Friday, November 24, 2017

Macedonia to extend LCC subsidies

The Macedonian government will introduce a new round of subsidies for low cost airlines next year in a bid to attract more carriers and develop connectivity, a move which will not sit well with authorities in Kosovo who say the policy has distorted competition in the region. Speaking to the "Srpska ekonomija" monthly, the Macedonian Minister for Transport and Communications, Goran Sugareski, said, "The government of the Republic of Macedonia is strongly committed to the development of air transport. We will maintain the policy of subsidising low cost airlines, which has resulted in cheap fares for Macedonians. The contract with the airline currently benefiting from incentives for the introduction of new routes [Wizz Air] expires next year. After this, we plan to issue a new public call, which will be open to all interested budget carriers. The end result will be an extensive network accessible to all citizens".

The Macedonian government launched a three-year subsidy scheme for low cost airlines in 2012. It proved successful with Wizz Air opening a base at Skopje Airport, which has, in turn, led to significant passenger and traffic growth. A fresh round of subsidies was offered in 2015, with Wizz Air basing a further two aircraft in the Macedonian capital, launching a handful of new routes and introducing services from Ohrid as well. However, the Kosovo Civil Aviation Authority has filed a complaint with the European Commission over the policy, while Pristina Airport says it is unacceptable for the state to provide such subsidies. It argues that they should come in form of incentives from the airport operator instead. Pristina and Skopje airports are now neck and neck in terms of passengers handled.

Speaking to EX-YU Aviation News, a European Commission spokesperson said, "The Commission is aware of concerns raised about the financial incentives' scheme granted by the government of Macedonia since 2012 to both domestic and foreign airlines to fly from the "Alexander the Great" Airport. It could possibly distort competition between airports in the area and indirectly between the airlines concerned. DG MOVE [Directorate-General for Mobility and Transport] is in contact with the competent Macedonian authorities and is examining this matter. This is taking place in the framework of the European Common Aviation Area Agreement, which was signed in 2006. While this Agreement is not in force yet, it is applied administratively". In its most recent annual progress report on Macedonia in the area of air transport, the European Commission said that "concerns about possible state aid in the aviation sector need to be addressed".

Several low cost airlines have previously expressed interest in launching flights to Macedonia, including Ryanair, Norwegian Air Shuttle and, most recently, Eurowings. Over the past few months, the Macedonian government has held talks with a number of carriers, such as LOT Polish Airlines, Onur Air and Arkia Israeli Airlines, which are considering potential operations to the country. "At this point we believe that the capacity at Skopje and Ohrid airports is not fully utilised and we are working hard on attracting new airlines", Mr Sugareski said. He added, "We are in negotiations with several carriers that want to fly to our country, however, these are only preliminary talks related to terms and conditions, as well as possibilities for cooperation".

Adria Tehnika to get new part-owner


The Czech Republic's Hartenberg Holding will acquire a 50% stake in Avia Prime, the sole owner of Poland's Linetech and Slovenia's Adria Airways Tehnika. The transaction will be completed after necessary approvals are granted from respective competition watchdogs. Adria Airways Tehnika specialises in narrow-body passenger Airbus and Bombardier aircraft and is the Canadian manufacturer's only certified service centre for Europe. It was acquired in 2015 by Avia Prime and has served as a sister company to Linetech since then. Hartenberg founder and co-owner, Jozef Janov, said, “We see great potential with this investment. The aviation industry is growing dynamically and a new generation of aircraft is just coming into service. Both Linetech and Adria are very well prepared for this growth and modernisation with a highly skilled team and modern facilities. We also believe in good cooperation with the existing management and founders, who will remain in the company with a significant shareholding stake. Our intention is to support new investment initiatives of both companies and we hope to maintain the impressive growth from recent years” The Prime Minister of the Czech Republic, Andrej Babiš, owns shares in Hartenberg.

Thursday, November 23, 2017

Belgrade Airport targets August 1 takeover

Belgrade Nikola Tesla Airport anticipates for the new concessionaire to take over its running on August 1, 2018. It comes following several delays in the completion of the second and final phase of the concession process, which has now been scheduled for December 8, after which the public body evaluating the bids will have a further thirty days to make their decision known. Belgrade Airport noted that, "For the avoidance of doubt, the selected best bidder (or the second ranked bidder) will not be entitled to adjust the terms of its financial offer if the actual concession commencement date differs from the assumed commencement date". Following the selection of the winning bid, the state will initiate talks with the concessionaire to navigate the financial closure of the 25-year deal.

Despite delays in the second phase of bidding, all participating parties have now submitted the final draft of the concession agreement, while their binding offers are due in just over two weeks time. In transcripts between the bidders and the public body, it is evident that the participants are still formulating their final bids since a number of questions and clarifications concerning financing, commitment letters and administrative procedures have been requested. However, the Serbian Minister for Construction, Transport and Infrastructure, Zorana Mihajlović, believes that the latest deadline extension will be the final one. She previously noted that a deal with the future concessionaire should be completed in March 2018. "The final deadline is March, which means that everything related to the concession, including all paperwork and administrative procedures, should be completed then".

The Serbian President, Aleksandar Vučić, said last week that he anticipates for the concession fee to amount to some 500 million euros, which is double the initial estimate. The President noted that the offers submitted during the first phase of bidding exceeded expectations by some 15% to 20%, adding that these cannot be lowered during the second phase. The future concessionaire will be responsible for the airport’s long-term development strategy including management, maintenance, financing and capacity expansion. The five entities taking part in the process include the Franco-Swiss consortium comprised of Zurich Airport, Meridiam and Eiffage, a consortium made up of India's GMR Infrastructure and Greece's GEK Terma, a consortium comprising of South Korea's Incheon International Airport Corporation, Turkey's Ic Ictas Altypi and Russia's VTB Capital, a stand-alone bid by Vinci, and a Chinese consortium made up of HNA Airport Group, AVIC International Holding Corporation and the China-Central and Eastern Europe Investment Cooperation Fund.

Belgrade Airport reported a 22.7 million euro net profit during the first three quarters of the year, up 14.4% on the same period in 2016. Operating income rose 15.4% to 28.3 million euros, while operating expenses increased 6.6% to 32 million euros. The airport anticipates welcoming its fifth-millionth passenger of the year early next month. Shares in the company peaked last week to historic levels, with the airport's share price gaining 26.9% in value on the Belgrade Stock Exchange over the past year.

Montenegro Airlines to launch Tehran charters


Montenegro Airlines will operate a series of charter flights between Podgorica and Tehran next year after concluding an agreement with local tour operator Iran Negin Parvaz. In a press release, the carrier said the flights will run during March and April 2018, while negotiations are underway for the charter service to be extended from June through to September. Montenegro Airlines will become the first carrier from the former Yugoslavia to operate flights to Iran since international sanctions against the Middle Eastern country were lifted last year. Iran's Qeshm Air has since commenced charter flights to both Zagreb and Belgrade. Earlier this year, two Iranian airline executives joined forces with a local Montenegrin businessman with plans to set up a new Podgorica-based airline - Crna Gora Airways - which will focus on shuttling passengers between Iran and Europe via Montenegro.

Wizz Air to boost Pristina operations


Wizz Air will increase frequencies on its services between London Luton and Pristina next year to three per week, after announcing the opening of its base at the British airport. The additional flight will be added from March 25, 2018. Wizz Air entered the Kosovan market this April with the launch of state sponsored flights from Budapest, which was followed up by services from London. Both the airline and airport have been engaged in drawn-out negotiations in the past over the introduction of new flights. Wizz Air's Chief Commercial Officer, George Michalopoulos, previously said the carrier was "in continued discussions with Pristina Airport over new routes". "Hopefully this is just the start", Mr Michalopoulos noted. The only airline flying between Pristina and London, besides Wizz Air, is Germania.