Friday, November 2, 2012

Domestic competition for Croatia Airlines

Local competition ahead for Croatia Airlines in 2013

Croatia Airlines could see competition on one of its busiest domestic routes next summer. The Croatian charter airline, Trade Air, is in talks with local authorities to launch scheduled flights from Zagreb to Dubrovnik in 2013. Trade Air, which boasts a fleet of three Fokker F100s, says the time is right for the airline to enter the domestic market with its own flights as Croatia heads towards full European Union membership next summer. The news comes only days after the Mayor of Dubrovnik and Croatia Airlines CEO agreed for the national carrier to be subsidised to the tune of almost 200.000 euros for its operations out of Dubrovnik next summer season.

Dubrovnik Airport is set to be the big winner out of Croatia’s entry into the European Union. Not only are airlines already boosting frequencies and announcing new flights to the city next summer, the airport is also expected to see record traffic. This October its passenger numbers surged by an impressive 25% compared to last year. Dubrovnik Airport welcomed over 131.660 passengers through its doors, up from last year’s 105.788. The airport is now firmly on course to become the fourth busiest in the former Yugoslavia by the end of 2012.

Croatia Airlines has no competition on its domestic operations. However, according to a recent report by consultancy firms hired by the national carrier, the Zagreb - Dubrovnik service is unprofitable along with the rest of the airline’s domestic network. During the 2012 summer season, Trade Air operated some flights on Croatia Airlines’ behalf as the national carrier’s fleet was operating at full capacity. In the first nine months of the year Croatia Airlines welcomed 1.550.000 passengers, up 4% on last year. While there was a passenger boost of 6% on international flights, numbers tumbled on domestic services by 3%.

16 comments:

  1. This is really good for Dubrovnik but really bad for Croatia Airlines. If the route is already considered as loss making then just imagine what impact competition will have on the future of this service.

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    Replies
    1. ZAG-DBV-ZAG is not loss making, it is one of the most profitable OU routes...

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    2. Based on what? Why would the consulting agency say otherwise?

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  2. There is one thing I don’t understand. Does the EU allow for the government to subsidise their national airline on domestic flights? If no what will happen with CA in July 13? Anyway this is great news for passengers. And well done to DBV. Those are fantastic figures.

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    Replies
    1. CA is the code for Air China, not Croatia Airlines.

      The European Union does allow subventions up to a certain degree, and for a limited amount of time.
      Obviously it would be better for OU if they were the sole operator on the route, but if they are not then the European Union might state that these subventions are illegal. To make things even worse here we will have two Craotian airlines competing.
      The only way around it is if the Croatian government would give subsidies to all carriers operating between Dubrovnik and Zagreb.

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    2. Why would 2 Croatian airlines competing on the same route be bad? I'd rather see that than a foreign airline talking evan more business from Croatia. Only thing wrong with this picture is aircraft type but I hope they adopt a low cost carrier approach otherwise I don't see if working. Good luck to them anyway.

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    3. PSO (Public service obligation) is regular pratice for subvention nonprofitable routes in cuntry and some times out of country (for Croatia outside route would be Zagreb-Mostar for istance).

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    4. I never said it was bad for Croatia and its fliers. It is bad for Croatia Airlines because if the government only gives them the subventions then it distorts the ideal of free competition. So there will be most likely two cases here: 1. either the Croatian government will have to give subventions to both Croatia Airlines and Trade Air, and 2. no subventions will be given.

      Zagreb-Mostar would have to fulfil all the demands for subventions. It would have to prove that the line is of vital importance.

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  3. Go Croatia go! :)

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  4. there examples of so many routes within EU (plenty of that is seen between Canary Islands, in Sweden and Denmark to some islands, etc.) of mentioned PSO, so not only that domestic routes will continue after joining EU, they can only increase, and some non-exsiting routes to be started such are: ZAG-OSI, OSI-SPU all year around, OSI-BWK, and maybe OSI-OMO as the international one.

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  5. @Ex-Yu aviation, the official passenger number for Dubrovnik for October is 134.462.

    So far this year 1.431.207 and it seems that this year it will exceed the record of 1.470.000 from 1987!

    Zadar has already done so this year. Most likely Split will see the all time record in 2012.

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    Replies
    1. The question remains will it be Priština or Dubrovnik who takes the third ExYu spot this year.

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    2. This will be difficult to tell until the end of the year since, as expected, at this point in the year DBV is well ahead of PRN (latest PRN figures Jan-Sep 2012: 1,188,272 pax). PRN pax traffic has grown 8% year-on-year so far and if this continues until the end of the year and if DBV growth is 14% year-on-year or higher than DBV should become the third busiest airport in the former Yugoslavia.

      It is nothing short of amazing that PRN has more pax than DBV. Next year PRN should get a new and modern terminal with air-bridges and this may lead to further growth, so beating PRN to the third place will only get harder, in my opinion.

      Btw, Pegasus is doing really, really well at PRN. They are adding more flights compared to W11.

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    3. Pristina has only so much potential. It does have a solid population, decent catchment area, and perhaps some business potential.
      However, it is still a black hole on the global map
      and I don't see significant changes happening so soon.

      Kosovo's problem is Serbia and Serbia's problem is Kosovo.
      And in a perception of investors, tourists etc. that is one big black hole. Most pax coming and going out of PRN are domestic pax anyway.

      I see PRN reaching its potential at 2 mil. by 2020 and staying around there.

      I believe DBV will definitely beat PRN and stay on top. Next year DBV will have 1,65 mil pax at least.

      Delete
  6. OT:
    Adria will open a new route out of PRN this winter season:
    JP268 PRN-VCE 19:00 20:45 5 2012-12-14 2013-03-22
    JP269 VCE-PRN 21:30 23:10 5 2012-12-14 2013-03-22

    Adria's PRN-VRN route has done very well passenger-wise. The ticket prices for this route are definitely not cheap, so I would guess that they're doing well on the VRN route and are expanding to VCE too.

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  7. Examples of air transport PSOs currently in operation in Europe are: routes from Dublin to Kerry and Donegal, routes between the Italian mainland and Sardinia, routes between the French mainland and Corsica, certain domestic routes within Norway, Sweden and Finland, and routes to the Scottish Highlands and Islands.....

    AlexLondon

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