Thursday, October 31, 2013

Adria aid investigation ongoing

Commission expected to rule on Adria aid by year’s end

A European Commission investigation launched in November last year into alleged state aid provided to Adria Airways is ongoing. These measures include four capital injections between 2007 and 2011 amounting to around 85.5 million euros. The Commission has doubts that they were granted on market terms. It is likely to make a ruling by the end of the year. Adria, as well as other interested parties, such as the Slovenian government, were invited to submit comments on the case in March 2013. In accordance with Article 14 of Council Regulation, all unlawful aid can be subject to recovery from the recipient, meaning Adria could be forced to pay back the entire sum of the multiple cash injections, which could have a significant financial impact on the airline and its operations.

The European Commission began a preliminary investigation into Adria in 2011. On March 11, 2011 Slovenia notified the Commission it was planning on approving a rescue aid package for Adria in the form of a state guarantee and a soft loan worth 6.2 million euros. Several exchanges of information took place afterwards. At a meeting with the Slovenian authorities on July 13, 2011, the Commission was informed that the rescue aid would not be sufficient. Slovenia withdrew its rescue aid notification on August 1, 2011. Following information that Slovenia had carried out a 50 million euro cash injection into Adria on September 30, 2011, without the EU’s approval, the Commission decided to launch a preliminary investigation. The government continued to pump money into Adria until the Commission launched a formal in depth investigation into Adria’s dealings just under a year ago. In addition, the Commission found that state owned holding company PDP and the majority state owned Ljubljana Airport acquired 52.3% and 47.7% of Adria Airways’ maintenance subsidiary Adria Airways Tehnika between October 2010 and March 2011.

For its part, the Slovenian carrier says, “We would like to stress that it is in the interest of Adria to prove that all the measures so far were carried out in accordance with the applicable legislation”. The Slovenian carrier believes the capital increase between 2007 and 2011 and the sale of shares of its subsidiary Adria Airways Tehnika do not represent state aid as all the investments met the criteria of the Market Economy Investor Principle. In June, low cost airline Ryanair requested the European Commission to make a swift ruling on the case. It said, “State aid was provided to Adria despite its inefficiencies while Ryanair has to develop its own market and is losing revenue”.

In 2012, both the Hungarian national carrier Malév and the Barcelona based Spanair declared bankruptcy and ceased operations after the Commission ordered the airlines to pay back state aid received by the Hungarian and regional Catalan governments respectively.

40 comments:

  1. What about AlItalia?

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    1. I think Alitalia is fine because the funds did not come directly from the government as was the case with Malev for example, they came from some semi-governmental institutions (such as the Italian Post) which in return got a share in the airline.

      What happened to Budapest after Malev went down was catastrophic, they have still not recovered from it. Yes, the passenger numbers might be on the rise but high-yielding passengers are gone and so are the intercontinental flights. It was thanks to Malev that Budapest had a direct link to Beijing and New York.

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    2. and also, MA (and therefore BUD) heavily relied on transit pax. now, there are virtualy no transit pax (both FR and W6 offer only O&D connections)

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    3. Yes, plus FR downsized their operations in Budapest because the airport authorities did not want to prostitute themselves.
      Not to mention that because of these two carriers (primarily FR) the airport looks like a joke now with all those fences and passageways.

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    4. FR only. That refugee camp looking boarding was built on their demand, and the airport obliged because the Hungarian government was desperate to have Ryanair over. One of the worst decisions ever.

      Suffice to say, on other developments in Hungary we have a slightly different view of what transpired in Hungary. Fidesz almost screwed Wizz Air out of Hungary at that point in time cause they were pissed at them for bankrupting Malev.

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    5. I guess you never heard of the 'tourist subsidies' Ryanair got for flying out of Budapest and replicating most of W6's network.

      Also, W6 never flew out of Sármellék / Balaton. FR did.

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    6. I stand corrected, thank you for pointing that out. Still, Wizz Air and the Hungarian government did make a deal, I got that information from a very reliable source. Furthermore, the government's reluctance to fight the EC kind of proves that.

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  2. Let's keep this artical without off topic comments. We don't want to argue, and therefore make the best admin in the world mad. :)

    If you have some news about SJJ, BEG, ZAG or whatever that does not regard Adria or LJU, you have the previous article made just for that.

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    1. Isn't your comment kind of off-topic though? Since you have not really said anything about Adria or Slovenia.

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  3. Is it possible that the government doesn’t want to start Adria’s privatization until this ruling is over? I wouldn’t sleep easily with this hanging over my head. I hope they don’t find Adria responsible but the Commission has shown no remorse. They shut down an airline like Malev so…

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  4. They have also shut it down to put some pressure on Orban. It's EU - everything is politics.. Slovenia is a different case and I assume they'll consider the economic crisis too.

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    1. Not quite. The Hungarian government did not want to fight for Malév because Fidesz had a deal with Wizz Air... a deal behind closed doors was made. In return for Malév's closure Wizz Air had to start flying from Hungary's countryside. Well, they tried that when they launched flights from Debrecen (and even Balataon) but we all remember how 'well' that worked out for them.

      Actually, the crisis makes it worse for Adria. They are not profitable and they are a nuisance for the Slovenian government which is being forced to cut all unnecessary expenses. I fear that Adria is one of them. When it comes to EC investigations, I fear that Adria and Cyprus Airways will be shut down while airBaltic will live to see another day because it has managed to record a profit this year (€798,000 after taxes). Angela Merkel stated the other day that it wants a Europe which is competitive (and profitable) and we all know who has the last word these days in the European Union.

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    2. When did Wizz start flights from Balaton???? As for Debrecen, London flights are doing great don't you worry about that. Nikad necu shvatiti ove zajedljive komentare "Hungary's countryside", what does that mean can you elaborate? Why Hungary's second largest city (NOT countryside) wouldn't have some flights....?

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    3. They were planning on flying from Balaton and I think they even had a few seasonal flights but it did not work out. Flights from Debrecen are not performing that well, primarily because the yields are trash. Even today, a year and a half after launching flights from the eastern city, they have not managed to have 7 weekly departures from there. Wizz Air's presence in Debrecen is the same as their presence in Tuzla.
      They have no choice but to keep these flights which was part of the deal they made with the government. After all, Orban did hand them over Budapest.

      For the same reason Serbia can't sustain flights outside of Belgrade. Budapest airport is accessible from all parts of Hungary due to decent infrastructure. That's why all air traffic is centred around Budapest and not scattered around the country as is the case with Poland or Romania for example.

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    4. I am sorry, but there is absolutely NO room to compare BEG with BUD.

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    5. Who was comparing BEG and BUD?! I was merely pointing out the similarities of their national markets and how the aviation system in both countries is centralized around their principal airports.

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    6. Well well it depends much more on the diaspora. Poland and especially Romania have whole towns that migrated to UK, Italy, Spain.. While Hungary doesn't rely on diaspora. It has much more business travellers and many tourists heading to BUD which is not the case with Poland and Romania. That's why it's so centralized. The same goes for Czech Republic.

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    7. Well, it does not really apply for the Czech Republic as all of eastern Czech Republic can comfortably fly from Vienna and to a lesser extent Braitslava, Brno, Krakow and Wroclaw.

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  5. Is it possible that Adria will go into exile or something like that?
    I mean by relocating to Prishtina.
    So Adria could survive.
    Maybe its forbidden for an EU-airline to get paid by taxpayers.
    But what if it is a airline outside EU but paid by Slovenian taxpayers?!

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  6. Here is one example of buying ticket from ZAG (why there is no more pax in ZAG), but also it concern BEG.

    destinacija: OTP
    daj bože iz ZAG, ali dolaze u obzir sve zračne luke unutar 400 km
    datum: 21.11.-22.11.
    cijene u EUR
    za auto je izračunat broj km x 1,5 kn/km (moja stoka od terenca guta 15 l/100 km) + cestarine + parkiranje
    * za Austriju i Sloveniju imam godišnje vinjete (nema troška)
    * za BEG imam gratis parkiranje

    Austrian
    ZAG-VIE-OTP = 666,66
    VIE-OTP 384,00 + automobil = 484,00

    Blue Air
    BLQ-OTP 49,80 + automobil = 164,80

    Lufthansa
    ZAG-MUC-OTP = 654,00

    Turkish
    ZAG-IST-OTP = 457,00
    akcija, ostanak min. 3 dana + nedjelja involvirana = 260,00
    * još bi i ostao 3 dana, ali mi nedjelja nikako ne odgovara radi sastanaka

    Tarom
    BEG-OTP = 240,00 + auto = 332,50
    BUD-OTP = 310,00 + auto = 430,00
    VIE-OTP = 192,00 + auto = 292,00

    Air Serbia
    BEG-OTP = 290,00 + auto = 382,50

    Wizz
    BLQ-OTP oko 80,00 + auto = 195,00
    PSA-OTP oko 80,00 + auto = 207,50
    TRF-OTP oko 130,00 + auto = 212,50 (dan prije 162,50)

    Zaključci:
    - jasno je zašto ZAG nema putnika, polazak iz ZAG je smak svijeta jer više nema opcija sa Malevom i ČSA, nego je preostala jedino opcija LH i pulena tj. za jugoistok preko sjeverozapada

    - BEG postaje nešto što gledam kao opciju, ovaj puta skoro uspjelo (za Jata nisam ni pokušavao)

    - Air Serbi nije konkurentna u code-share sa TAROMOM

    - hvala ti bože na LCC, jer ovo što radi OS i LH je protiv svake pameti, a TAROM je prisiljen imati niže cijene zbog Wizza i Blue Aira

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    1. Ali ja i dalje ne mogu da shvatim zasto nema vise avio kompanija iz Zagreba. Jel to protekcionizam radi OU ili previsoke cene?

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    2. Zagreb has many companies, for example TAP, Vueling, Air France, British (all of them don't fly from Belgrade at the moment), but Zagreb needs more companies that will offer good connecting flights to the east. Air Serbia would be good choice.

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    3. God, what has Belgrade got to do with this discussion? Do you feel the need to compare the two airports all the time? Mind you, Vueling should not be on the list as it will fly to BEG in summer.

      Also, the thing is that even with 'all' these airlines, the airport is not as competitive as it should be. The fares are still rather high.

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    4. Ma problem je što je u okolici od 400 km brdo aerodroma koji nude nekoliko stotina letova dnevno.

      Veliki aerodromi nacionalnih kompanija:
      - Beč
      - Venecija
      - Ljubljana
      - Beograd

      Veliki LCC aerodromi:
      - Budimpešta
      - Bratislava
      - Verona
      - Trieste
      - Treviso
      - Bologna

      Charter i manji LCC aerodromi:
      - Graz
      - Klagenfurt
      - Balaton
      - Linz
      - Salzburg
      - Zadar
      - Rijeka
      - Pula
      - Split

      Svi ovi aerodromi odvlače velik dio Zagrebačkih putnika. Ja od 10 svojih letova 8 letim iz drugih aerodroma, a samo 2 iz Zagreba. Autoputom 400 km je tri sata, granica nema. Izbor letova ogroman, cijene vrlo povoljne!

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    5. Pa da ali svi ti aerodromi su se izborili da privuku niskobudzetne kompanije. Iako mrzim Wizz Air ipak sam im zahvalan sta su uradili sa Beogradom. Cene karata su se otopile preko noci! To hocu samo da kazem, mozda je vreme da privuku Wizz Air ili vise letova easyJetom.

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    6. @Purger

      Slazem se sa tvojom konstatacijom da LH i druzina nije normalna I samo cu ti ponuditi jedan podatak iz moje perspective. Letiti YYZ-SJJ ljeti kosta oko $1800 sa OS/LH (ostatak godine je $1400-$1500). ZAG je malo jeftiniji, moze se naci sa AF ali nista pretjerano. U isto vrijeme BEG sa AF,KLM,BA,OS (nikad LH ili AC) cesto u kooperaciju sa JU moze se naci za $1000-1200, a van sezone i jeftinije. Sa svojim cjenama nisu normalni ali sto da ne kad imaju (skoro) monopol. Jedina druga opcija je TR ali u 90% slucajeva nisu ni oni puno bolji. Slicno je i u Zagrebu pretpostavljam.

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    7. So Purger, how are you gonna fly?

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    8. Treviso or Belgrade still didn't decide.

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    9. I guess passengers from Ljubljana face similar ripoff?

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  7. Aegean is currently considering launching flights from Athens to both Dubrovnik and Ljubljana during the 2014 summer season. Wouldn't it make more sense for them to fly into Zagreb than Ljubljana? The market must be bigger.

    https://en.aegeanair.com/e-services/e-ticket/

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    1. that would be great!i'm not sure about ZAG but Greece is a very popular destination for Sloveninas so i'm sure they could do well with one or two weekly flights to LJU

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    2. Does Adria still fly to Athens? I wonder how this will impact Croatia Airlines' flights from Dubrovnik to Athens. Aegean has an amazing product and I don't see how they can compete.

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  8. Why is the European Commission investigation taking so long?
    Was the ruling shorter for Malev and Spanair?

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    Replies
    1. Because of the double standards applied !!!!!!

      As soon as the big guy interests are challenged the legislation gets enforced immediately
      (Malev case, big guys were not happy with its' connections to North America: excellent service, good prices.
      Apparently, in this case the pet feeder (Adria) has been contributing to big guy (LH) profit.

      The case puts at least the following questions:
      1. Shell we ever hear from EC why it has taken so long for the start of the investigation?
      2. Is there anybody who should have asked the EC?
      3. How long we shall wait for the outcome of the investigation?
      4. What are going to be the EC actions: severe as in Malev case or just some warning.
      5. Can a troubled air carrier be saved by some fund institution supported by the carrier's country Government so that formally the government funds remain hidden. Is it the case of Alitalia?

      Regards

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  9. My friends in Slovenia: you are in the Eu for some years already.so your laws are comparable with the laws of old EU members.

    Different chapters were closed in the pre-access period.
    So you are admitted to the in the EU.
    No more transitions and excuses with the law ... pleaseeeee like:

    to prove that all the measures so far were carried out in accordance with the applicable legislation


    You are in EU and the fact (another case) that you are not energetically fighting the cocain trade in/thru/out Slovenia it's not a law fault

    it's plain no respecting and no implementation of the law

    Adria business (and involved gov. institutions) following same mentality pattern.

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  10. OT: guys, does any of you know whether Airbus' A300 Beluga ever landed on any of major airports in ExYU countries?

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    1. Guess not! What would Airbus need from ExYU? :D

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  11. I've just noticed an Iran Air A300 that departed Ljubljana airport, where it had a refueling stop on the way from LHR to Teheran. The question is, usually stops to refuel in Belgrade, but whenever I saw, that was on Frankfurt - Teheran, so is it only for that flight that they do a refuel stop in Belgrade?

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