Following the announcement of the Ryanair base opening at Zagreb Airport (MZLZ), Croatia Airlines, as the largest user of MZLZ services, has asked its partner to harmonize the agreed terms of service with the terms offered to Ryanair, reports HRTurizam.
After Zagreb International Airport and Ryanair announced the opening of the Irish airline base in Zagreb on March 30, Croatia Airlines, as the largest long-term user of MZLZ services with more than a 50 percent share of its annual passenger traffic, asks its partners to align the agreed terms of airport services with better commercial terms than those obtained by a new competitor in Zagreb, Ryanair.
“Passengers and the Croatian public have the right to competitive prices and complete and objective information. It is inadmissible for the national airline to finance the entry of new competitors on the Croatian market,” emphasize Croatia Airlines and point out that they expect that better conditions for Croatia Airlines will be agreed upon in upcoming meetings.
A large number of strong competitors is a market reality that Croatia Airlines (CA) has been facing in its operations since its establishment, and there is really nothing controversial in that, CA said in a statement but pointed out that it is unacceptable for a national airline to finance new entrants.
“Specifically, under the terms offered to Ryanair, the national airline Croatia Airlines would pay HRK 135,384,105 less than the amounts actually paid in 2019, which would mean that the company, instead of the reported net loss of around HRK 80 million, would report a net profit of more than HRK 55 million that year,” CA said, adding that the terms offered to Ryanair are in line with information from the MZL Zagreb website, which includes the recently published Growth Incentive Model, which was a prerequisite for the arrival of Ryanair.
Namely, the mentioned Traffic Growth Incentive Model explicitly states that the existing routes are defined (according to the IATA code) in Appendix A of this document. All other routes that are not listed in that appendix are considered non-existent.
“It is interesting to note that the IATA codes mentioned refer to airports and not to locations, i.e., regions and cities in which they are located, thus camouflaging the intention of MZLZ to install new carriers on the same markets without hindrance, which directly benefits from more favorable conditions. Therefore, the incentive model camouflages Ryanair’s announced traffic to destinations to which Croatia Airlines (and other carriers) also fly,” CA said.
As the MZLZ offer has not yet been received despite the urgent reaction of Croatia Airlines and the meeting, Croatia Airlines is aware of the existing legislation and warns the Croatian public of distorting equal market competition and potentially harmful effects due to obvious interests.
For effective market competition among entrepreneurs in certain markets, it is necessary to ensure equal access to and survival in the market, which is achieved through domestic and international legislation, especially at the European Union level. The relevant market, in this case, is the cities and regions, routes, and destinations to be flown, which are part of Ryanair’s announcement: Brussels, Frankfurt, London, Paris and Rome, Milan, Munich, and Oslo). Croatia Airlines has independently developed and invested in all of the above markets for years and in some for decades.
“We appreciate the efforts of MZLZ to ensure new turnover, but only based on impartiality, the same regulated conditions for all companies and without benefits. At the same time, we expect that MZLZ will meet Croatia Airlines’ needs in the same way and that the conditions will be harmonized with those achieved by Ryanair, taking into account the number of routes and transported passengers. Failure to approve the same, or even greater discounts to Croatia Airlines about the amount of traffic and the number of destinations, endangers equal competition and knowingly inflicts direct damage on the national airline that is majority-owned by the Republic of Croatia,” point out Croatia Airlines, adding that according to available information, and given that Croatia Airlines in 2020 achieved a market share in the total turnover of MZLZ of 62 percent of transported passengers, Croatia Airlines does not consider it necessary to finance its competition and expects to reach an agreement as soon as possible with MZLZ on better commercial conditions, to provide the Croatian public and its passengers with what they rightly expect.
CA also points out that during the entire pandemic, it did not interrupt traffic at any time, unlike all other airlines that disappeared from the Croatian market in extraordinary circumstances (March 2020). After operating only one flight per day from the beginning of April to the beginning of May 2020 (Zagreb – Frankfurt – Zagreb), the national airline invested in the gradual renewal of traffic by increasing the number of destinations and frequencies following market demand.
In the end, Croatia Airlines reminds that from 2016-2019; they opened ten completely new destinations from Zagreb (St. Petersburg, Lisbon, Bucharest, Oslo, Helsinki, Stockholm, Dublin, Prague, Milan, Mostar), for which they received a total of HRK 1,459,521 in incentives from MZL Zagreb. For twelve routes, of which most are not new, Ryanair annually received 30 times the incentives.
Also, Ryanair announced the opening of its base in Zagreb with only two aircraft. Simultaneously, the national airline owns 6 to 7 times more, or 12 to 14 based aircraft that have been flying successfully for decades, adhering to the highest safety and professional standards, concluded CA.
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