Croatian Bus Company Business Unsustainable Without Public Services Contract

By 27 March 2021

March the 27th, 2021 - Croatian bus company business is already under a lot of strain due to the ongoing coronavirus pandemic and generally less demand, but without a contract on public services, operations will only become more problematic.

As Poslovni Dnevnik/Darko Bicak writes, although the Law on Road Transport, which is known to the public for its current regulation of the taxi market, also regulated the market of bus carriers operating within public intercity transport. However, at least to date, this particular regulation pertaining to Croatian bus company business operations hasn't been implemented in practice.

Namely, as was warned of recently from the Coordination of Public Line Passenger Transport at the Croatian Employers' Association, public service contracts for these carriers have not yet been concluded despite the fact that this is a legal obligation. The aforementioned association warned that this endangers more than seven thousand jobs and transport for more than 200 thousand passengers across Croatia.

Hrvoje Mestrovic, the president of this particular coordination, pointed out that without public service contracts, Croatian bus company business operations will continue being placed under tremendous strain.

"These carriers perform 80 percent of county transport, and the continued absence of a resolution for the conditions of bus carriers and the co-financing of unprofitable lines through public service contracts as the only possible way to co-finance public regular transport, endangers the social rights of people in smaller, rural parts of the country," warned Mestrovic.

He added that they are asking for these contracts to be signed for a period of seven years so that transport companies can borrow, pay debts and invest in good time.

"The state has already secured part of the funds through the budget for the transportation of high school students to help the residents of the country's islands, and an additional 107 million kuna is planned to be spent on that. This would ensure, with the additional possible co-financing of the municipalities and counties themselves, that the complete public line transport is maintained so that the lines don't end up being totally shut down,'' explained Mestrovic.

Bus carriers estimate that the total cost of this type of transport, which in 80 percent of cases is performed by private enterprises, stands at around 690 million kuna in total. As these are mostly unprofitable lines that are more important for the regional development of the country than for earnings, subsidies of an estimated 427 million kuna per year are necessary.

Carriers claim that a large part of that amount is currently being spent on transport, but that the system is unregulated and remains chaotic.

The Croatian Employers' Association's Damir Zoric, pointed out that bus companies have been brought to the brink of uncertainty because they cannot plan their business precisely because they were guided by the provisions of the applicable law which still isn't being regulated properly.

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