Sunday, 10 October 2021

Croatian Bus Companies Still Facing Issues, Ticket Prices to Increase

October the 10th, 2021 - Croatian bus companies have been experiencing major issues for a long time now, and things have been made exponentially worse by the ongoing coronavirus pandemic. It seems that ticket prices are set to go up and some very important services could well be lost in the wake of the continued problems hampering this industry.

As Poslovni Dnevnik writes, the a group of bus line carriers which belong to the Croatian Employers' Association (HUP) has asked the Croatian Government to issue an identical conclusion that was recently obtained by the construction sector.

Namely, the Government pointed out in its explanation that the prices of certain raw materials used in the construction sector increased in price enormously, heading well into the double digits, and has made moves to make things easier on this enfeebled sector. The Croatian Employers' Association has naturally welcomed the Government's help in this matter, but has also pointed out that similar problems exist in other sectors - primarily those whose operations depend exclusively on the price of energy, which has exploded in recent weeks. For example, Eurodiesel prices are currently above eleven kuna.

Hrvoje Mestrovic, who is the president of the aforementioned group of individuals from within this Association, pointed out that Croatian bus companies will be forced to increase the prices of their services and their tickets, but the problem of already signed contracts for student transport remains a potentially enormous issue.

''When it comes to passenger transport, the key input is the cost of fuel and that is something which has really exploded, with predictions of even further growth. Croatian bus companies will soon not even be able to provide student transportation services they've previously agreed to undetake,'' said Mestrovic.

Many companies operating within this particular industry feel well and truly ignored by the Croatian Government and this is far from the first time they've felt that way. It seems that as issues continue and recovery is made more difficult, the situation isn't about to improve any time soon.

For more, check out our business section.

Tuesday, 20 July 2021

Croatian Bus Companies Caught Off Guard by Market Deregulation

July the 20th, 2021 - Croatian bus companies have been among the hardest hit when it comes to the pandemic, as certain agreements for them haven't come to fruition and money is being haemorrhaged left, right and centre.

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.

For more, follow our business section.

Wednesday, 9 June 2021

Croatian Bus Companies Continue to Feel Intolerable Pressure

June the 9th, 2021 - Croatian bus companies running along county and inter-county lines have been suffering tremendously throughout the pandemic, and despite the state insisting on getting involved to relieve the pressure, nothing has happened.

As Poslovni Dnevnik/Darko Bicak writes, although after a three-year delay this spring, a decision has finally been made to regulate the public road passenger transport service, Croatian bus companies running along the aforementioned lines warn that nothing is still happening.

As was stated in the open letter sent to the Prime Minister by the Croatian Employers' Association (HUP) and the Federation of Independent Trade Unions of Croatia (SSSH), an urgent meeting is requested regarding the regulation of such regular public transport.

"Ready-made legal solutions that were a precondition for signing the contract for public line passenger transport on county and inter-county lines up to 100 kilometres, aren't being implemented due to the sheer inertia of state administration bodies.

The fact is that the decision on the distribution of funds from the state budget to the counties hasn't yet been made, although, to the knowledge of the UAS and HUP, the funds have already been secured. On top of that, no public service contracts have been signed between the counties and private Croatian bus carriers that maintain public regular passenger transport,'' they stated from HUP.

They state that private Croatian bus carriers within the scope of HUP are responsible for as much as 80 percent of public transport operating along county and inter-county lines of up to 100 kilometres, and employ more than 7,000 workers who are directly affected by such irresponsible behaviour of the competent ministries.

Namely, they point out, without concluding a public service contract, not only has the process of collective bargaining to improve working conditions in the transport sector been stopped, but existing jobs have also been called into question.

"By further prolonging the adoption of the Decision and signing contracts with private Croatian bus carriers, the maintenance of most public bus lines is now endangered, especially in rural areas. For three years now, workers and private public transport providers have been unable to plan their businesses and the prospects of their companies.

The signing of a contract on public regular transport is a precondition without which it's impossible to improve the working conditions of employees, especially drivers, who are also in short supply,'' said the Croatian bus operators.

HUP explains that the maintenance of most bus public lines is endangered due to the misconception that carriers were brought into because they based all of their business and investment plans on the Law which provided that public transport be organised by public service contracts until November the 30th, 2019, which hasn't been implemented, although it is the only model applied in the entire EU in such situations.

"This activity is capital intensive and Croatian bus carriers are under heavy and long-term obligations, which are now being called into question. We've been prevented from using EU funds because public service contracts are a precondition for them. Now 1611 km2 of territory and 1.5 million inhabitants of Croatia are covered by public service contracts, while almost 55,000 km2 and as many as 2.8 million of the country's inhabitants aren't,'' they explained.

While Croatian bus carriers have enormous and more than justified concerns about their continued existence, the multinational and wildly popular platform FlixBus, which has expanded here in Croatia over recent years, is planning yet more investments and further expansion. The FlixMobility Group has concluded a new round of funding totalling 650 million US dollars.

As they point out from FlixBus, the new estimated value of the company is now more than three billion dollars. The investment will enable the expansion of the bus line network throughout the USA, here in Europe in Great Britain, France and Portugal, as well as further expansion in the markets of Eastern Europe and even Turkey.

For more, follow our business section.

Monday, 3 May 2021

Croatian Bus Companies Continue to Flounder Amid Pandemic

May the 3rd, 2021 - Croatian bus companies are continuing to struggle as the pandemic goes on, with much needed help and the necessary contracts still having not been dealt with properly.

As Poslovni Dnevnik/Darko Bicak writes, although the Road Transport Act, which is known to the public for its current regulation of the taxi market, also regulated the market of Croatian bus companies operating along public intercity transport lines, but only a recent Government Decree has revived this regulation in real practice.

With its regulations, Croatia has taken on the European Union (EU) practice of determining communal regular transport, which Croatia has defined at the county level and referred to as a public service (PSO).

Croatian counties were thus given the right and obligation to prescribe their county network of Croatian bus companies, more specifically their lines, and the carriers operating along those lines would need to be paid.

Contracts for this sort of public service are typically signed for a very long period, from 7 to 10 years to more precise, and the estimated value of these contracts at the level of all counties stands at around one billion euros. However, the current text of the law has introduced nothing but confusion among county leaders, on two levels: how can those carriers be chosen and how can such a service be paid for at all?

This law, least in part, mentions that when concluding a public service contract they are obliged to respect the acquired rights of those Croatian bus companies and carriers who performed transport on the basis of permits or concessions on the day the law came into force. Despite that, the counties didn't know how to choose such carriers, nor did they realise that there are a number of carriers that have "acquired" rights in their territories - meaning that they may run the same or similar lines at certain intervals. They were also unsure of what way they might sign such valuable contracts without the need for a public tender process and potentially expose themselves to risks, lawsuits and even criminal charges.

There is also the issue of financing, ie co-financing by the state. These are the key reasons as to why this form of public service hasn't yet been contracted in any Croatian county.

The recent regulation on the procedure for concluding public service contracts, on the other hand, has allowed counties to enter into contracts either through direct negotiation or public tenders. There is a conflict between traditional Croatian bus companies and carriers that have maintained concrete lines for decades and new players who, perhaps with a lower price, would like to enter the market and take over.

Those traditional carriers complain that existing Croatian bus companies and their lines in county transport are unprofitable, that they have been knowingly accumulating losses for years, operating at the margin of profitability and actually "maintaining their infrastructure" in the public interest. Although the details of these concessions for PSO are yet to be seen, the price mentioned so far is 11.20 kuna/km without VAT and higher.

On the other hand, newer and smaller Croatian bus companies and their carriers who either have limited access to public service contracts or have never had the opportunity to run along those services in that domain are protesting and demanding for open and transparent access to public tenders for that service.

Carriers estimate that the total cost of this type of transport is around 690 million kuna, and as this regards mostly unprofitable lines that are more important for the regional development of the country than for actual earnings, subsidies of an estimated 427 million kuna per year are necessary.

The Croatian Employers' Association (HUP) emphasises that concluding the first contracts by direct settlement for all bus carriers according to this model is a transitional solution and necessary from the context of maintaining business continuity and providing the basic public service of public regular bus transport to citizens.

''The preparation of public tenders for these needs is a long process and by that time, the financing of unprofitable lines should be ensured in order to prevent the collapse of lines and carriers that have been maintaining these lines for years.

Croatian bus companies who run regular public transport lines have been investing in their tangible assets for years with the intention of making a reasonable profit in the future based on their rights to intangible assets, and these are our markets and our lines,'' HUP stated, adding that carriers on local lines have incurred large losses in previous years and care should be taken to have large assets engaged for public needs and to ensure their transition in the future.

They also emphasised that after the expiration of these "first" contracts, public tenders will be announced, with the exceptions defined by EU Regulation 1370/2007 where public bidding isn't mandatory for internal operators, or in the Croatian case for those owned by local government units.

"It should be understood that these contracts, according to the EU Regulation, aren't contracted on the principle of a fixed price, but instead they include the separate management of all costs and proof of each cost by the operator, increased by a reasonable profit. The public administration covers the difference between these amounts and the realised revenues from ticket sales. Consequently, these tenders are much more complex and must include a lot of elements that must be built into them. The implementation of these contracts allows existing carriers to adapt to the new way of doing business and the transparent control over the spending of public funds. 

All European Union countries and their respective private carriers, which won the first contracts without a public tender, did it this way. All these carriers can apply for the tender in Croatia, and it's necessary for Croatian carriers to have the same starting positions, ie that they have experience in performing public service contracts in order to be able to compete in the EU tomorrow,'' they concluded from HUP.

One of the transport companies that is potentially interested in the PSO service is the wildly popular FlixBus platform. Ante Grbesa, the director of FlixBus CEE South region, pointed out that the process of concluding public service contracts, which enables counties to conclude contracts through tenders, is certainly one of the positive steps in market transparency.

“Here, first of all, the basic task of all counties is to communicate their needs for a network of lines for which carriers can then offer their service. Transparency and clarity of the use of public money of Croatia's taxpayers that will be achieved in this way, this is important not only in terms of consumption, but also in terms of choosing the highest quality and the safest organised local transport,'' stated Grbesa.

For more, follow our business section.

Tuesday, 20 April 2021

Croatian Transport Companies Face Anxieties as Monatoriums Expire

April the 20th, 2021 - Croatian transport companies have been dealt an extremely heavy and deeply unforgiving blow by the ongoing coronavirus pandemic, and with monatoriums expiring and cash continuing to dry up, many have been left biting their nails as the government scrambles to find a solution.

As Poslovni Dnevnik writes, all those whose moratoriums expired on April the 12 have their interest due. The Croatian Government has promised to find a solution to this pressing issue which primarily concerns Croatian transport companies, but it seems that another in a series of promises has been circumvented, and at the same time leasing companies have already been swift in starting to confiscate vehicles.

“The Transport Committee of the Voice of Entrepreneurs Association (UGP) held a meeting with the Ministry of Maritime Affairs, Transport and Infrastructure back on March the 24th. Subsequently, on March the 25th and 26th, we held additional consultations with ministry representatives on the financial assistance model. Again, after meetings and consultations at which concrete assistance was agreed, the Croatian Government and the competent ministries failed to make a decision to solve the problem for companies whose moratoriums have now expired.

We must point out in this way that the leasing companies initially supported the requirements of Croatian transport companies who deal with passenger transport and that they expressed a desire to approve further reprogramming. What unpleasantly surprised us after such an initial attitude from the leasing companies was the fact that leasing companies still started confiscating vehicles. We have information that a minimum of 30 vehicles have been seized in the past two weeks alone. In addition to that, while we've been receiving information from leasing companies that they're fully approving the reprogram, the situation on the ground is completely different. To our knowledge, leasing companies approve reprograms for vehicles that they're sure they can't sell, while for other vehicles that have a chance to be sold for half price, they aren't approving the reprograms. It also happened to our members in which they had to sign a reprogram for a period of 12 months, only to receive a new offer just a few days later, in which 12 months is replaced by only 3 months,'' the aforementioned Association explained in a statement.

The Croatian National Bank is also a big problem in this regard, as it has not issued any instructions for new moratoriums, ie reprograms. Leasing companies weren't invited to a meeting at the Ministry of Finance to agree on potential reprograms and government guarantees at all.

"Additionally, we must point out that the Transport Committee has received information that a model is being designed according to which a monthly fee would be paid per vehicle from now on, following the example of other European countries. We must point out that other countries have been doing this since the very beginning of the coronavirus crisis and that you can't just 'erase' the past year just like that.

In other countries, after a year of such assistance, carriers aren't having any problems with paying interest due on leases because they've paid them from the said assistance in the meantime. Such a model cannot rescue any carrier because they have nothing to settle their debts that have accumulated in the last year with. We don’t understand why we’re trying to find a model that has nothing to do with what we’ve been arranging. The model that is now planned to be proposed will not be effective, it isn't going to help anyone,'' they added.

The Association is appealing for the acceptance of the proposals devised and proposed by Croatian transport companies together with the representatives of the Ministry of Maritime Affairs, Transport and Infrastructure. It is an amount of 200 million kuna that will save the entire industry, jobs and ensure the survival of the new deeply weakened Croatian transport companies. Otherwise, this activity could become the first permanently destroyed branch of the Croatian economy without any chance of recovery.

"Less than four weeks ago, I stated that a light could be seen at the end of the tunnel for Croatian transport companies dealing with passenger transport. Unfortunately, that candle burned out. April the 1st is now long gone, all leasing companies have sent clients their full installments and interest for the past period. We've broken the due date for payment and that is unfortunately the end of it. It's tragic that absolutely nothing has been done to help this sector.

I'd like to congratulate Prime Minister Plenkovic, Minister Maric (Minister of Finance) and Minister Butkovic (Minister of Transport) for classifying Croatia alongside Albania, as the only countries in Europe that haven't helped the passenger transport business,'' said Marko Sliskovic, the coordinator of the Transport Committee of the Voice of Entrepreneurs Association (UGP).

For more, make sure to check out our business section.

Saturday, 27 March 2021

Croatian Bus Company Business Unsustainable Without Public Services Contract

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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Saturday, 13 March 2021

State to Offer Intervention Help to Croatian Bus Companies After All

March the 13th, 2021 - It seems that the state is set to step in after all with intervention aid for a long suffering industry that has been dealt a heavy blow by the ongoing pandemic - Croatian bus companies.

As Poslovni Dnevnik/Darko Bicak writes, at a recent session, the Croatian Government accepted the bill on amendments to the Law on Road Transport, which will provide emergency assistance to Croatian bus companies, more specifically those carries which are continuing to uphold and maintain what have now become unprofitable lines.

The Croatian Employers' Association (HUP/CEA) hopes that this bill, which is proposed to be adopted in an urgent procedure, will finally contribute to a faster solution to the burning problem faced by Croatian bus companies/regular carriers performing regular public line passenger transport.

"The current regulation of passenger transport is not sustainable given that public service contracts still haven´t been concluded, and without the adequate regulation of public bus passenger transport, Croatian bus companies maintaining these lines are being threatened with closures and even collapse, which would lead to the loss of more than 7,000 jobs," they warned from HUP.

They added that Croatian bus companies are still waiting for the implementation of the public service contract from way back in May 2018, when the law prescribing it was initially passed.

This non-implementation of that law, they point out, directly affects the collapse of the entire sector of passenger transport when it comes to buses, and without quality transport there can be absolutely no hope whatsoever of any revitalisation of rural areas across the Republic of Croatia.

Therefore, HUP will continue to insist on the urgent implementation of the Public Services Agreement, which has been defined by the Act since back in 2018, in order to prevent more layoffs and the further suffering and potential collapse of Croatian bus companies.

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