Tuesday, March 13, 2012

AEA: EX-YU airlines should unite

Scandinavian model for former Yugoslavia suggested
The Secretary General of the Association of European Airlines, Ulrich Schulte Strathaus, has told the Slovenian daily “Dnevnik” that in order for the national carriers of the former Yugoslavia to survive they will need to unite into a single airline. “The once single Yugoslav market is now fragmented and a regional solution is necessary. The region needs an airline that would cover local needs and connect with global hubs”, Strathaus says. He notes that he recently discussed the issue with Adria Airways’ management. “It would be great if Adria Airways, which has extensive knowledge of the Balkan market, were to initiate a regional summit which would be dedicated to this issue, however, due to political quarrels I doubt this could happen”, Strathaus adds.

The Association of European Airlines counts 34 members, mostly national carriers. Adria Airways, Croatia Airlines and Jat Airways are all members. Montenegro Airlines also used to be a member of the association but mysteriously left after a few months. Strathaus believes that certain markets in the former Yugoslavia are too small to have their own national carrier. He notes that Serbia can’t find an investor for Jat, Croatia Airlines and Montenegro Airlines are operating with mounting problems and that B&H Airlines will go bankrupt when Turkish Airlines ceases financing it.

Last year, an idea to unite the former Yugoslav aviation market was put on the table during talks between the Serbian government and Turkish Airlines. It was suggested that a regional airline, Balkan Airways, could serve as a national carrier for Serbia, Bosnia and Herzegovina, Montenegro and Macedonia. In September 2011, Croatia Airlines and Adria Airways reached an agreement over a common business plan model. The two airlines agreed to strengthen ties and cooperate on jet leasing as a means of improving efficiency and streamlining fleet utilisation.

B&H resumes operations

B&H Airlines has resumed operations with a single ATR72 and will operate flights to Istanbul. It’s Airbus A319, will soon rejoin Turkish Airlines’ fleet as the carrier abruptly ended its lease of the aircraft to B&H on February 27.

43 comments:

  1. Croatia Airlines is managing quite well and is in no need for a regional merger. Sure Croatia Airlines might not be in the green, but not many airlines are now anyway,.Croatia Airlines is far more stable than any other airine of the exyu thanks to our booming tourism industry. The airline will only be stronger in the years ahead, especially with the new terminal being built in Zagreb.

    I have to agree with the guy on the remaining airlines. Jat is actually doing ok passenger wise. Their aging fleet is their main issue.

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    1. Croatia Airlines is doing well in this, Croatia Airlines is doing well in that...bla bla bla. Give me a break. if they were doing that well, they would be making profit and not asking for the money from the government all the time. If you think the situation is going to get better with CRO joining the EU, you are wrong. Look what has happened to the Brussels Airlines, BMI, SAS, Swiss....they all fell on their knees and are subordinates to LH. Yes, Croatia has nice beaches and tourism, but so dooes Greece and Spain and look what happened to Olympic and Spanair. If you think Croatia Airlines who is 10 times smaller can survive the big competition that dominates the European market, think twice.

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  2. GR8! Two companies for whole EX-Yu Market! Normal multinational airliner - new company Adria Airways and low cost carrier Adria Express. What do you think?

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    1. Croatia Airlines and Adria can merge like British and Iberia did. Let the rest of the exyu region form their Balkan Airline.

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    2. Complexes, complexes. But we are used to inferiority complexes by now.

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  3. The AEA are absolutely correct. It would be much better if there was 1 airline for all of exyu, then adria to avoid a monopoly and then a low cost carrier.

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  4. Mr. Ulrich Schulte should unite with his wife if he still can. That's about giving advices to others.
    On the other hand, none is preventing these particular companies to cooperate or code share some flights / lines.

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  5. My question to Mr. Schulte would be:

    If you have one bag of shit and you put it next to another one isn't it still big pile of shit?

    There are multitudes of problems at each ex-yu airline and putting these airlines together does not solve the issues - it rather would exaggerate problems as now you would also need to take into account various national and political issues (where would the seat of the company be?, what nationality would ceo have? what composition of the crew would be?)

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    1. Well, as long those kind of questions are more important than having a reliable, profitable and a professional airline, we will remain in the black hole where we are right now. Seems like our people have a really hard time looking into the future and stop living in the past.

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  6. The Ex Yu market need not only a common national airline but also a common low cost airline. Immidiatelly. Why we travel to Venice and Budapest, from example Maribor 3 hours if have own airport and 1 hour to ZAG and LJU. I cannot understand why we wait so long and give money to Italy and Hungary. Really stupid.

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    1. Dear Anonymous, I completely agree with you. Just me (and it's similar with almost all people I know), used during last few year Marco Polo/Treviso/Ronchi for flights to/from:
      Rome (AirOne, Alitalia)
      Palermo (Windjet)
      Cagliari (Ryanair)
      Barcelona (ex-Alpieagles)
      Sevilla (Vueling)
      Madrid-Laspalmas (Iberia)
      Madrid-Havana (Iberia)
      Casablanca (AirArabiaMaroc)
      Dubai-Seychelles (Emirates)
      Riga-Tbilisi (AirBaltic)

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  7. Wow! I'm so touched, I'm just about to start crying how is he worried about our well-being!

    No doubt this guy is LH player. It's not enough that in both Croatia and Slovenia is practically impossible to travel by air without using LH or one of their humiliated feeders OU and JP, but should that now be extended to the whole of ex-yu region, which is stabilizing and significant growth in air traffic is expected, in order to bring new incoms for LH.

    According to this nonsense,it's not problem that ex-yu "flag carriers" are mismanaged, under political domination, need huge restructurings, have different fleets, partly different markets, need different operation models - no, that's not important, they are too small. So, what about Luxair? New Olympic? Bulgaria Air? As Zrak already perfectly said : one or more piles of shit, what's the difference? Except, of course, more piles of shit, when joined, will bring more money to LH.

    What I agree is that one new airline is needed on ex-yu space. One which will connect all airports in region with regional hub, and "cover" missing segments, and those are low cost and long-haul flights. Such an airline should definitely not start as result of political transnational and transborder bullshit, but based on business plan and market demands, and led and operated by people with different mental condition and attitiude towards business than those currently in ex-yu "flag carriers" and who know what market, finances and modern aviation are.

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  8. I'd say that there is a perception in all ex-YU countries they all need and deserve to have connections to all major cities in Europe, and more, as we are now all independent states. Of course, that's just wishful thinking, but people from Niš and Zadar, and let alone Skopje or Sarajevo, expect to be able to fly directy to Barcelona or Zurich.

    That's not going to happen until they become way richer and there is business demand for those flights. Instead, they will need to make use of hubs, and that goes for everyone, except ZAG and BEG to a certain extent.

    Now, that hub can be Lufthansa's MUC or FRA, or some imaginary hub of Balkan Airlines, say ZAG or LJU or BEG. And say a person from SJJ needs to make a decision which route to take - an average person will pick either the cheapest or the fastest route. That implies not only frequent connections to the hub city, but also frequent flight to final destination. Is it really viable that a Balkan airline can offer more access to European destinations and better pricing than, primarily Lufthansa, but others as well? And can that offer be so much better than, say, Lufthansa's to outweight the benefits of FF program and some animosity that passangers from i.e. ZAD would experience flying through BEG.

    My answer would be a resounding - no. Unfortunately and sadly, but no.

    Even if the answer was yes, we would come to the question of financing such airline and agreeing on network and focus cities, but I would say this all just wishful thinking. There is no common interest for such an airline.

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  9. Even though there are choices to BEG besides LH, Lufthansa offers the best connection times and prices from many, many countries!

    It would be nice for Balkans to unite and make BEG main HUB with many focus cities and start transatlantic flights and offeR great connectiOns, and prices:)

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  10. ne hvala! nikakva zajednica vise!

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    1. But of course. Why would our airlines establish tight cooperation if they can all independently submit to slavery under LH's rule? It's funny how the same concept applies in civil aviation and economy/politics on the whole. It would be laughable if it weren't sad.

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    2. Da..Da...ekonomska zajednica...

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    3. ex-YU is not very convenient part of Europe to unite airline-wise. Why? Well, the largest city, airport and the airport with most passangers is on the eastern border of the area. Contrary to that, most destinations are in the west, meaning that if BEG was that hub city, majority of passengers would be forced to backtrack. On the other hand, if LJU or ZAG were hubs, which would be more logical from geographic standpoint, it is very unlikely pax from BEG would chose such flights instead of direct route from their city which is very well serviced.

      So, if any market consolidation is to happen, I think more realistic would be to include SRB, BIH, MK, ME, AL, KS and perhaps even Bulgaria; or alternativery, all those countries except Serbia and Bulgaria (better to say except Belgrade and Bulgaria), but with Croatia and Slovenia.

      Though, Croatia is a tough nut - they've got very different market and, while Zagreb market might be prone to such idea, tourist traffic and smaller airports network is an entirely different story. No other country in the region has anything like that.

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    4. You obviously don't fly that much. What makes you think that people travel only westward and ZAG being more convenient than BEG because of that? As far as I know, Middle East, China and Asia in general are recording more growth and soon will surpass the numbers from the West. So saying that ZAG would be a more convenient hub just because it's "closer" to the West has no sense. I live in the US and if I get a better deal flying to LJU via BEG than via MUC, I will choose BEG. People fly from Europe to BOS via ORD and to HKG via SIN. If it's a good airline and they offer good price, I will take it, plus I get extra miles.

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    5. In fact, I fly to China monthly. But I was discussing existing lines, flyable with planes currently at disposal in ex YU airlines. It is entirely different story if you bring long hauls into play. Still, I very much doubt somebody would chose, say, LJU-BEG-LHR over LJU-FRA-LHR if price is similar. Get my point? If feeder flight is followed by long haul overnight, then sure, it doesn't make any difference. But in this case, it actually does. Especially high yield pax will chose convenience and time even over fares.

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  11. It is true that the future of airlines is in alliances (associations), but uniting Croatia with Jat is not good idea. Croatia airlines should unite with Adria and cover Slovenian and Croatian market, connect Ljubljana with Split, Dubrovnik, Brač and Zadar. On the other side Jat can be carrier for Serbian and Macedonian market. Montenegro airlines can be carrier for Montenegrin and Kosovo market.

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  12. I do not think that will happen soon. A model like SAS? First of all we would need to have the culture and heritage of the nordic people to make it work. Exept for the Slovenians all other involved are Balkan people with long tradition of mismanagement, nepotism, corruption, political interference. Sometimes also pure laziness is evident. On top of that, all involved would think that they are the best and the ones who should decide and manage the whole conglomerate. So chances are 5%. Would work only if 51% of the new airline would be held by a foreign partner (lets say IAG or AF/KLM group) and the rest in 10% packages by the former YU republics. All top management to be by experts and / or foreigners.

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  13. The model could be working as follows: Adria covers the leisure flights to the coast and the ethnic and low cost market. OU makes Zagreb the hub to western and northern Europe and JAT creates in Belgrade a hub to the east, middle east and transatlantic. The major stake holder to be a big player like AF/KLM or Qatar. The ex YU republics just minority holders with 2-10% stakes.
    I can also imagine that JP and JU could agree on some kind of cooparation and OU will be sandwiched if the don't join.

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    1. Only Jat has the capacity and knowledge/tradition in ex yu....
      They should shape up and become a hybrid carrier-flying were they get subsidied or were alarge diaspora lives!

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  14. The top two airlines in the region are Adria Airways and Croatia Airlines...It is what it is...

    What know how does JAT have over Croatia Airlines and Adria Airways..Two modern regional airlines and members of the Star Alliance....

    JAT does not have the Know- how...if they did they wouldn't have one of the oldests fleets in Europe and would be in an alliance by now...

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    1. Ohhhh "in an alliance now", i see that alliance with LH brought do much to Croatia Airlines, you just maintained your LH feeder airline status. soon you will fly ZAG SPU via MUC ahahahhahahah

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    2. Keep laughing...don't be surprised if Croatia Airlines introduces direct flights to the USA and Canada once the new terminal has been built. Don't forget, Croatia is a sought after travel destination :) Last year there were 12 million tourists in Croatia, they say bookings are up 60% so far this year in Germany and Great Britain...15 million tourists here we come! Croatia has twice as many tourists than the rest of the Former Yugo combined :)

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    3. Since Croatian aviation industry share makes almost 50% of ex-yu area, it is logical that CA takes over all other airliners in the area except JAT, which is of no value at all.

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    4. All very true about fantastic tourist demand, which is honestly more due to beautiful landscape than anything else, but hardly can OU do something about it. 99% of that tourist demand is from June until September. Say, they lease a plane for US flights - what would it do the remaining 8 months a year?

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  15. Why would the people in the former Yugo want one large airline???? This would mean a monopoly on many routes and thus higher prices. At the moment we have more competition or at the least possibility for competition to grow. If the region moves towards one airline it would be a move backwards not forwards.

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  16. However at this time there is room for a small regional airline using 19 to 40 seat capacity aircraft to connect some of the smaller cities with the larger ones in and around former Yugo. The beech 1900D comes to mind.

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  17. I have a better idea.

    Instead of unite they should die one after the other!

    It is not only an idea...more a conclusion.

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    1. Yes, that is what we all know will happen in a year or two. For now former republics can finance their operating at loss airlines, but for how long will MN and even SLO be doing that?
      The biggest problem with one imaginary "Balkan airlines" would be, from wich country and what political party would the CEO come from?

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    2. Theoretically Adria can be financed through loans till eternity because a lot of banks worldwide are operated by governments.

      It even makes no difference if debt of Adria is 150 million euros or 150 billions because
      in both cases the debtors will never get their money back...

      That is today THE global problem...
      giving money to people who you know they will never can pay it back!

      Delete
  18. In business, combining two or more problems doesn't make instant success. Except if you are this (obviously well-meaning) buffoon from the AEA. And of course, SAS is such a financial success story that it must be replicated elsewhere, especially in our region of Europe where the wages/standard of living/flying culture is half of the Nordic countries.

    There is a hidden agenda behind these absurd 'comments' - let's see what the real plan being drawn up is.


    @ Q400

    Monopoly = $$$ cash cow. Supply and Demand dictates what the fares can be when there is no competition: OS slashing 150 euros off VIE-SJJ round trips is a perfect example of what happens when a little competition is at play. So competition and variety on offer *is* important, especially in a region with potetial to grow.

    As for smaller planes, i'm not sure they are actually needed from an 'economy of scale': 70-seat props normally break even ~30 seats, you don't always get those benefits while still paying fuel/wages/landing fees etc with smaller planes. NZ is a good example of where upgauging of planes is taking place, replacing B1900s with Q300s, and Q300s with AT7s... OU, JP and JU would be far better operating *more* 70-seat props and less jets IMO

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    1. In you first paragraph directed to me I think we agree on this point.

      Secondly, the region needs an aircraft which will facilitate in route development. The example you used of Air NZ moving from 1900Ds to Q300s could actually be a success story of this type of model. The 1900s helped develop routes which are so popular now that larger aircraft are needed. a another Australian example of an airline which used 1900ds would be Impulse airlines. 737s now connect some of the cities previously operated by Impulse.

      Imagine what, let’s say OU for example could do with 3 to 4 Beech 1900ds. All year connection from the following:

      Split - Osijek
      Zagreb- Osijek
      Dubrovnik - Osijek
      Pula - Dubrovnik
      Rijeka - Dubrovnik
      Zagreb - Mostar
      Nis - Dubrovnik
      Nis - Split
      Skopje - Dubrovnik
      Skopje - Split
      Sarajevo - Split
      Sarajevo - Dubrovnik.
      Ljubljana - Split
      Ljubljana - Dubrovnik

      The previous are just examples, I'm sure there are more possible routes and I only included cities from the former Yugo, the list could be extended to include cities all around the region including flights to Bulgaria and Romania.

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  19. Reading the posts above i can conclude the following, NO ALLIANCE in near future, we are still under strong influence of the WAR FROM RECENT PAST, therefore, THY will rule to the border of ex-Otoman Empire, LH and "satellites" will be on the other side (CEATS scenario, in a way)!

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    1. Do not forget to add Russia in your list.

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    2. Yes, and dont forget the Chinese restaurant owners who prepare for world domination !

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  20. The AEA are a clever bunch. SAS has to be one of the worst structures for any airline on earth! Why anyone, anywhere, would even think of doing anything that even resembles SAS is a complete mystery.

    Within 3 or 4 years, SAS will go bust as Norwegian will drive them to the wall.

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  21. Nikola Pašić would have a thing or two to say about any kind of unification or cooperation between Serbs and Croats.

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  22. We don't need the Croats nor the Slovenians in a union with us, they would just sabotage the union because they hate Serbs. But a union between Macedondia, Serbia, Montenegro and Republic of Srpska could last and profit. I hope the Air Association or federation of these 3 Countries and Republic of Srpska, read this comment or follow this blog and take this proposition under review.

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  23. Good luck with that one Filipi but I think they have enough loony’s to advise them how f*#k things up already.

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