Thursday, September 25, 2014

B&H Airlines faces challenging future

Tough times at B&H Airlines

Two years after Turkish Airlines relinquished its 49% stake in B&H Airlines, the Bosnian carrier faces a difficult future with two leased aircraft, four destinations and no strategic parent in sight. While the Federation government has been adamant it would find a new part-owner for B&H, interest has been scarce. The airline’s CEO, Amir Jažić, has described the situation at the carrier as “alarming” and “distressing”, while the government has said B&H is “in a critical state”. One of the greatest obstacles facing the airline at the moment is debt owed to the Hypo Group for the financial lease of its fleet of two ATR72 aircraft. The leasing arrangement will expire in late 2015 and Hypo has already warned it is unlikely to extend the deal. As a result, the Bosnian carrier could be left without any aircraft in its fleet in just over a year. The government has said it will try and renegotiate the leasing arrangement, which it believes is damaging for the carrier.

Several months ago B&H Airlines suspended its signature route to Istanbul, facing unprecedented competition from its one-time partner Turkish Airlines and budget carrier Pegasus. Mr. Jažić says B&H cannot compete against the likes of Turkish Airlines on their route to Istanbul. However, the CEO notes that the bilateral aviation agreement between Bosnia and Turkey, drafted more than a decade ago, gives Turkey an unfair advantage in commercial operations. The Federation government has been reluctant to renegotiate the terms of the agreement with their Turkish counterparts. Following its acquisition by Turkish Airlines in 2008, the Bosnian carrier launched a handful of new routes and became the busiest airline operating out of Sarajevo with a market share of 26%. Today, that share has dwindled to only 4%. In 2012, B&H Airlines ended the year with a profit of almost half a million euros. Last year, the airline recorded a loss of two million euros. In addition, over the past year, seven pilots have left the carrier, creating a major operational headache for the small airline which counts only 104 employees.

With competition on the rise at its Sarajevo hub, B&H’s battle for passengers is likely to become even more difficult. Last week, the Federal Minister for Transport and Communication, Enver Bijedić, said Wizz Air is considering launching flights to Sarajevo. Talks between the budget airline and Sarajevo Airport are in progress, with the carrier’s CEO indicating services from three different cities could be launched to the Bosnian capital during the 2015 summer season. Late last year Mr. Bijedić said, “We cannot get rid of our only national carrier. We will do everything for the company to survive and function properly”. However, the government’s response and support has been minimal so far. This summer the Bosnian carrier, faced with a surplus of aircraft, tapped into the lucrative charter market with flights from Mostar and Sarajevo to Foggia, Bari and Pescara in Italy, Bodrum in Turkey, as well as seasonal services from Banja Luka to Tivat, in an attempt to sure up revenue. Without any clear direction or support from its owner, B&H is facing an uncertain future with few prospects.

25 comments:

  1. I feel sorry for the 100+ people working there. An airline which really had an opportunity to do something. Yes, the Bosnian market is small but it didn't even try. Sad really.

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  2. This ship has sailed. Wizz Air is coming and apparently Transavia is coming next year as well. Sorry but BH just lost the race.

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  3. They should consider to take some flights from other EX-YU airports, such as Nis, like Adria does in EU countries.

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  4. There was lots of speculation a few years ago that Croatia Airlines might buy B&H. A pity it didn't happen. Would have opened a completely new market for them. Maybe Air Serbia through Etihad could do something like that now.

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  5. Deo raspadnuta zemlja ne moze imati pristojnu avio kompaniju. Sada svi zavise od stranaca. Bas ce oni da prave letove iz NIs sa kompanijom koja ne moze da se sastavi ni u Sarajevu.

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  6. The only business option for B&H Airlines is to have deal with Air Serbia and to fly for them

    1st plane
    1st wave SJJ-BEG
    2nd wave BEG-TIA-BEG
    3rd wave BEG-SJJ-BEG
    4th wave BEG-SOF-BEG
    1st wave BEG-SJJ

    2nd plane
    1st wave OMO-BEG
    2nd wave BEG-VAR-BEG
    3rd wave BEG-OMO
    4th wave OMO-BNX-ZRH-SJJ-ZRH-BNX-OMO

    + all those lines in their timetable as 1stop SJJ-BEG-TIA, SJJ-BEG-SOF, OMO-BEG-VAR
    + code-share on most JU routes from BEG

    Alternatively it can be same deal with Croatia Airlines, but for sure Air Serbia is much better option

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  7. Is there much demand for OMO-BEG?
    What about SJJ-TIA?

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    Replies
    1. Demand is there if you have good hub. OMO today have no regular flights so they are desperate for any possible flights with connections.

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  8. According to reliable source from the Government and from the company there are potential investors in sight and negotiations with couple of them are currently in progress.

    However, as we know elections anywhere in Balkans are unpredictable and could mean a significant turnover in basically any process so potential investors have choose to wait and see the results before making a rushed decision and a deal with somebody who is likely to get changed after the elections in October.

    As somebody stated before, Bosnian market is small but there is more then one reason why a company based in Bosnia could run a profitable operations.
    First card that management should play on is diaspora, and specially Germany (200 000), Austria (100 000), Swiss (100 000), Sweden (150 000). BH Airlines doesnt fly to any of these with an exception of Zurich.
    Diaspora in US and Australia is numerous as well, so a good connecting flight from Amsterdam or one of the ME hubs is essential too.

    Secondly, thanks to its nature and a rich and turbulent history Bosnia is recording a strong growth in number of tourists and according to WTO (World Tourism Organisation) it will continue with that trend with prediction that the growth will be third largest in the world from 1995 to 2020. Approximately 20 000 kuwaity citizens are visiting Bosnia each year, and pumping up Turkish Airlines load factor from IST, flight to ME or more precisely Kuwait is necessary.

    The greatest problem of BH Airlines is not its fleet or the market. The greatest problem is its management that is either corrupted or not capable to handle tasks in front of them and this is the story that has been going on since Air Bosna. Unfortunately, I can`t even name one Bosnian who is capable and educated to run an airline business.

    Now back to the fleet, with 2 ATR72s (not a lot) and annual government support they are failing to recognize the potential of destination well in comfortable reach with this fleet, such as Vienna, Rome and Budapest.

    We can only hope that a foreigner will come not only to bring money to this company but to run it.

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  9. uou check it. Sofia - New york 370€, Sofia - Hong Kong 454€. We are gooing. bit.ly/1rnNzwE

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  10. Purger has wet dreams. No need for Air Serbia to do that with bad company with leased planes. Just adding one ATR 72 to their fleet. OMO is dead airport except for pillgrams.

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    1. OMO is not dead, it has a potential for development. West Hercegovina is the richest part of BiH and that market has potential for development

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  11. Best chance BH Airlines had was with Turkish Airlines but only with their last management. Unfortunately THY only sent serious people last couple of months when it was to late to repair the damage. However Bosnia has good prospect for tourism and domestic company could be very profitable if managed properly.

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  12. Malo sam tanji sa engleskim ali sarajevo nije "bosnian capitol" but capitol city of B&H . I tako dalje s upotrebom tog prideva " bosnian" . Ovako dovodite sebe da korektnim tekstovima umesto informisete vi ( urednistvo bloga) u stvari dezinformisete javnost. Siguran sam da vam to nije cilj .

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    1. Kaze se capital, not capitol.

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  13. Za njih bi bilo najbolje bilo da uzmu jedan E190 AR
    INN-NS

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  14. The story is: They will not let them go bust and they will keep giving them symbolic government support. More or less the same story as everywhere in the region just in a bit smaller scale.

    But I cant understand why is it so hard to employ somebody from the industry to run it at least...

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    Replies
    1. Very simple ... somebody from the industry will not work for peanuts .... that's why such airlines employ monkeys

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  15. OT: Etihad's new livery

    http://www.flightglobal.com/news/articles/etihad-shows-off-new-colours-on-a380-404157/

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  16. Is it true that Turkish is sending their A330 two times tomorrow to Skopje in 08:10 and 19:50??? It says so on flightradar...

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  17. https://pbs.twimg.com/media/ByZcTnrCAAAd1S1.jpg

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    Replies
    1. Kad bi ga slali barem 1 godisne za BEG =D
      INN-NS

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  18. This airline shouldn't even exist...it's a joke. Die already!!

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