Monday, July 25, 2016

Solid start for Air Serbia's New York service

A month in from launching its first transatlantic service, Air Serbia has recorded solid results on the route so far. According to Serbia's Prime Minister, the carrier has registered an average cabin load factor of 84.1% on the 254-seat Airbus A330-200 aircraft, which is utlised five time per week to New York. Air Serbia's CEO, Dane Kondić, conceded that, as a newcomer, it is difficult to establish brand awareness on the crowded transatlantic travel market. Speaking to "Travel Weekly" recently, Mr Kondić said, "Flying as a young brand is no easy feat, but we're lucky in that we have a fairly sizable diaspora in the US. There are 200.000 people who are Serbian and of Serbian descent coupled with just as many people who are from the remainder of the former Yugoslav federation". The airline has run a number of promotional campaigns to attract new passengers to the service, particularly in the former Yugoslav markets.

Local travel agents in the United States, who specialise in sales to the former Yugoslavia, have told EX-YU Aviation News that ticket sales and interest in flights from New York to Belgrade have considerably increased in the lead-up to the service launch and spiked some thirty days ago when the route was inaugurated. According to the airline's CEO, Air Serbia also plans to attract more tourists from the United States but also lure travellers heading to the Adriatic coast. "As Serbia grows as a leisure destination, we hope to draw more passengers. Read many publications; they will tell you Serbia is a great destination to go out and see. We are positioning Belgrade as a gateway into the Adriatic coast of Croatia and Montenegro".

However, solid passenger numbers do not necessarily translate into profitability. According to Serbia's Prime Minister, Aleksandar Vučić, the route will turn a profit in three year's time. "We have a significant number of Albanians using the service and we will look to capitalise on this", Mr Vučić said, hinting at the possibility of the resumption of flights between Belgrade and Pristina. "The target is to reach an average cabin load factor of 90% in the foreseeable future", he added. On the other hand, the President and CEO of the Etihad Aviation Group, which Air Serbia is a member of, James Hogan, has said the financial investment in launching the flights was minimal due to the support of other group members. Another way in which Air Serbia is looking to increase revenues on the route is by carrying a larger share of freight. The carrier's A330 has a belly-hold cargo capacity of fifteen tonnes or forty square metres per flight. “Since launching the flights, we have seen strong demand from postal services for carrying mail across the Atlantic, including from authorities in Serbia, as well as Slovenia and Bulgaria, and the United States Postal Service", Mr Kondić said. He added, "We are also now transporting freight to the United States from Serbia and all over the region, including Bulgaria, Macedonia, Bosnia and Turkey, showing that our new flight is already enabling significant economic activity and trade growth”.

Ryanair considering Malta - Niš service in 2017


Budget airline Ryanair is considering introducing flights between Malta and Niš Constantine the Great Airport during the summer of 2017. According to Niš Airport's General Manager, Vladica Djurdjanović, discussions between Serbian and Maltese local authorities, as well as Ryanair, are currently under way. "A significant number of people from southern Serbia live and work in Malta and this service would be profitable. Business representatives from the town of Leskovac have reached an agreement with the mayor of one Maltese city and have entered negotiations with Ryanair". The no frills carrier boasts an operational base in Malta. The budget airline will launch its first of four new routes to Niš on September 4. Air Serbia currently maintains three weekly flights between Belgrade and Malta on a seasonal summer basis.

Sunday, July 24, 2016

Germans take full control of Adria

The German owner of Adria Airways, which held 99.14% in the carrier before Thursday's shareholders' meeting, has squeezed out small investors at fifteen cents per share and now owns a full 100% stake in the company. The remaining share cost AA International Aviation Holding, an affiliate of the German turnaround fund 4K Invest, roughly 9.900 euros. The company said the move would simplify management, make the business structure more flexible and reduce operating costs. The German fund had acquired 96.09% in the formerly state-owned airline through a recapitalise-and-sell procedure in March. A total of 3.1 million euros in fresh capital was provided by the Slovenian state and one million by AA International Aviation Holding, which also paid 100.000 euros to the state-owned shareholders.

4K Invest is a leading European restructuring fund registered in Luxembourg and managed out of Munich. All of it ́s subsidiaries, including AA International Holding as Adria's parent company, are completely owned by European investors, mostly German nationals. 4K Invest anticipates for Adria to be profitable by the end of the year, following a loss of 6.9 million euros in 2015. "Actually, we look quite positively into this year, expecting good results. Adria's strategy seems like a good fit for a regional carrier", the airline's 33-year-old CEO, Arno Schuster, recently said. "We want to grow with our own existing network and to make it more efficient", he added.

Slovenia becomes the only country in the former Yugoslavia to have fully privatised key players in its aviation sector. In 2014, Germany's Fraport acquired operator Aerodrom Ljubljana, which runs Ljubljana Jože Pučnik Airport, and now holds a 100% share in the company. In 2015, maintenance firm Adria Airways Tehnika was sold to Poland's Linetech Holding. The 100% stake was unofficially sold for around five million euros, some two million euros of which came in purchase money and the rest in the form of a loan repayment to the two former shareholders. Meanwhile, Delavska hranilnica, a union-owned savings bank which has a majority stake in Mairbor Airport's operator Aerodrom Maribor, is expected to sell its share to Chinese businessmen David Pu, the owner of Maribor winery Vinag, who is also associated with several Chinese ventures in the city. Mr Pu reportedly offered 6 - 7 million euros for an outright stake in Aerodrom Maribor pending due diligence and the resolution of outstanding issues such as the concession fee for airport infrastructure. The operator of Portorož Airport is also looking for a new owner with Aerodrom Ljubljana, holding company Istrabenz and the Port of Koper all moving to sell their stakes. The Serbian-based holding company MK Group is believed to be close to making an offer.

Saturday, July 23, 2016

Wizz and Ryanair eye Mostar flights

Low cost airlines Wizz Air and Ryanair are considering launching operations to Mostar in Bosnia and Herzegovina and are currently in contact with local authorities. According to the General Manager of Mostar Airport, Marin Raspudić, both the airport and local government must first secure funds to subsidise one of the two carriers in order for them to introduce services. "No low cost airline will start flying to an airport if there is no co-financing involved. Today, no risks are taken in the aviation sector. Without subsidies it is impossible for budget airlines to launch flights", Mr Raspudić said. He added that in September both the airport and authorities will approach one of the two mentioned no frills carriers and give them an offer. "They want to have answers by September. Every serious airline wants to have information so they can plan for next summer", Mr Raspudić noted.

In 2013, the Federal government of Bosnia and Herzegovina designated both Mostar and Tuzla airports as the country’s low cost hubs. Since then, Wizz Air has opened a base in Tuzla. Mostar Airport attempted to attract low cost carriers on several occasions but has had little success. Back in 2012 it held talks with Wizz Air over potential flights from Dortmund and Malmo, but the airline opted for Tuzla instead. However, Wizz Air's Head of Airport Development, Jozsef Ujhely, recently said the carrier was looking to further strengthen its presence in Bosnia and Hezrzegovina, which could result in potential flights to Mostar as well. On the other hand, in October 2014, Ryanair confirmed it had entered negotiations with Mostar Airport concerning the possible launch of services from Germany and Scandinavia. In the end, these flights did not materialise either.

Mostar has struggled to attract scheduled flights but sees a significant number of charter traffic throughout the year, carrying religious pilgrims visiting the nearby Medjugorje sight. Mostar Airport handled 18.486 passengers during the first half of 2016, down 41.4% on last year due to fewer charters, making it Bosnia and Herzegovina’s third busiest airport behind Sarajevo and Tuzla but ahead of Banja Luka. It handled a record 86.000 travellers in a single year prior to the breakup of the former Yugoslavia but has been unable to surpass that figure ever since. This summer, a total of seven airlines are maintaining regular charter flights to Mostar, one of them being Croatia Airlines. The Croatian carrier maintains services from Mostar to the Lebanese capital Beirut.

Friday, July 22, 2016

EX-YU airports see record first half of 2016

Airports across the former Yugoslavia handled over 8.3 million passengers during the first half of the year, with ten of them posting their best figures to date. Among capital city airports, Skopje continues to maintain its position as the fastest growing, with figures up almost 25%. Commenting on the results, Deputy General Manager for Operations at TAV Macedonia, Alper Ersoy, said, "With strong support from its headquarters in Istanbul, as well as TAV Airports' marketing department, TAV Macedonia is constantly working on expanding the destination network from Macedonia's two airports and increasing frequencies on existing services. The growth and development of Skopje and Ohrid airports is based on the opening of new routes to many destinations in different parts of Europe and the world". He added, "The entry of new airline operators onto the Macedonian aviation market is particularly important, not only in terms of expanding the network, but also in terms of increased competition, because innovation, competitive products and services are the ones that drive progress. However, we also listen to the needs of airlines as our customers and their requirements, in order to provide high-quality services and encourage them to increase their existing frequencies". Macedonia's second international airport - Ohrid - has also seen strong passenger growth thanks to Wizz Air, as well as the arrival of several new customers this summer such as Air Serbia and Arkia Israeli Airlines.

EX-YU airport results, H1 2016

AirportPAXChange (%)
Belgrade2.111.690 1.2
Zagreb1.225.889 5.7
Pristina776.502 15.0
Skopje757.850 24.6
Split686.583 12.6
Dubrovnik676.707 15.2
Ljubljana598.271 4.5
Sarajevo357.465 1.6
Tivat291.635 6.5
Podgorica246.172* 9.0

* The figure for Podgorica Airport is for the January - May period

Croatia's three largest airports have registered record breaking figures during the first half of the year. Current trends indicate that Split Airport will handle half a million passengers in July alone, marking its busiest month since opening its doors over five decades ago. On the other hand, Dubrovnik has also seen encouraging figures with the airport marking its busiest day on record last week. Following a slump in figures last year, Tivat has staged a comeback in 2016 and is on course to handle over one million passengers by year's-end. The only two capital city airports to see their figures decline during the first half of the year were Belgrade and Ljubljana. The former Yugoslavia's busiest airport recorded softer numbers earlier in the year as a result of Air Serbia's decision to consolidate its route network over the winter. The airport, which sees a significant share of its passengers carried on charter services during the summer, could record a slower season due to political instability and safety concerns in key holiday markets such as Turkey, Egypt and Tunisia. In contrast, Ljubljana Airport recorded decent passenger growth during the first quarter but was hit by a sharp downturn in figures over the past three months as a result of Adria Airways' network cuts, as well as a decline in charter traffic.

AirportPAXChange (%)
Zadar180.325 0.2
Tuzla141.600 46.8
Pula115.054 16.4
Ohrid51.038 76.2
Rijeka36.076 4.2
Niš32.261 2600.0
Mostar18.486 41.4
Osijek10.961 7.8
Banja Luka9.700 10.5
Portorož9.240 7.0
Brač3.336 30.5
Mali Lošinj2.240 17.2
Maribor2.183 59.0

Smaller airports in the former Yugoslavia have seen some of the biggest growth so far this year. Niš Airport, which had almost no passengers during the first half of 2015 has profited greatly from Wizz Air's arrival, which is set to continue later on in the year when Ryanair launches services to the city. On Tuesday, the airport surpassed its 2015 end-of-year result. Tuzla Airport also continues to benefit from Wizz Air, with its figures up almost 50%. As a result, it has closed in on its traditionally busier counterpart in Zadar. Several of Croatia's coastal airports have seen softer numbers so far this year, however, these are expected to pick up in July and August.