SECOND INTERNATIONAL AIRPORTS CONFERENCE PLANNING, INFRASTRUCTURE & ENVIRONMENT

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1 SECOND INTERNATIONAL AIRPORTS CONFERENCE PLANNING, INFRASTRUCTURE & ENVIRONMENT SÃO PAULO SP BRAZIL AUGUST 2-4, 2006 CROATIAN AIRPORT SYSTEM AND TOURISM Stanislav Pavlin Professor of Department of Airports at the Faculty of Transport and Traffic Sciences, University of Zagreb Vukelićeva 4, Zagreb, Croatia stanislav.pavlin@fpz.hr Igor Dimnik, Marko Rapan, Vedran Sorić Assistants at Department of Airports at the Faculty of Transport and Traffic Sciences, University of Zagreb Vukelićeva 4, Zagreb, Croatia igor.dimnik@zg.t-com.hr, marko.rapan@fpz.hr, vedransoric@yahoo.co.uk 1

2 ABSTRACT Croatia is a tourist country situated in the South-eastern Europe, with approximately 10 million tourists per year. Its main characteristic is geographical diversity of terrain covering a relatively small area which has greatly influenced the development of airport infrastructure. With a population of only four and half million inhabitants, Croatia has seven international CTOL airports. Airports are dispersedly located across the country but mainly at the coast. Zagreb Airport serves the capital of Croatia and is the only transfer airport in the country, with spatial and environmental limitations to further development. Almost forty percent of total passenger traffic is handled through Zagreb Airport. Five coastal airports have high passenger figures during summer season. Approx % of tourists arrive by plane, which generated a traffic flow of 2 million passengers at the Croatian coastal airports in 2005, and this had a strong impact on their capacity requirements. Croatia has one of the most indented coastlines in the world and a great number of attractive islands. There are two stolports and two airfields situated on the islands with less than 1% of passengers of total passengers at Croatian airports. Tourists arriving by plane are transferred by buses to the ports, and then by ferryboats to the islands. Usually, the transfer lasts more than the flight time and the level of service is low. The paper indicates the necessity of a well-established strategy for the development of the Croatian airport system. It will also present a new approach for passenger transfer between the costal airports and the islands. Further expansion of airport manoeuvring area and facilities is necessary to cope with the growing demand. KEY WORDS airports, development, tourism, planning 2

3 1. INTRODUCTION Croatia is a Mediterranean country situated South Eastern Europe, covering an area of 56,000km 2 and with a population of 4.5 million inhabitants. The capital of Croatia is Zagreb whose residents form almost one quarter of the Croatian population. The shape of Croatia reminds of a hoof and it is the reason for great lengths of land borders between Croatia and her neighbouring countries Slovenia, Hungary, Serbia and Montenegro, Bosnia and Herzegovina, and the maritime border with Italy. On a relatively small area Croatia features great geographical diversity, which can be divided into three units. The continental northern and north-eastern part of the country which features hills and planes, central part with forest mountains and the coastal part along the Adriatic Sea. Croatia is characterized by numerous natural beauties as well as various climatic conditions. Due to its extremely long and indented coast and all the other natural beauties, her main economic activity is tourism. Croatian coast with the over thousand islands belongs to the most developed ones in the world. Figure 1. Karta Republike Hrvatske Posljednjih desetak godina ulažu se velika sredstva u razvoj sustava autocesta kako bi se ostvarila povezanost kontinentalnog sa priobalnim i obalnim dijelom zemlje prvenstveno radi zadovoljavanja prometne potražnje u turističkoj sezoni kada su prometna opterećenja najveća. Pomorski promet povezuje veliki dio obale s otocima. Tradicionalno, turisti dolaze u Hrvatsku najviše cestovnim prometom, nešto zrakoplovom. 2. DOSADAŠNJI RAZVOJ ZRAČNIH LUKA Najveći broj zračnih luka otvoren je 60-tih prošlog stoljeća gradnjom novih ili nadogradnjom zrakoplvnih vojnih baza. Tada se bivša Jugoslavija otvara za međunarodni turizam i naglo se, zbog loše cestovne infrastrukture, razvija zračni promet. Najveći promet putnika je ostvaren na svim hrvatskim zračnim lukama zajedno, 5,5 milijuna putnika od čega su oko 3,5 milijuna putnika bili turisti. Na obalnim zračnim lukama gotovo četiri petine putnika su bili turisti. Jedna petina svih stranih turista je u Hrvatsku dolazilo zrakoplovom. Zračna luka Zagreb je jedina bila tranzitno-transferna s ukupnim prometom do dva milijuna putnika godišnje i 55% putnika u tranzitu i transferu zahvaljujući ulozi glavne čvorne zračne luke u mreži linija Jugoslavenskog Aerotransporta (JAT). Osamostaljenjem Republike Hrvatske JAT prestaje letjeti, a novonastali nacionalni prijevoznik Croatia Airlines ima manje mogućnosti za uspostavu čvorne zračne luke. Tranzit nestaje a transfer pada na 20 %. Zračna luka Split je jedina uz Zagreb koja ima kontinuiranu godišnju prometnu potražnju sa izrazitim Italy prometom tijekom ljetne sezone. Prije rata je dosegla do 1,15 milijuna putnika. Zračna luka Dubrovnik je prije rata bila druga zračna luka po prometu sa najviše 1,5 milijuna putnika godišnje, uglavnom turista. Zračna luka Pula je bila četvrta po prometu s 0,7 milijuna uglavnom britanskih turista godišnje. Figure 1 Republic of Croatia Over the recent decade, substantial means have been invested in the development of the motorway network in order to establish connections of the continental and the coastal part of the country, primarily in order to satisfy the traffic demand in the tourist season when the 3

4 traffic loads are maximal. Maritime traffic connects a great part of the coast with the islands. Traditionally, the tourists arrive to Croatia mostly by road, and only partly by air. 2. PAST DEVELOPMENT OF AIRPORTS The majority of airports was opened during the sixties of the last century by construction of new or expansion of military air bases. The former Yugoslavia then opened to international tourism and provided opportunities for sudden development of air traffic, as result of poor road infrastructure. Maximum passenger traffic was realized in 1987 at all the Croatian airports together, 5.5 million passengers out of which about 3.5 million passengers were tourists. At coastal airports almost four fifths of the passengers were tourists. One fifth of all the foreign tourists arrived to Croatia by air. Zagreb Airport was the only transit-transfer airport with total traffic of up to two million passengers a year from which 55 percent were in transit and transfer owing to the role of the main hub in the network of Jugoslavenski Aerotransport (JAT) lines. When the Republic of Croatia gained independence, JAT ceased to fly, and the newly established flag carrier, Croatia Airlines had fewer opportunities to organize hub. The transit ceases and transfer falls to 20 %. Split Airport is the only airport, apart from Zagreb, that has continuous annual traffic demand with emphasised traffic during the summer season. Before the war it had reached a volume of 1.15 million passengers. Before the war, Dubrovnik Airport was the second airport regarding traffic with a maximum of 1.5 million passengers a year, mainly tourists. Pula Airport was the fourth with 0.7 million of prevailingly British tourists a year. The first three airports Zagreb, Dubrovnik and Split realized almost 80 percent of passenger traffic, and together with Pula over 90 percent. All the other airports had about 0.3 million passengers. The physical characteristics of the manoeuvring areas of some coastal airports do not satisfy the recommendations, and in some cases not even the standards of the International Civil Aviation Organization. This refers primarily to the runway strips. Furthermore, the number, configuration and types of taxiways are mainly obsolete and of insufficient capacity. Some airports are restricted in space so that the lack of manoeuvring area capacity and even aprons are becoming a serious problem (1). In 1989, 21 percent of tourists arrived to Croatia by air (Table 1). In 1991 started the aggression on Croatia and this caused the foreign tourists to stop coming. From the end of the war, 1995 saw gradual return of tourists. The year 2004 saw an arrival of almost 10 million tourists which is almost the pre-war volume. The share of tourists who arrived to Croatia by air was 6 percent which is much less than the pre-war volume. 4

5 Table 1 Shares of tourist arrivals per used transport means to Croatia (%) (2) YEAR TOTAL PASSENGER CARS BUS AIRCRAFT OTHER In 2005 there was a significant increase in the share of tourists who arrived to Croatia by air to about percent, which is a good sign of traffic return to Croatian airports. 3. CURRENT SITUATION Croatia has nine airports open to international air transport out of which seven accommodate conventional aircraft and two are stolports. This makes 7 per mille of the total number of airports for international traffic in the world, which realize 1 per mille of global passenger traffic. The airports are located mainly at the coast, and taking into consideration the relatively small geographical area covered by the Republic of Croatia, the distances between them are small (Figure 2). Figure 2 Location of airports in Croatia (3) There are two airports in the continental part of the country, Zagreb as the biggest one and Osijek. The airports Pula, Rijeka, Zadar, Split and Dubrovnik are located in the coastal region, and stolports Brač and Lošinj on the islands. Rijeka Airport is on the island of Krk which is connected to the mainland by a bridge, so that it is basically not regarded as an island airport. When the number of airports is compared to the area and the number of inhabitants of Croatia, their excessive number becomes obvious. The catchment areas of the Croatian airports overlap many times. The coastal airports are mainly in the function of tourism and this mainly during the summer tourist season. 5

6 The general characteristics of airports and stolports, navigation equipment, ownership, number of passengers and the passenger terminal capacities, as well as other characteristics are systematically presented in Table 2. Table 2 Characteristics of the Croatian international airports for CTOL and STOL aircraft (3) Zagreb Dubrovnik Split Pula Rijeka Zadar Osijek Brač Lošinj Location continent coast coast coast coast coast continent island island Prevailing sched. non-sched. sched./nonschedschedschedsched. non- sched./non- sched./non- general non- general traffic aviation sched. aviation Navigational CAT III CAT I CAT I CAT I CAT I CAT I Non Prec Non Prec Non equipment Croatian AP within 200km Public ownership Passenger traffic / capacity of passangers terminal (mil PAX) Rijeka Split Brač Dubrovnik Brač Zadar Rijeka Lošinj Zagreb Zadar Pula Lošinj Rijeka Lošinj Split Brač Table 2 shows that there are no passenger terminal capacity reserves at the biggest airports. The total number passengers at the Croatian airports in 2005 was 4 million passengers. When Croatia gained independence the social ownership was eliminated and public ownership was introduced at airports, 55 percent in the ownership of the government and the rest of 45 percent was divided between the city, county and local communities. The phenomenon that accompanied public ownership has been inefficient management of airports so that the number of passengers per employee was around 1,500 (Figure 3) which is much lower than the European average. The issue of shift of ownership is topical and several studies were developed that have not been realized. - Split Zadar Dubrovnik Prec Rijeka Pula Zadar 100% 100% 100% 100% 100% 100% 100% 49% 86% 1,55/ 1,6 1,08/ 1,1 0,93/ 1 0,21/ 0,8 0,12/ 0,1 0,09/ 0,2 0,003/ 0,1 0,03/ 0,06 0,01/ 0, Maximum (DBV) Medium (PUY) 50 Minimum (OSI) Figure 3 Efficiency at come Croatian airports expressed in the number of passengers per employee 6

7 4. CURRENT PROBLEMS The year 2005 saw an average increase of 15 percent of passengers at the Croatian airports. The greater increase than the average was registered by the airports in Rijeka (115%), Dubrovnik (28%) and Split (18%). The increase in transport consists mainly of tourist traffic (4). The existing stolports on the islands of Brač and Lošinj (Brač can also accomodate minor CTOL aircraft) realized traffic of thousand passengers a year. It does not provide economic justification for the construction of such airports on other islands. The Physical Planning Programme of the Republic of Croatia includes the possibility of constructing an airport for light aircraft with or without paved runway with the aim of developing tourism and for emergencies (5). On the islands of Hvar and Unije there are examples of such airports. 5. MODELS OF MANAGEMENT AND OWNERSHIP In the world there is a large number of models of ownership, management and business operation. In the operation of the Croatian airports, as already mentioned, tourism and its seasonal characteristics have great influence. The traffic demand outside the tourist season is relatively small, which makes it difficult to maintain the cost-efficient operations during the entire year. Therefore, it is necessary to find a way in which great oscillations in the demand over the year can be reduced, that is, to find a way to increase the demand outside the tourist season. The cooperation with the tourist sector here is of extreme significance, with the aim of prolonging the tourist season outside the summer months as well. The airports should be market-oriented business entities that use marketing strategy and right positioning on the market to increase their productivity and cost-efficiency. The Croatian government as the majority owner is aware of the need to increase the efficiency of the operation of the Croatian airports, primarily through the implementation of new forms of ownership, that is, management. The studies made up to now have not provided satisfactory solutions, nor has the Croatian government accepted those results as the model of future management. It is obvious that the current inefficient management and ownership system will have to be changed. 6. AIRPORT COMPETITIVENESS Due to relatively small distances between the Croatian airports, their catchment areas overlap. Figure 4 shows the gravitation areas of the Croatian and the neighbouring airports by means of circles with radius of 110 km. This is the equivalent to car drive of 90 minutes regarded as the limit for passengers who use the network carrier services, whereas in low-budget carriers this limit is expanded. In spite of the relatively small distances, the airports were not real competitors on the market. The relative position on the market as well as the operation concept of the flag carrier, Croatia Airlines, have not provided the atmosphere of market competition and fight for every passenger. The passengers who used air transport services in scheduled operations decided on their airport of origin exclusively regarding the closeness, and not price since the prices of the carriers were almost uniform due to the regulation of the market. Also, since Croatia is mainly a receptive market, the carriers, especially the non- 7

8 scheduled ones, chose for their destination airport in Croatia the one which was closest to the passengers end destinations. The airports themselves could not have any major influence here, since the demand depends exclusively on the available tourist capacities in a certain region. Figure 4 Catchment areas of the Croatian and neighbouring airports (6) However, the situation on the market has changed significantly with the arrival of new carriers, primarily the low-cost carriers. The Croatian airports started to compete for the first time for the carriers and the passengers themselves. The appearance of low-budget carriers and their arrival to Croatia had as consequence the reduction of prices in airport service taxes. Some airports do not accept such low fees for airport services, whereas, Rijeka Airport, for instance, accepted them. By accepting the conditions of low-budget carriers, the management increased the traffic in 2005 by 115%, from 55 to 122 thousand passengers and expanded its catchment area to the neighbouring three airports, which resulted in such a sudden increase of traffic. In 2006 additional contracts were signed so that a traffic volume of up to 200 thousand passengers is expected. Rijeka Airport has become thus direct competitor to airports in Pula, Zadar and Zagreb. For the moment, Pula Airport has not managed to attract in any major way the low-budget carriers. However, since it is the only airport on the Istrian peninsula, which is tourist most developed region in Croatia, greater interest of carriers for this airport can be expected. 8

9 Zadar airport has good predispositions for a quality development, although the implemented business strategy does not indicate satisfactory results. The absence of any low-cost carriers, and cancellation of the majority of scheduled flights by the domestic flag carrier do not indicate any good development of the situation. It is necessary to reanalyze the market approach in order to find a satisfactory market segment in which Zadar Airport would use its potentials. Osijek Airport is the most isolated airport in Croatia. It has a wide catchment area which reaches also into the neighbouring countries, but it is still the smallest airport in Croatia regarding the realized traffic. The scheduled passenger traffic does not exist. The reason for such condition lies probably in the difficult economic situation in the region which was seriously affected by war destruction during the War of Independence. However, it may be assumed that the provision of low-price flights would generate a certain traffic demand in the region. Regarding relatively profitable operation, the airports Zagreb, Dubrovnik and Split are not in the position to have to accept extremely low service fees which are required by low-cost carriers, but rather achieve higher fees. 7. INFRASTRUCTURE DEVELOPMENT The necessary development of air traffic infrastructure can be divided into the development of airports and infrastructure and the development of connections with the catchment area by road and sea. The maximal requirements are expressed by three biggest airports. Zagreb Airport, as the biggest one in the Republic of Croatia has high potential for further development, but also a series of problems. Considering its position on the market, it is necessary to emphasise the insufficiently used potential of the transit-transfer airport. The reasons can be sought in the relatively undeveloped network of Croatia Airlines as well as insufficiently clear business strategy of the Zagreb Airport itself. In relation to the region Zagreb Airport is significantly lagging behind, and a new marketing approach is necessary in order to try to take over a part of the regular transit-transfer traffic in this part of Europe. It is necessary to urgently construct a new passenger terminal with the respective apron and new access road. It is necessary to insure the area for the second runway, and to plan its construction as necessary. Dubrovnik Airport which follows the developed tourist offer of the City of Dubrovnik shows a continuous increase in passenger traffic, primarily the non-scheduled traffic. The problem of insufficient capacities of passenger terminal at peak loads during summer season is solved by the reconstruction and expansion that should be completed by 2009 with the capacity of 2 million passengers. Split Airport serves the City of Split which is the second largest in Croatia, and it is the airport with catchment area that includes great number of Adriatic islands. Better positioning of Split Airport as the connection between the mainland and the tourist-developed islands of Central Dalmatia would insure increased traffic demand. However, the precondition is adequate development of infrastructure. It is necessary to expand the current passenger terminal, the apron and the manoeuvring area, access to the airport and parking lot. 9

10 In order to fully use the potentials of single airports it is necessary to connect them well with the catchment area, mainland, and in this case these also include the islands. Almost all the airports have the problem of inadequate road connections which is most acute in big airports, Zagreb, Dubrovnik and Split. Since the construction of new airports on the islands is not acceptable from the economic ecological aspect since there is no basis for a full-year profitable operation of island airports except in air-taxi transport, all measures should be undertaken in order to connect some coastal airports in the best possible way with the coast, i.e. passenger seaport. Split Airport has been taken as the most striking example. It is about 20 km far from the city centre where the passenger seaport is located, which means about 45-minute drive during rush hours and traffic congestions. Inadequate and rare ferry connections to certain islands greatly increase the travelling times to the islands. According to long-term plan of Split Airport development, the construction of the connection between the airport and the coast is planned in the close vicinity of the airport at a distance of 500m. A passenger seaport would be constructed on the coast which would accommodate fast ships, catamarans, of the capacity of around 300 passengers, which would transfer passengers to islands. Such implementation of intermodal transport would provide a fast and efficient connection with the islands of Central and South Adriatic, which are the mostly visited tourist regions (6). 8. CONCLUSION By analyzing the Croatian airports, one may conclude that there are too many of them regarding the area covered and the number of inhabitants. The average traffic of thousand passengers annually per airport, shows a much lower value than in the world, as well as the productivity. Constructing the motorway system reduced the travelling time by road in relation to air traffic, lowering the domestic demand for air transport. The ownership model, public ownership with majority share of the government has proven inefficient and a new model should be found as soon as possible which will result in better operation of the airports After a period of ten years in which the pre-war capacities were used, it is necessary to invest substantial means into airports, primarily in passenger buildings, aprons, as well as in the manoeuvring areas, parking lots and connections with the catchment areas. The appearance of low-cost carriers has brought, depending on the airports, the competitiveness which had not been known until recently. New traffic demand stimulated by these carriers, that is, passengers who use their services are ready to travel even several hundred kilometres to take the advantage of low prices thus increasing the significance of marginal, i.e. secondary airports. The mentioned problems show that it is necessary to develop a strategy on the development of the Croatian airports that should provide an answer to a number of questions asked in this phase of the transport increase which is to continue in the years to come. 10

11 9. LITERATURE (1) Pavlin, S., Rapan, M., Mehmedi, I.: Compliancy of Croatian, Macedonian and Slovenian Airport Manoeuvring Areas with International Recommended Practices, 9 th International Conference on Traffic Science ICTS 2005, Slovenian Society for Science in Transportation, Faculty of Maritime Affairs and Transportation, University of Ljubljana, Portorož, Slovenia, November 2005., Conference proceedings on CD, 11p. (2) Pavlin, S., Sorić, V.: Possible Development of Aerodromes on Croatian Islands, Ceste i mostovi, No , ann. 50, Zagreb, October/December 2004., ISSN , p (3) Strategy development for the Croatian airport system, Workshop documentation, Roland Berger, Zagreb, March, (4) Statistics of Croatian Chamber of Commerce (5) The Physical planning programme of the Republic of Croatia, Ministry of Physical Planning, Construction and Housing, Institute for Physical Planning, Zagreb, (6) Novak, L.: Airport Split Development Model, Zagreb

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