Tuesday, March 18, 2014

Adria begins transition into low cost airline

Adria launches new business strategy

Adria Airways has started adopting measures used by low cost airlines as the Slovenian carrier begins its transition from a full service to a hybrid - no frills carrier. CEO Mark Anžur has confirmed that from April 22 all economy class passengers will be charged for on board food and beverages. “With the option to purchase on board, we will not earn much. However, we will significantly reduce the need to stock our aircraft with supplies. As a result, we will achieve substantial savings. Using this approach we are shifting towards other low cost airlines”, Mr. Anžur says. He adds, “When a low cost airline lands at an airport it does not have many expenses, only the bare essentials, which is fuel”.

In addition, Adria will also increase capacity on its aircraft this summer. “Capacity is very important to low cost airlines. We will add an additional nine seats to our Airbus A319s”, Mr. Anžur says. Adria’s two A319s currently seat 135 passengers, which will increase to 144 this summer season. “It doesn’t sound like much, but if the aircraft is full, our revenue increases by a tenth”, Adria’s CEO explains. The carrier’s Bombardier CRJ900s are also expected to receive an additional row of seating. Therefore, the jets will be fitted with an extra four seats.

Many low cost and full service carriers are morphing to a range of hybrid models. In Europe alone there are numerous examples including Air Berlin, Norwegian Air Shuttle, Brussels Airlines and Niki, to name a few. However, Adria is also awaiting its privatisation which could take the Slovenian carrier on a completely different course to the one it is starting to adopt. “Potential investors are awaiting a ruling by the European Commission”, Mark Anžur says. Adria is being investigated for state aid received between 2007 and 2011 to the tune of 85.5 million euros. “The ruling will be made in June. We believe the judgment will be in Adria’s favour”, the CEO concludes.

44 comments:

  1. Good luck, Adria!

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  2. Goog news for customers.

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  3. Transitioning to a hybrid style carrier is definitely the right way for them to go. However, there are some things which are making me sceptical:

    1. All hybrid airlines today are highly dependant on connecting passengers. The best example is airBaltic which operates out of a country that's smaller than Slovenia but handles more than 4 million passengers a year... and still manages to make money.

    2. Adria will concentrate on the O&D market but the real question if this market is big enough to sustain their operations in the long run. Especially now when Wizz Air is eyeing the Slovenian market. Let's not forget that it was them who were urging the European Commission to make a ruling on state aid. Furthermore, Wizz Air doesn't really care about money since they are funded by an investment fund from the United States. They can dump fares all they want, something Adria can't do.

    3. Do they really need the A319? Maybe a better alternative would have been to just concentrate on the CRJ-900 (fleet commonality) and to add frequencies there where there is more demand. Like this they could have a clear advantage over their competition- most passengers love flexibility. Especially business people who tend to be higher yielding.

    In my opinion, the Slovenian government should make a professional restructuring plan for Adria whose funding will be approved by Brussels- in accordance with the Lisbon Treaty.
    They should return to their pre-crisis model of turning Ljubljana into a mini hub between the Balkans and western/central/northern Europe. This could very well work with the CRJ-900, an aircraft they seem to love.
    Actually, combining a fleet of CRJ-900 and Atr 72-600 could work for them. Use the former for routes longer than 500 nm while the latter for those shorter than 500 nm.

    I guess time will tell what will become of Adria.

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    1. Adria's fortune is in EC's hands. If they order them to pay back the €85m, it's Chapter 11 for them.

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    2. Unfortunately Slovenia doesn't have that much influence on the EU level but let's hope that their representatives in Brussels manage to save it from its doom.

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    3. I basically agree w/ Nemjee. Just few more thoughts:

      I think they need the capacity of A319 and A320 at least for summer charters, which often have LF of 100%. Not sure about the winter season though. Also, not sure about the future of old A320 (AAS).

      On Sierra5 portal an interesting article was published today:
      http://sierra5.net/index.php?option=com_content&task=view&id=2060&Itemid=1

      Basically, Adria already grounded CRJ200 AAE, which is being sold. Instead of that and another CRJ200 that will be grounded in near future they are leasing 2 CRJ900, one in April and one in June, both for period of 8 years.
      They will hire 4 new copilots and 17 cabin crew (who are already working for them on a contractual basis).

      Also, they've changed their timetable so that the flight MUC-LCJ-MUC falls between morning LJU-MUC and midday MUC-LJU, therefore avoiding the need of empty a/c movements. Also, the new timing of the flight MUC-LJU coincides much better with connections to SE (Podgorica, Skopje, Sarajevo, Tirana, Priština).

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    4. I guess the copying of Air Serbia's new routes (Prague, Kiev and Warsaw) didn't bring the expected miracle to Adria. With the introduction of the hybrid scheme in the way they understand it, Adria will become more expensive than Wizz Air, but with a service worse than Air Serbia. Frankly speaking, with W6, U2, JU and TK around, there is not much place for Adria left in the region, besides Albania as someone already mentioned. Trying to 'steal' a few of JU's pax to PRG and WAW (KBP already canceled before launch) will only make them bleed even more money cause they don't have the aircraft needed to compete efficiently coupled with almost nil O&D, especially to Prague.

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    5. One would have thought their Belgrade experience was enough for not to embark on further advanturism against Air Serbia.

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  4. @Nemjee

    After several email exchanges with JU they said now that BEY flights are not confirmed yet as of 01jun. Thats why I can t book them in the internet. They re still lacking licenses.
    Do u know more? Can u book flts in the JU system after 01Jun? If yes do u see prices for ZRHBEY in EUR return fee?

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    1. Hey, do you have an e-mail where I can write back to you so as to not be accused of spamming the Adria topic.

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    2. Again delay

      AIR DELAY!!!

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    3. They can't resume selling flights before officially obtaining all needed licenses. Flights are expected to be put back on sale with the start of the summer season, on March 30.

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  5. Od babe nikada dobra devojka nije ispala.

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    1. Znači li to da je Air Serbia loša devojka?

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  6. ali je od stare koke uvijek bolja juha :)

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    1. Nije prijatelju nije... to ti je jako zastarjela uzrečica. Danas mlade koke puno bolje izgledaju a sve znaju dok su još jako mlade.

      ima ona za muškarce:
      MLAĐE PILA JAČE ŽILE
      (danas se to može uporabiti i za djevojke)

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    2. Stara koka dobra juha, jeste, ali se ne živi od juhe već od mesa, dakle mlađa koka je u điru....

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  7. uskoro će imati flotu kao partizanska eskadrila, kao i sve ostale kompanije u ex yu osim air serbia. Izašli su iz za njih najbolje popunjenog leta - feedera za LYBE. BH Airlines recimo jedino ima dobro zaradu od leta za LYBE

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    1. Gluposti, pričaš iz glave i bezvezarije. B&H ima katastrofalnu popunjenost na letovima za BEG. Gubitak je rekordan.

      Kako možeš reči za Adrijinu flotu i druge flote da su ko partizanska eksadrila:

      - Adria A319, A320, CRJ 900 (CRJ200 odlaze u kratko vrijeme)
      * prosječna starost 9,7 godina

      - Croatia A319, A320, Q400
      * prosječna starost 10,4 godine

      - Montenegro E195, F100 (smanjuju broj Fokkera na samo 2)
      * prosječna starost 15,3 godine

      - B&H Airlines ATR 72-200
      * prosječna starost 18,3 godine

      istovremeno Air Serbia A319, A320 (svi Airbusi skupljeni odsvud, neki i u UEA registri, jedan se pogubio u farbanju), 737-300 (dva od Bularia Aira), ATR 72-200, ATR 72-500
      * prosječna starost 19,1 godinu

      I opet nacionalistički obojena nerealnost!

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    2. Air Serbia će imati unificiranu Airbus/ATR flotu koja se rapidno uvećava i modernizuje, dok svi ostali downscaluju i ostaju sa flotama za koje je pitanje da li će uopšte imati Airbusove/Boeinge. Sa druge strane, Air Serbia kupuje nove NEOove. ;d

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    3. With somebody else`s money, though....

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    4. Ne kupuje ih Air Serbia, nego Arapi. Air Serbia trenutačno ni maketu ne može kupiti jer Arapi sve diktiraju.

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    5. Jeste, i avionima odvoze poljoprivredno zemljište, i ugovor uključuje tajne delove kojima se cela Srbija prodaje Arapima itd. itd. Nije ti dosadilo da širiš patetični FUD? Realnost te teško demantuje.

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    6. Here we go again... Air Serbia needs to hire someone like brand dot com to take this troll out.

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    7. Mi govorimo o sadasnjoj floti a sto ce bit u buducnosti sam bog zna. Mozda Etihad podvije rep, mozda ce do 2018. Air Serbia imati 30 aviona.

      U svakom slucaju Montenegro dobija nove Embraere, Croatia ima narucene nove Airbuseve, Adria nove CRJ900... a Air Serbia ce i falje letjeti sa 24 godine starim ATR-ovima i ne bas mladjahnim Airbusevima. Bar jos pola desetljeca.

      Pa time Partizansku flotu sada ali i u doglednoj buducnosti ima jedino new Jat.

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    8. Нема везе да ли има партизанску флоту, најважније је то што је Ер Сербија једина, за сада, која има будућност и једина која тренутно расте.

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    9. ahahaha opet ja... da je Croatia Airlines toliko jak imao bi na konto turizma 5 miliona putnika godišnje, ali ta kompanija je i dalje u socijalističkom samoupravljanju, imaju flotu koja je nekad bila nova, 10 godina nisu kupili ni jedan avion a narudžbina Airbusa je zaledjena na neodredjeno. Adria će na kraju verovatno otići iz Slovenije, i to u albaniju koja ima bolju projekciju rasta a nema ni jednu kompaniju, tu nije reč o snazi kompanije ni države u kojoj se nalazi, nego aerodroma. Nego volim kada naši susJedi pene sa onim što je kupljeno pljačkanjem Srbije u zadnjih 50 godina. Samo u mojoj Rakovici je postojala fabrika avionskih motora još pre nego što su Zagreb i Ljubljana uopšte imali aerodrom, posle 1945 crveni su sve to pokupili i odneli u Sloveniju, kao i gomilu drugih fabrika. Hrvatskoj i Sloveniji bi bilo pametnije da ulažu u mreže brzih pruga ako neče da imaju feeder aerodrome za BEG, one imaju i veći kapacitet od aerodroma.

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    10. Obožavam kad ljudi provale glupost i žive u svom neznanju, ali ipak sami sebe uvjeravaju u činjenice samo da bi dokazali svoju nacionalističku sljepoču.

      CROATIA AIRLINES je kupila avione u posljednjih 10 godina i to je ne samo neisina nego i glupost. Q400 CTN-a SU STARI OD 4,2 DO 5,9 GODINA. Dakle sad ste ispali smješni i poprilično blentavi.

      Ali to što ste napisali za flotu koja nije ništa kupila u posljednjih 10 godina je ništa za glupost oko pljačke Srbije. No, to je ipak največa, ali največa gluparija koju sam ikada pročitao. Samo sitan dokaz. Iako je Hrvatska morala izgraditi stotine tisća kuća, mostova, tvornica, pa i 5 aerodroma koji su porušeni i popljačkani, danas, od kada ne mora hraniti Srbiju plača u Hrvatskoj je 3 puta veča, a standard bar 4 puta. Što nam to govori?

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    11. Govori nam da i dalje cvikate od Beograda. I da imate 10 puta veći standard, i dalje će ZG ostati town a ne city.

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    12. Govori i to da vam je spoljni dug više od 50 milijardi evra i da sem zastave, himne i propale aviokompanije ništa više nije u hrvatskom vlasništvu

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  8. OT

    Both Swiss and easyJet will be increasing their own flights from Geneva to Belgrade from two weekly to three weekly. They will also adjust their timetables so that there is no overlapping.

    With Etihad Regional, which starts its own flights in May, total number of weekly flights will be 9!

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    1. This is THE route to watch this summer. Not everyone will survive. Reminds me of that movie title: "There will be blood".

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  9. Adria is doing the right thing. I live and work in USA so this sort of service is a norm - on all airlines (with minor exceptions). I just flew Adria from Zurich recently and I was surprised by the elevated level of service. If they can manage to make their tickets cheaper yet leave the option to have such service for people that want to pay for it, it makes absolute sense. I would love to think that people in ex-yu would always choose quality over ticket price but that is a far cry from reality. Adria will now leave you the choice of both...so nobody is left out.

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    1. Exactly, nice constructive comment, respect.

      I am sure prices could be more distributed between for example a few in 99€ up to 199€

      though people just think that if you put 99€ for sale there will be 100 of them available for one flight.

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  10. Not sure, if it's yet to come, but as of now, there is hardly anything low-cost about Adria that would appeal to potential passengers. The fares are still much higher not just over what low-cost airlines offer but also compared to many legacy carriers in the region, resulting in many people avoiding LJU altogether and using TRS, VCE, ZAG, VIE, BUD or even MXP. Adria as it is, will not be able to live for too long. Once the LJU Airport opens up to other airlines, they will be gone very soon unless they change their model of operations. The recent cost savings were not achieved that much due to passenger increase as much for selling off its property and downsizing. To succeed, Adria has to focus on the tourist market. Slovenia compared to Croatia and Serbia can exploit both seasons very well. The country has beautiful mountains and ski resorts that should be more promoted and incorporated in its marketing strategy during the so called slow months. Of course, for tourists to come, you can't charge them 300 EUR or more just for the airline ticket. Slovenia might be beautiful but it's relatively unknown and you can't charge the premium as if I were going somewhere to Switzerland. Lower airfares, increase the quality of service, get rid of the Balkan mentality and tourist will start coming and noticing you. Only then when you have numbers and demand you can start playing with the price. Until then, there is still a lot for not only Adria but the entire Slovenia to learn.

    Regards

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  11. QR A321 to BEG today. Nice to see them upgauge despite all the competition involved.

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  12. As far as I am concerned Serbia and Croatia are only two countries in the region who need and have justified their own airlines. Slovenia, BH and FYR Macedonia, as well as Albania and "Kosovo" are too small and Adria could be a good roof to put everything under. As a holding or multinational carrier whatever, since Slovenia is too small for Adria and Adria too big for Slovenia. But what the heck, CIA and Mc Kinsey and co. told to all these governments that you need for nation building: a language, a church, an airline, 75 embassies around the world.....so until they are all broke and bankrupt they will not come to reason.

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  13. OT: Interesting blog post on Economist.com talks about ex-yu air carriers.

    http://www.economist.com/blogs/gulliver/2014/03/balkan-airlines

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  14. JP to get 2 more CR9. 1st to arr in April, 2nd aircraft in June
    Same time 1 CR2 will retire

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  15. Two more CRJ900 for Adria
    http://sierra5.net/index.php?option=com_content&task=view&id=2060&Itemid=1

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