Z. Radacic, M. Tatalovic, I. Misetic, I. Furlan: Application of Total Productivity Model within Croatia Airlines ZEWKO RADACIC, D. Se. E-mail: radacic.z@fpz.hr University of Zagreb Faculty of Traffic and Transport Sciences Vukeliceva 4, 10000 Zagreb, Republic of Croatia MIRKO TATALOVIC, D. Se. IV AN MISETIC, M. Se. Croatia Airlines Poljana V. Njegovana 9, 10000 Zagreb, Republic of Croatia IVAN FURLAN, B. Eng. E-mail: ivan.furlan@zet.hr Zagreb Electric Tramway Ltd. Ozaljska 105, 10000 Zagreb, Republic of Croatia Traffic Economics Preliminary Communication U. D. C.: 656.7:336.2(497.5) Accepted: May 31, 2005 Approved:Sep.6,2005 APPLICATION OF TOTAL PRODUCTIVITY MOD EL WITHIN CROATIA AIRLINES ABSTRACT By defining and selecting adequate factors of the total pro- ductivity model and by assigning specific relevance of each fac- tor, the initial preconditions for the analysis and monitoring of the model application efficiency within the Croatia Airlines business policy have been established. Since the majority of the analyzed factors have realized a more intensive growth than planned, the business year 2004 can be assessed as the most successful one in the Croatia Airlines history. Consequently, the difference related to the productivity indicators of the Asso- ciation of European Airlines has been reduced, particularly the aircraft productivity with remnant of 5 to 10 percent, and the productivity of the employees with a remnant of 15 to 20 per- cent, and the productivity of fuel expressed as quantity at AEA level, and expressed as value below that level. Finally, although there is no expressed correlation between the quantitative pro- ductivity indicators and business profitability, the highest real- ized net profit since the foundation of Croatia Airlines fully supplements the solid level of the comparison indicators, con- firming its complete readiness and maturity to join the Star Alli- ance. KEYWORDS total productivity model, productivity indicators, growth rate, business profitability, productivity factors 1. INTRODUCTION Since the model of total productivity, the so-called TFP (Total Factor Productivity), apart from basic pro- ductivity indicators of aircraft, employees, and fuel, encompasses a much wider range of influencing fac- tors, in setting up the model it is necessary to select those that have the highest specific relevance appro- priate for the representativeness of the model. Promet- Traffic- Traffico, Vol. 17, 2005, No. 5, 253-260 For quite some time now, Croatia Airlines has been paying due attention also to the indicators of high-quality transport effect, and not only to direct quantity productivity factors. The economical, as well as indirect inter-influencing factors also find their suit- able position in the model of future development until the year 2014. Since the model has been set for the period 2002- 2014, its feasibility in the business year 2004 needs to be analyzed in detail. At the same time, the correlation of the selected quantitative and economical indicators needs to pro- vide an answer to the concrete realizations of Croatia Airlines in the period from 1991 to 2004, how strong is the correlation between the selected categories. 2. DEFINING OF THE MODEL FACTORS Regarding the processed and presented total pro- ductivity factors, as well as growth trends of all the rel- evant indicators of traffic effects in the world and in Europe, it is possible to quantify more precisely the inter-relationship and the specific relevance of single elements using the growth matrix i.e. its direct and in- direct growth rates. The direct growth rates cannot represent well enough which of the applied model factors is develop- ing faster in the absolute and in the relative sense. Since these are significantly different productivity ex- pressions, which means different measuring units, their reduction to a common measure is carried out by the approach of relative assessment of the achieved level of each single factor in relation to the average factors of the European airlines. The reason why the European comparison prevailed is the basic know!- 253