PSO routes for better air accessibility

DNP MPs propose amendments to the Air Traffic Act to introduce air routes of public interest based on the EU model

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The goal of PSO routes is also the further development of tourism: Tivat Airport, Photo: Siniša Luković
The goal of PSO routes is also the further development of tourism: Tivat Airport, Photo: Siniša Luković
Disclaimer: The translations are mostly done through AI translator and might not be 100% accurate.

Amendments to the Law on Air Transport, which is in the parliamentary procedure, propose the introduction of public service obligation (PSO) into Montenegrin legislation, which is applied by most European Union (EU) member states in accordance with European directives.

PSO is an arrangement in which the state offers subsidies to airlines through public procurement, so that the airline that wins the tender is obliged to operate air transport on precisely specified routes for a certain period of time, for a certain fee. There are clearly defined conditions that a route must meet in order to be considered a route of public interest.

The amendments to this law were proposed by the Democratic People's Party (DNP) parliamentary group through amendments to Article 37 of the current Air Transport Law. The reason for proposing the introduction of PSO is better air accessibility of the country and further development of tourism.

"Tourism is a strategic economic sector of the Montenegrin economy, bearing in mind that it generates around 35% of the country's GDP. Montenegro is already recognized to a certain extent as a tourist destination, and tourism is one of the most promising activities in the future economic development of Montenegro. Among the most important factors in the development of our destination and the growth of tourist traffic, which is not within the domain of the tourism sector, is better transport accessibility of Montenegro, with an emphasis on air accessibility. Observing global trends, it is clear that air traffic is the fastest and simplest way to connect a destination, and in accordance with the above, we believe that the amendment to Article 37 of the legal act regulating the field of air traffic is fully justified," it was stated in the explanation of the amendments to the law.

It was clarified that if airlines do not have an initial commercial interest in operating on certain routes, there are mechanisms recognized by EU regulations that can be applied for the purpose of better air connectivity.

"One of these mechanisms is the introduction of routes of public interest, the so-called PSO (Public Service Obligation). In the field of providing services of public interest in air transport, there is Regulation (EC) No. 1008/2008 of the European Parliament and of the Council of 24 September 2008 on common rules for the operation of air transport in the Community, and in this regard there is a need for harmonisation with the EU acquis. Over time, the PSO procedure has been improved, and now the main document defining the rules of PSO in air transport is the EU Air Service Regulation 1008/2008 of 24 September 9. The PSO regulates obligations for EU member states, as well as for countries in the accession process," the explanatory memorandum states.

PSO is an arrangement in which the state offers subsidies to airlines through public procurement, so that the airline that wins the tender is obliged to operate air transport on precisely specified routes within a certain period of time, for a certain fee.

The DNP parliamentary group stated that it should be emphasized that most EU member states apply the relevant regulations and that France has the most airlines.

"In 2019, there were as many as 40 airlines, followed by Spain, Portugal, Greece, Great Britain, Italy, Sweden, Finland, Ireland... As state aid to air transport is prohibited under the general regime, it is noticeable that EU member states use other legally permitted mechanisms of subsidies for certain other needs, and that through them, indirectly, they help airlines. PSO is a well-known mechanism, explicitly defined by EU regulation 1008/2008, which represents one of the EU's umbrella regulations in the aviation segment," states the DNP parliamentary group.

The explanation of the amendments to Article 37 recognizes the obligation to provide a service of public interest, stating that if an air carrier has no commercial interest in providing air transport services on a specific route that is significant for the economic and socio-economic development of a specific area in Montenegro, the Government may establish the obligation to provide a service on that route as a service of public interest.

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