it much better. It's always good when taxpayer money goes to a private company so they can fly empty planes around.
DeleteThis has really become a mess.
ReplyDeleteI'm assuming that Trade Air's wet lease of the Saab also ends at the end of March?
ReplyDeleteI have a feeling they will wet lease the ETF ATR72 next.
DeleteOr OU will wet lease it.
DeleteExcellent timing....
DeleteBut putting an ATR72 instead a Saab340 would increase the costs.
@anon 11:30
DeleteHigher capacity means more PSO money ;-)
Butkovic too busy to deal with this...
ReplyDeleteThat's how politics work in all Eastern European countries.
ReplyDeleteCan non-Croatian registered airlines participate in this tender?
ReplyDeleteI believe any EU-registered airline can apply for PSO flights inside the EU. In essence they are domestic airlines.
DeleteAny EU airlines can bid for a PSO route.
DeleteAfter local politics will put some clauses in the PSO tender to favour local operators.
This is not good
ReplyDeleteGood luck Croatia Airlines and Trade Air.
ReplyDeleteSo basically this means all domestic services in Croatia will likely be terminated at the end of March?
ReplyDeleteRead the article. OU will keep flying and the government will pay them retroactively after the tender. As for Trade Air, they will stop flying.
DeleteWhat if OU doesn't win the tender?
DeleteBut they will, that is a given in Croatia.
DeleteNot only in Croatia...almost all tenders won by non local airlines have somehow been cancelled and replayed with small clauses that made the choice "obvious".
DeleteStart the tender ASAP.
ReplyDelete+1
DeleteWhat a waste of resources to fund Osijek-Zagreb route. There is a perfectly fine highway connecting both cities.
ReplyDeleteEspecially since the distance is short.
DeleteIndeed. Its enviromentally criminal too.
DeleteI hope they do revise the PSO contracts because I think some route are unnecessary while others not included would be really beneficial.
DeleteSuch as?
Delete16 million for PSO? Quite a bit.
ReplyDeleteOne of the lower amounts in Europe for PSO.
DeleteBut don't forget Croatia is a small country.
DeleteCan't compare Italy with Croatia for example.
What are generally the loads on these domestic Croatian flights?
ReplyDeleteA bit better than on OU's international but still low.
DeleteWould love to see this Saab in full Trade Air livery.
ReplyDeleteThe plane is likely being returned to the lessor at the end of next month so we won't see it in full livery.
DeleteIf they started the tender this month, new PSO routes could start by mid August.
ReplyDeleteDoubt they will start PSO tender any time soon.
DeleteAnd Croatian airports were hoping how PSO funding would be increased an more routes introduced. So much for that...
ReplyDeleteThey haven't started it because of pure ignorance. That's why.
ReplyDeleteThis is ridiculous giving as PSO main domestic routes ! It's like the Greek goverment giving as PSO routes like ATH-SKG-ATH or ATH-HER-ATH !
ReplyDeleteIt's PSO to protect OU, isn't that quite obvious? Also it's questionable how many commercial flights they would have in this part of year, for example...
DeleteSomeone should be responsible for this.
ReplyDeleteZAG-DBV and ZAG-SPU is really unnecessary. I'm sure these can be profit making.
ReplyDeleteThe planes might be full but can they make a profit?
DeletePSO for DBV and SPU is just an excuse to give some money to Croatia Airlines.
DeleteAnd?
DeleteOU also gets some subsidies from local city authorities on these flights too.
DeletePSO routes in EU exists to ensure that areas receive the same air service during the whole year enabling connectivity for local people with the capital for example.
DeleteSomeone can from SPU or DBV go to Zagreb for some admistrative purposes or extremely important for medical reasons.
On PSO flights you see a lot of people going for medical treatments or people visiting those on treatments in the major cities.
Not only about injecting cash or some kind of corruption but PSO are also important for the living of ordinary people.
How is Rijeka-Osijek going to save lives or help with administation?
Delete