Trade Air has suspended its domestic flights operating under Public Service Obligation (PSO) contracts after the Croatian government failed to conclude new ones with operators. The new agreements, involving twelve routes, were due to come into effect on May 1 and run until March 28, 2026. The Croatian government began tender procedures to select operating carriers back in November of last year. 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, held by Trade Air and Croatia Airlines, expired back in March 2020 but were extended until this May due to the coronavirus pandemic.
The tendering process for the new PSO routes closed in late December 2021. The Croatian government has given no explanation for the delay nor when the contracts could be awarded. Trade Air has returned a Turbolet L-410 aircraft it has been wet-leasing for the short domestic routes. The value of the new PSO contracts has not been disclosed either. Under the previous deal, Croatia Airlines received roughly 11.4 million euros in annual compensation, while Trade Air approximately 2.5 million euros per year according to the European Commission. The routes which are subject to PSO funding 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.
The airlines that took part in the latest PSO tender have not been disclosed, however, Trade Air and Croatia Airlines are both believed to have applied. Ryanair, which has a base in Zagreb and Zadar, previously said it would seriously consider taking part in the tender. Commenting on the potential of operating domestic flights in Croatia, Ryanair said last year, “We are waiting for the 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.
Can Croatian government get anything right?
ReplyDeleteIrresponsible.
DeleteBut why???? Why hasn't the government awarded the PSO contract? It's not like the money would come from their pockets.
DeleteI don't understand it too. Not sure what they are doing.
Deletemaybe they couldnt get their cut this time, if you know what I mean..
DeleteMost likely
DeleteWhat is the government doing?
ReplyDeleteThey had one job...
Deletepure ignorance
DeleteC'mon guys, there is a war in UA. No time to deal with domestic unimportant contracts.
DeleteIt isn't the first time this has happened but this is very embarrassing for the state and can do a lot of damage to airlines that are planning to operate these flights.
ReplyDeleteI'm starting to think they tied Croatia Airlines' capital injection to PSO. Maybe they promised EU they wouldn't apply for PSO funding.
DeleteTrue @ anon 9.03. Domestic routes are extremely important for a country and contribute heavily to its economy.
DeleteThe fact that Croatia Airlines has not suspended its PSO flights goes to show that most of their PSO should not be covered by this funding.
ReplyDeleteNo, it's just that they know the government will cover their losses retroactively if need be.
DeleteOr Croatia Airlines knows it will be awarded all PSO contracts including the one from Trade Air :D
DeletePSO for DBV is really not needed especially in the summer.
DeleteOr it shows that Trade Air maybe knows it's not going to get the contracts this time around. Who knows.
DeleteFingers crossed this means Ryanair is coming on domestic routes although it's a long shot
ReplyDeleteIs it possible that Ryanair has submitted better deal for main domestic routes such as ZAG-DBV and ZAG-SPU, hence the government stopped the tender process?
ReplyDeleteWould not be surprised at all although it might not be Ryanair. I know first hand there were worries that several foreign airlines were waiting to apply for PSO because since Covid several airlines have started applying to all PSOs across Europe.
DeleteDubrovnik/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
DeleteAgree. Ryanair could compete for Zagreb to Dubrovnik and Split. For others they have too large aircraft.
DeleteIt is cheaper to fly Zagreb-Podgorica with Ryanair than Zagreb-Dubrovnik with subsidized Croatia Airlines flights.
DeleteThat's why I hope FR applied.
DeleteThere's no need for Fr. 737/A320 is way too big for these flights.
DeleteAnd that is why OU operates its A319/320 from ZAG to DBV and SPU? ;)
DeleteUnbelievable that the government is being so reckless.
ReplyDeleteUnbelievable? You don't know much about our government.
DeleteThat's the end of that chapter.
ReplyDeleteTrade Air is doing so well with their mainline business, I don't think they need to worry much about this loss.
ReplyDeleteIt was easy money and good money.
DeleteThese PSOs seems to have worked out quite well for Trade Air since they have been able to add 4 planes to their fleet since they got their first PSO contracts.
DeleteETF Airways also will be interesting ;) Split and Dubrovnik for example.
ReplyDeleteDo you think they applied?
DeleteIts possible . But the 737-800 is big for these routes. This can work only in Dubrovnik and Split.
DeleteWell airlines can apply for one or more routes. So it is possible that some applied for ZAG-DBV/SPU but the question is it wort it for ETF? Because it would mean they can not charter one plane anywhere. It would have to sit in ZAG (or DBV) and just fly this route. In summer that's fine but in winter I don't think utilization would be high.
DeleteAnd speaking of ETF, where are their planes now? Do they have clients?
DeleteGood luck to OU then, they should be awarded the whole lot. Keep Ryanair away!
ReplyDeleteShame :(
ReplyDeleteI really don't get why there is PSO in summer for tourist destinations.
ReplyDeleteBecause I assume even in summer the majority of those routes can't turn a profit.
DeletePSO for DBV and SPU is just an excuse to give some money to Croatia Airlines.
DeleteOf course
DeleteIt took them more than 2 years to launch a tender and it seems it will take them another 2 to select a winner. Shambles.
ReplyDeleteDisappointing...
DeleteWasted opportunities. Some routes are unnecessary while others not included would be really beneficial.
ReplyDeleteSuch as?
DeleteOSI-ZAG route is ridiculous.
DeleteIf the OSI-ZAG flights were properly timed, to make connections during the waves, it would work just fine.
DeleteThere is a perfectly fine highway connecting both cities.
DeleteYes there is a good highway, but why pay extra for fuel and parking costs in Zagreb.
DeleteHow 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?
ReplyDeleteI believe it's negotiated directly with the government but the metrics you listed are taken into consideration.
DeleteI see. Thank you.
DeleteInteresting that Adria wanted to bid while they were still around. Makes sense though. Their Saabs would have been perfect for some routes.
ReplyDeleteThey were desperate for any money they could get.
DeleteTrue. But equipment for these flights was a good fit.
DeleteWatch OU get awarded all twelve routes
ReplyDeleteThis is just crazy. I don't know what the government is playing here.
ReplyDeleteOSI could be particularly impacted by this.
ReplyDeleteOSI isn't viable as an airport
DeleteThe airport struggles both commercially and financially.
DeleteOSI is a cargo airport. It handles more cargo than Zagreb and Ljubljana.
DeleteHow is 13,460kg (OSI) more than 24,874t (LJU) and 12,881t (ZAG)? These are statistics for 2019.
DeleteWhat's more worrying that no one seems to care. Where are the airport to put preassure on the government?
ReplyDeleteBecause the people running the airports were appointed by the government and party. They don't want to complain and seem ungrateful.
DeleteSomeone should be held responsible for this.
ReplyDeleteSomeone should be held responsible for a lot of things in Croatia.
DeletePravomocno presudjena zlocinacka organizacija mozda? Mali Ivica u prvom osnovne zna da ce Hrvatska tonuti sve dublje i dublje dok god ADEZE uz pomoc kupljenih zetoncica i pupovaca ostaje na vlasti i unistava sve oko sebe zbog osobnih koristi i povlastica
DeleteThat is why that country is slowly having less and less people living there, people suffering injustice, and finding justice somewhere else. But I do believe in justice for those criminals that have been ruining everything for decades, and the worst is the fire likely awaiting all those you just mentioned who are enjoying their temporary lives. When their end comes, I would not want to be in their spot for sure.
DeleteHopefully they work it out. These routes are important.
ReplyDeleteI understand but some routes are really unneeded
ReplyDeleteEspecially since the driving distance between some is short.
DeleteThis has really become a mess.
ReplyDeleteJust another way to pump money into OU
ReplyDeleteAnyone know the real reason why the government hasn't selected anyone?
ReplyDeleteNo one knows. It's inexplicable.
DeleteButkovic too busy to deal with this...
DeleteFools in government.
DeleteWhat a disaster.
ReplyDeleteThis could have a very negative effect on domestic air travel and passenger performance for some airports. Shame on the government.
ReplyDeleteIs OU selling tickets for the domestic PSO routes?
ReplyDeleteYes
DeleteLove that Trade Air livery
ReplyDelete+1
DeleteWe all don't know the real reason behind this but yes I do have a feeling it somehow has to do with OU.
ReplyDeleteMe too. No other reason makes sense.
DeleteThey are up to something, that's for sure.
DeleteThis is not good
ReplyDeleteSelect the operators ASAP.
ReplyDeleteAt least the EU will be happy since it is part of their green policy :D
ReplyDeleteI hope they do revise the PSO contracts because I think some route are unnecessary while others not included would be really beneficial.
ReplyDeleteIf they start revising it, they won't adopt it for another 5 years.
DeleteWhat are generally the loads on these domestic Croatian flights? If they are marked as PSO it's probably not great outside of peak summer?
ReplyDeleteOther than ZAG-DPU/SPU and ZAG-BWK loads are very light but the scenery on these flights is beautiful.
DeleteHow transparent
ReplyDeleteI'm honestly surprised at how non transparent this whole process is. You would expect that the EU would have some rules where you would have to show which airline applied, for what, what is the value of the contract...
DeleteThis is just another way to keep this dinosaur alive.
ReplyDelete+1
DeleteSomething tells me OU will get all the routes.
ReplyDeleteWell at least now we know why OU is going to lease an extra plane.
ReplyDeleteBravo Hrvatska?
ReplyDeleteHi. I am an Australian who will be visiting Croatia this summer. I wanted to fly Pula to Split with Trade Air in July. Do you think this will still be possible? Or should I look at an alternative such as Pula to Zadar with OU, and road transfer to Split?
ReplyDeleteIf it's any consolation to you, the Australian government is also inept and corrupt!
Pula to Zadar is a connecting route to Zagreb, so generally pretty light. You can probably get away with waiting it out until June to see if PUY-SPU becomes available through Trade Air and then if not PUY-ZAD and then a road/bus transfer isn't awful (it adds another 2-2.5 hours).
Delete