Croatian Bus Companies Caught Off Guard by Market Deregulation

Lauren Simmonds

Updated on:

As Poslovni Dnevnik/Darko Bicak writes, although this situation has been going on for some time now, last week, Croatia adopted, somewhat suddenly, a measure to liberalise the bus services market in the country by lifting the cabotage ban.

On Tuesday, the Ministry of Maritine Affairs, Transport and Infrastructure issued a Notice on the relevant EU Regulation regulating the transport of passengers in international road transport under these new rules.

So far here in Croatia, bus carriers operating within the scope of international transport have been banned from buying and leaving passengers at intermediate destinations in Croatia.

Specifically, if the carrier had a line like Osijek-Vienna, although the bus passed through, for example, Virovitica, Koprivnica and Varazdin, in those cities, only passengers for Vienna were allowed to purchase tickets, but not for, for example, the Virovitica-Varazdin line.

The new regulations abolish this practice, and the only thing that remains is the ban on performing regular county transport on this basis of international transport.

The new regulations for Croatian bus companies will mean even more for frequencies between larger cities because the same practice mentioned above also applied to lines such as Split-Vienna that pass through Zagreb, but passengers from Split and Zagreb didn’t have the opportunity to use these lines for travel within Croatia.

The Coordination of Public Line Passenger Transport of the Croatian Employers’ Association (HUP) states that they’re surprised by this measure and that they oppose it and consider it high treason.

Hrvoje Mestrovic, President of the Coordination, says that they’re surprised and confused by this change because back in April, they had it confirmed by the relevant ministry that cabotage will continue to be banned. They also warn that it remains unclear exactly who made this decision and based on what act it was done.

”I really don’t know the logic of the decision-maker and that’s why we asked for an urgent meeting with Minister Oleg Butkovic on Tuesday. This will bring additional chaos to the bus market.

The new benefit is exclusively for foreign carriers, which will now be able to, in addition to their main focus on international transport, generate additional revenue on the Croatian market and thus issue lower ticket prices. The problem is that they’ll drive according to their own profitability plans, mainly during the tourist season, and the existing carriers in Croatia drive constantly.

Due to the arrival of such unfair competition, many Croatian bus companies will find themselves in troubled waters, which will lead to layoffs, the cancellations of lines and eventual collapse, so in the end nobody will be operating along that line during the winter, and if they do, the state will have to subsidise them very generously,” explained Mestrovic.

An additional problem, he continues, is that the ban on cabotage is still valid in potentially interesting markets for Croatian carriers, such as Slovenia and Hungary. He also sees the EU Regulation which regards the ban on cabotage in agglomerations as a potential issue.

From FlixBus, which is one of the carriers that should benefit the most from these new regulations, they say that their development so far in Croatia, where they cooperate with many Croatian bus companies, is in line with high demand in international passenger transport, but when it comes to the transport of passengers on Croatian territory and its potential, so far it has been largely unused due to unfavourable legislation, which directly affects every single Croatian bus company.

“The inconsistency of the Road Transport Act with the settings of the liberalised European market, which has already been discussed on several occasions – stopping the harmonisation of timetables, the impossibility of opening new lines, stopping investments, investing in fleet quality and higher travel standards, has been further expressed at the beginning of the pandemic, revealing precisely the inflexibility and closedness of the Croatian market.

Instead of heading in the direction of growth and development which are crucial to the survival of the bus industry, many Croatian bus companies have found themselves at the target of illiquidity and a questionable profitable return to the market.

At the same time, carriers that have the knowledge and ability to respond to the challenges of the pandemic, due to numerous restrictions, couldn’t get involved in free market competition,” they stated from FlixBus.

They added that FlixBus, as a carrier that operates in differently regulated markets across Europe and the world and has a direct insight into all the advantages of the open or partially open market, strongly supports the decision of the Ministry on the new regulation of passenger transport.

Traffic analyst Zeljko Marusic pointed out that this is a positive thing that will further strengthen the Croatian transport system, bring benefits to passengers, but also have positive effects on tourism.

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