"Pilots take no special joy in walking. Pilots like flying." - Neil Armstrong
COVID-19 CRISIS: We are saving Croatia Airlines, but what about airports?
Written by: Nenad Sredojević.
We recently witnessed that, for the second time this year, the state has financially supported the national airline Croatia Airlines.
The total amount of money is so dizzying that we are afraid to add it up and publish it.
The need to help a state-owned company, which even in the years before the COVID-19 virus pandemic was creating losses, is breaking spears in the public, which is mostly against that.
This is expected, since the state money comes from the citizens and is again directed to a company that did not make much effort to justify the help received with results and successful re-organization.
It is normal that the citizens are indignant and think that no more money should be given to "that bottomless pit" as they call it. Moreover, the question arises whether Croatia needs Croatia Airlines at all? So the public even calls for the downfall of the carrier for someone else to come and fly instead of it "so we will have cheaper tickets, better flight schedules, better destinations…"
To the latter we must tell you NO!
No one else will come. At least not someone who will provide the conditions we want, that is, lower prices, better flight schedule, better destinations, flight connections ... etc.
Why? Because most lines (all domestic) are ultimately unprofitable. That is why the state gives PSO.
As much as se think Croats are flying all the time, planes flew more than half-empty on some routes most days of the week.
We were also interested in whether the state is also helping airports, following the example of the stumbled airline, because the crisis in aviation affects everyone equally.
It goes without saying that we were amazed by what we learned. Airports may have lower maintenance costs, but "cold drive" also requiers money.
Croatia has 7 "big" airports. We contacted six of them who have regular traffic, as well as the Ministry of Transport to find out if the state is planning to help airports and how. We did not receive an answer to the inquiry by e-mail from the ministry, even after a phone call.
The question we asked the airports was, "Did the airport seek or receive any financial assistance from the state to mitigate the effects of the coronavirus pandemic? If so, what kind of assistance was it?"
We additionally asked the largest airport, Dr. Franjo Tuđman, Zagreb, how things stand in terms of concessions.
"Given the significant drop in revenues, Zagreb International Airport met the conditions for the use of the package of measures to help the economy, which was approved by the Government of the Republic of Croatia, and we use measures to support the preservation of jobs.
MZLZ as a concessionaire of Zagreb Airport, in accordance with the Concession Agreement, invoked the aggravating circumstance of force majeure (given that the epidemic is the main cause of a significant drop in traffic) and requested a postponement of the concession fee. In accordance with the concession agreement, the company's liquidity is regularly monitored and it is expected that the payment of the concession fee will be postponed until the company's liquidity is at a level that ensures safe continuity of all business activities. "
Dubrovnik Airport confirmed to us that they also use measures of the Government of the Republic of Croatia to preserve jobs for slightly less than 400 employees, but Commercial Director Ivan Maslać for emphasized to AvioRadar that they did not ask for other types of help because they do not need them and their liquidity is stable.
Results in the years before the pandemic in which they sought to be frugal, and that the frugality they have is now intensified. Dubrovnik Airport management had the cooperation of the unions in determining the austerity measures in these times of pandemic.
The director of Split Airport, Lukša Novak, confirmed to us that they are using the support of the Government to preserve jobs.
"Split Airport Ltd. is not a beneficiary of state aid, state guarantees or subsidies.
The only thing is that Split Airport used subsidies to preserve jobs under the conditions determined by the Croatian Employment Service.
These aids do not have the character of state aid because they are an integral part of the measures of the Government of the Republic of Croatia that aims to preserve jobs in the most vulnerable sectors."
Josip Klišmanić, CEO of Zadar Airport, told us the following:
"Zadar Airport used the assistance to mitigate the consequences of the COVID-19 pandemic that was available to it. The help received was in the form of release of tax liabilities in the period from March to May, due to reduced revenues as a result of the pandemic. After that, from June onwards, we use job-saving grants in the form of compensation for part of the salary and part-time work.
We did not have any other aid related to repairing the consequences of the pandemic in the form of direct financial benefits. "
When asked if they asked for or received help, Rijeka Airport answered:
"Given that the state has not provided any program of assistance to airports, Rijeka Airport has not requested any financial assistance to mitigate the consequences of the pandemic, despite the difficult situation and a drop in traffic of over 85%.
To our knowledge, the only form of state aid for the entire transport sector was issued under the State Aid Program for the Maritime, Transport, Transport Infrastructure and Related Activities in the current pandemic of COVID 19 (OG 77/20, 116/20) in the form of approval of state guarantees on credit indebtedness.
However, of course, direct financial injection and credit indebtedness certainly cannot be considered equal treatment. "- Vedrana Čubranić, Head of Business Development told us in the official reply.
Nina Vojnić Žagar, CEO of Pula airport:
"Pula Airport Ltd. as well as other airports is a beneficiary of the Support for the preservation of jobs of the Croatian Employment Service in activities affected by coronavirus, starting from July (HRK 4,000.00 net per eligible worker, with the tax administration writing off contributions to and from the salary to the stated amount, and HZZ payment of contributions for the second retirement fund).
The support was granted to us starting in July, when we were classified as eligible employers.
Therefore, it is a question of using measures that are intended for other employers in eligible activities, and according to the conditions stated in the support."
However, what director Žagar did not tell us, and AvioRadar found out, was that Pula Airport was expecting a grant, but after the announcement of the State Aid Program in the current pandemic, they were told that they could only get state guarantees for borrowing from commercial banks because of grant money not in the budget!
And that is the answer to our question from the title.
There is nothing planed for the airports. There is money in the budget for the company that produces the biggest loss, but not for those who operated on an upward path before the pandemic.
Take a loan!
This is irresistibly reminiscent of the post-war years when the unstoppable state borrowing began, which to this day has seen no light at the end of the tunnel.
It should be fair to say that the situation is the same across Europe, where carriers ask for and receive help, while airports are doing very poorly on this issue. And not only that, but the carriers are pressuring and blackmailing airports and demanding a reduction in fees, what makes them double subsidized.