Croatia - Civil Aviation

Summary

A country of 56.5 thousand square kilometres and 4.4 million inhabitants accommodates 11.2 million tourists every year, of which 9.4 million are foreign. On top of that, Croatia's boomerang shape and a long strip of coast guarded by mountains often make it cheaper and/or easier to travel by air than by car or railroad. However, despite double-digit growth in the early 2000s, passenger traffic in Croatian airports has not yet regained its all-time high of 5.45 million from 1987. Still, that recent growth is necessitating that the airports undertake ambitious expansion projects.

The ten Croatian international airports are 55% owned by the central government, with the rest distributed among different levels of local authorities. Due to this fact, airport development projects are financed primarily through lending and own funds. Airport expansion projects are currently the largest traffic infrastructure projects in Croatia.

The expected construction of the new terminal building at the Zagreb airport is the largest project by far, and has been discussed since the late 1990s. The total cost estimates for the project have varied between EUR212 million and EUR300 million and it is probable that the Zagreb Airport will opt for a BOT concession model. Expansion projects at the airports in Split and Dubrovnik are already in advanced stages.

Passenger traffic and revenues for the top five Croatian airports in 2009:

Passenger transport in Croatia, 2009:

Cargo transport in Croatia, 2009:

Market Data/Background

Zagreb Airport

Expansion of the Zagreb Airport has been one of the most anticipated projects in Croatia since 2000, when several companies were short listed as the potential BOT concessionaires. However, the tender was annulled as the management decided to construct the terminal with the airport’s own resources. Just as the local construction firm IGH Inc. (www.igh.hr) won the tender for the architectural design of the new terminal building, the financial crisis struck and the plans to finance the terminal construction through lending were abandoned. Recent statements from the management indicate that the new terminal building should be constructed by 2014 using the BOT model.

In the meanwhile, the airport will expand the existing terminal building to allow more space for check-in passengers. The expansion will cost approximately USD7.2 million and should be completed just before the works on the new building begin. In addition, the airport is preparing the tender documents for equipping the phyto sanitary inspection point at the border crossing. The project will cost approximately USD7 million, of which USD5.2 million will come from the EU IPA grant funds.

Dubrovnik Airport

Although the passenger traffic through Dubrovnik Airport noticeably decreased in 2009 (in spite of record figures for August 2009), studies indicate that the traffic through the airport could reach as much as 4.5 million passengers by 2025. The airport just finished the reconstruction of the domestic passenger terminal and relocated its baggage handling area. In addition, Dubrovnik Airport became the first airport in Croatia with passenger boarding bridges.

Dubrovnik Airport intends to continue with expansion and accommodate more than 2 million passengers annually by 2011.

Split Airport

Having surpassed Dubrovnik Airport in terms of passenger traffic for the first time in 2007, Split Airport captured the position of the No. 1 coastal airport in Croatia. Located next to the number one passenger seaport in Croatia and linked to the Zagreb-Split highway, Split Airport can look forward to steadily increasing traffic volumes. It plans to expand its capacity to 1.6 million annual passengers by 2012. In order to do that, Split Airport initiated a EUR40 million investment plan for the expansion of the passenger terminal and the aircraft parking area. The airport is currently expanding the aircraft parking area, a project that costs approximately USD14.5 million.

Pula Airport

Ryan Air and its eclectic group of flights from Pula - Belgrade, Kiev, Moscow, St. Petersburg, London (Stansted), Oslo, Mikonos – has helped Pula Airport gain visibility and become profitable. However, the airport failed to reach the target of 500,000 passengers in 2009, and is currently far below the 1987 figure of 670,000 passengers.

Air Carriers

Croatia Airlines is the national carrier and serves most of the key Western European destinations. With a fleet of 13 airplanes (3 Airbus 320, 4 Airbus 319 and 6 Bombardier Dash 8 – Q400) it generated revenues of EUR197 million in 2009.

Five years after its establishment in 2004, Dubrovnik Airline Ltd. registered annual revenues of EUR26 million (down from EUR46 million in 2008) using its fleet of five McDonnell-Douglas airplanes (3 MD82s and 2 MD 83s).

Trade Air Ltd. is the third registered commercial carrier in Croatia. It operates a fleet of 2 Fokker 100 and 2 L-410 airplanes and generated EUR9 million in revenues in 2009.

Market Demand/Individual Projects

Most of the airport expansion projects are already well under way, but the largest one (the new terminal for the Zagreb Airport) is still pending. Terminal construction and expansion projects at the airports in Zagreb and Dubrovnik will require installation of new EDS equipment. Pula Airport recently installed Rapiscan Systems’ EDS equipment and it is expected that other airports will continuously upgrade and expand their EDS capacities.