Watchdog clears Zagreb Airport of Ryanair favouritism
The Croatian Competition Agency has found, following a thorough investigation, that Zagreb Airport did not distort the market or put Ryanair in a privileged position compared to other carriers through its incentive program which resulted in the low cost airline basing three aircraft in the city and launching 24 routes. The growth incentive model, introduced at the end of last year, encourages airlines to commence unserved routes, however, Croatia Airlines has argued it was not offered similar conditions when it was adding new destinations to its Zagreb network prior to the Covid-19 pandemic. The Competition Agency concluded, “The determined discount system used by Zagreb Airport in this model of the incentive scheme has a standardised threshold that applies equally to all interested airlines and as such does not result in the unequal position of airlines, since the discount mechanism is not flexible and is not applied to carriers on an individual basis”.
Zagreb Airport previously noted, “The traffic growth incentive model is designed to reduce the cannibalisation of existing routes (and airlines operating on these routes), while providing maximum market flexibility and ensuring increased traffic in Zagreb. Zagreb Airport is subject to strict regulations defined by the European Commission and the Croatian Civil Aviation Agency. All incentive programs implemented by the incentive model are transparent and non-discriminatory and can be used by all airlines under equal conditions”. Ryanair Group CEO, Michael O’Leary, said, “We are not focusing on routes covered by Croatia Airlines but those that are not served from Zagreb. We plan on carrying over ten million passengers in cooperation with Zagreb Airport over the next five to six years. Croatia Airlines is a distinguished carrier, but it has lost touch with the development of air travel in Croatia, particularly from Zagreb. We do not see them as a competitor because even on the routes we both operate on, we fly to different airports”. Ryanair has three aircraft based in the Croatian capital and its winter destination network is double that of Croatia Airlines, although it still operates significantly fewer flights and offers less capacity.
On the other hand, Croatia Airlines believes it is not being treated equally by its main hub. It previously said, “Competing with a significant number of large carriers has been the reality of the market since Croatia Airlines’ foundation and there is nothing problematic in that regard. However, it is unacceptable that the national carrier is financing the arrival of new carriers on the market”. The company noted that were it offered the same conditions as the low cost giant, its fees at Zagreb Airport would have been reduced by 17.8 million euros in 2019, which would have seen the airline post a profit instead of a loss that year. It added, “We appreciate Zagreb Airport’s efforts in securing new flights, however, this should only be done on the basis of impartiality and the same terms should be offered to all companies without favouritism. At the same time, we expect for Zagreb Airport to meet the needs of Croatia Airlines in the same way and that conditions will be harmonised with those offered to Ryanair, taking into account the number of routes we operate, and passengers carried. Failure to secure the same incentives for Croatia Airlines, or even greater discounts, seriously endangers equal conditions for all and purposely causes damage to the national carrier, which is majority owned by the Republic of Croatia”.
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