Saturday, November 15, 2014

Alitalia-Air Serbia to give up slots

New airline to launch Rome - Belgrade flights

The European Commission has given the go-ahead for Etihad Airways to buy a 49% stake in Italy‘s Alitalia, but said the two carriers, as well as Air Serbia, must allow competitors to fly between Rome and Belgrade. The deal, inked in June, will reinforce Etihad‘s presence in Europe, where it already owns minority stakes in the Serbian carrier, Air Berlin and Aer Lingus. Italian authorities have expressed hope that it will end Alitalia‘s longstanding flirt with bankruptcy. "The Commission examined the competitive effects of the proposed acquisition and concluded that on all affected routes, with the exception of the Rome - Belgrade route, the transaction does not raise any serious competition concerns", the European Commission wrote in a statement.

The European Union‘s executive body feared that a monopoly on flights between Rome and Belgrade "could lead to higher prices and a loss of service quality for passengers". It says, “To dispel the Commission's competition concerns on the Rome - Belgrade route, Alitalia and Etihad submitted commitments to release up to two daily slot pairs at Rome Fiumicino and Belgrade airports to one or more interested new entrants. Alitalia and Etihad also committed to provide further incentives, such as the possibility for a new entrant to acquire grandfathering rights after a fixed period of time. Furthermore, Alitalia and Etihad committed to offering a special prorate agreement, a fare combinability agreement, an interline agreement and access to their frequent flyer programme to new entrants, to make entry more likely”.

Alitalia and Air Serbia hold a duopoly over the Rome - Belgrade route and codeshare on each other’ flights, making it unclear which other airline could step in to take the conceded slots. Late last month, easyJet terminated its three weekly service between the two capital cities due to poor ticket sales. The budget airline is not the first to suspend flights between Rome and Belgrade. In 2012, Wizz Air cancelled the same route citing high seasonality. In its conclusion, the Commision says, “These commitments adequately address the competition concerns identified by the Commission and should facilitate new entry on the Rome - Belgrade route”. Alitalia, plagued by decades of mismanagement and political meddling in its affairs, has not turned a profit since 2002. Ahead of the deal, Alitalia CEO, Gabriele Del Torchio, said Etihad would invest 560 million euros in the ailing airline. However, he also said at the time that more than 2.200 jobs would have to be slashed - almost a fifth of the workforce.

78 comments:

  1. This surely tells me that the Eurocrats in BRU have their heads well and truly up their backsides.

    They want AZ and JU to give up slots to competitors, on a route where even 2 well known LCCs withdrew, due to poor tkt sales ...

    Obviously, nothing better to do with their time than to make such huge earth shattering decisions which will "clearly" be in the consumer's interests ...

    ReplyDelete
    Replies
    1. The phenomenon you are describing is called 'Fort Brussels.' ;)

      Delete
    2. same happened to BA at LHR. its nothing anti-serbian!

      Delete
    3. He was not implying it was an anti-Serbian decision but rather that it was a stupid decision.

      Delete
    4. If I may add, the decision that does absolutely nothing, or prodavanje magle if you know what I mean

      Delete
    5. Of course but that's Brussels, they are detached from reality hence why they were given the nickname 'Fort Europe.'
      However I have to admit that the previous commissioner for transport was a rather competent man (Siim Kalas from Estonia). In the new commission transport was given to a completely clueless person!

      Delete
  2. So who will come back to this route - Easyjet or Wizzair?

    ReplyDelete
    Replies
    1. Ryanair has a base at both FCO and Ciampino, so they could. They just might be extreme LCC enough to find some room in this crowded market.

      Delete
    2. I fear BEG is 'too expensive' for Ryanair. My guess would be Vueling. They are already flying from Barcelona and they have been expanding rather aggressively in Rome. Plus, they are a really good carrier.

      Delete
    3. Wizz failed on that route too

      Delete
    4. Wizz Air used to arrive at 00.25 in Belgrade, maybe that was the main problem. There is no public transport to the city at that time.

      Delete
  3. OT: My idea of what a BEG Terminal 3 could look like (for those who have not seen this on SSC)

    http://imgur.com/2GuJGds

    ReplyDelete
    Replies
    1. Now all you need to find is EU investor to fund it and operator to run it!

      Delete
    2. Is it possible for Air Serbia to build, own, and operate its own terminal? I feel like this would solve all the problems. They would only need to pay landing fees at BEG, and they could build a terminal to their exact specifications, and operate it 10 times better because they would have an interest in having it be top notch.

      Delete
    3. That would be great, but how will Air Serbia pay for the new terminal?

      Air Serbia announced 1 Mil EUR profit for 2014. If they dump all of it into building a new terminal, they only need 299 million more to make it. I am trying to say JU needs external investor for the new terminal, as it will probably cost at least 300 mil EUR or more if ZAG price tag can be used as a reference. EC will likely not allow UAE investor for both the airline AND the airport.

      As for the fees, you are probably aware of the published contract and Air Serbia discounts at the airport until the end of 2016.

      Delete
    4. Air Serbia could turn to Etihad and GoS to help split the tab, and also take up some loans. I don't know if this would count as a foreign investor because technically Air Serbia is doing the investment.

      I know that it is essential for Air Serbia's growth to be alleviated from the high prices at BEG.

      Delete
    5. It's sad that BEG won't have that terminal before 2018 for sure, because they'll need at least 3 years to build it, and Air Serbia won't be able to expand before that terminal is built. Also, Serbian government is that stupid, they said now that they are considering not to give BEG into a concession, but that maybe Serbia will 'invest' for the new terminal and runway. So if that is true, I afraid that we won't see there any construction site before 2025...

      Delete
    6. Vucic said they couldn't get 250 M Eur for BEG last year, so if non-EU investor wanted to pour in 300 M Eur for new terminal, that would be more than 49%.


      Now Vucic says they could get 500-600 M Eur. Airport increased capacity by less than 1,5 M and had minor renovations since, so where did this massive valuation increase come from?

      One explanation is just hot air. Second one is inclusion of other Airports of Serbia and GoS plan to keep expanding BEG on their own. Sure, that increases value beyond 250 M. Now if GoS can also find partial EU investor for the second runway, BEG could really one day be worth 500-600 M Eur. Now if at that point non-EU investor wants to add 300 M Eur to the mix for building new terminal, non-Eu investment in the overall Airports of Serbia company would be less than 40%.

      Thing is, GoS still does not have that primary EU investor and future operator lined up.

      Delete
    7. So...No chances for BEG to get new terminal and runway before, I don' know..2020???

      Delete
    8. veca je vrijednost posto ce biti druge godine sigurno preko 5 mil. putnika.
      Prije bi es mozda racunalo sa 4-4,5 mil.

      Delete
    9. Znaci sta oni cekaju da aerodrom bude pretrpan da bi bio sto skuplji, pa ce onda da nadju koncesora?

      Delete
    10. @ Aleksandar

      Great idea. I think that the space that you have added to the terminal is an interesting way to add to the current terminal. A good idea would be in you plan would be to extend that apron for larger aircraft with capability to serve for smaller Airbus/Boeing (B737/A320) aircraft,

      Funding any project at BEG will be interesting as the government doesnt seem to be the best with finances. Giving the airport to foreign investors doesnt seem to be going anywhere either. But this is Serbia, who knows. Who would of thought we would have Air Serbia 2 years ago.

      Delete
    11. @Aleksandar
      How did you made that picture? I mean Terminal 3

      Delete
    12. @JATBEGMEL, I am not an expert with photoshop, so I couldn't figure out how to show all the aprons and taxiways very well, but certainly the new terminal would need some.

      @Anon 7:31, the software is called Pixlr, and I copied Alicante's terminal. Unfortunately I couldn't quite figure out how to make everything to scale, so the 737s at T3 look smaller than the ATRs near T2 in my picture.

      Delete
    13. @JATBEGMEL

      Vucic today: "Na pitanje zašto se prodaje manjinski deo EPS-a Vučić je rekao da bi voleo da se na mnogo mesta uspostavio sistem kao u "Er Srbiji".

      "Izgovoriću tu jeres. Voleo bih da imamo sistem kao što je u "Er Srbiji" na mnogo mesta. Građani će razumeti ovo što sam rekao", poručio je premijer."

      They way I understand it, he doesn't just want Serbian (partisan) management nor foreign investor with complete management team shipped from another country (as Germans and some other EU countries prefer to run their companies in Serbia).

      It looks like he would rather see professional team led by Serbian diaspora/expat experts with some of the foreign managers in the mix. If you look at CV's of several top mgmt levels at Air Serbia, that's the picture.

      I could be wrong, but that seems to be his message, and it could very well work for the Airport one day.

      Delete
    14. This is my version of Terminal 3, second runway and cargo terminal at BEG.
      http://imgur.com/kcEK1mN

      Delete
    15. I wouldn't put cargo terminal there, but it's nice ;)

      Delete
    16. @ AirCEO

      The moment we saw Sasa Vlaisavljevic come into the picture at BEG is the moment I lost hope for positive change at the airport. A professional team cannot be one with him in it. We all saw what happened during his time in Jat.

      Serbia doesnt need to constantly look beyond its borders to find quality workers. Serbia has alot of educated people finishing universities only to be left without jobs, or only finding a position outside of their field. Those lucky enough to leave to find employment abroad dont necessarily look at coming back, because there they have good salaries and a stable job.

      The Air Serbia situation has impressed me so far, however saying that there are still many challenges the company faces from yesterday, today and will be there tomorrow. I doubt that the few who have returned to Serbia working in JU are exactly satisfied. The salary and benefits to start is much higher abroad.

      Party based employment is still common in Serbia, as well as the mentality of finding employment through connections rather than knowledge. The rapid first year of expansion and change in Air Serbia should of brang forward future plans for BEG but nothing more has come through other than replacing tiles and adding fresh paint to the existing terminal, which itself has been scandalously slow. The terminal itself is giving a claustrophobic feeling even before the increase in pax numbers, in a terminal not designed to be a transit hub, and all this is with narrow bodied a/c.

      Basic things like getting rid of illegal taxi drivers is still an issue at the airport, Im just wondering how they intend to solve a bigger problem such as capacity issues. Talk is cheap and everyone in Serbia knows this very well. Reading something is one thing, believing it is another.

      Delete
    17. @ JATBEGMEL

      There is a lot of Serbian expats who would, given the option, return in a heartbeat. You are right, they can make more money abroad but you have to take into account cost of living in Serbia and everywhere else. Also, there is also a nostalgia factor which for a lot of people (not all definitely) can't be disregarded. There are other factors as well that for someone living in Serbia would maybe be silly but they definitely all play a role.

      Maybe you went through something similar yourself but most of us that took off for "greener pastures" had a crash course in modern capitalism when we came here. We had to adapt and do that very quickly and i think that is what separates us. Serbia has a lot of smart and educated individuals. The problem I think is that most of those people have the same attitude toward work, management etc. like their parents did. Times have changed and a lot of them have tough time adjusting.Again, there is probably a lot of good examples as well but this is just my impression from what I see and hear every year I go back home for vacation. Good friend of mine was recruited by the EU based corporation to go back and lead their Serbian division after working in the same filed here in Canada for 10-15 years. You should hear his experience. For example, first guy he met at the airport was one of his two drivers. His reasoning was why do I need any drivers, I know how to drive but a lot of people told him how can you be a CEO of such a big company and have no driver. This is just one silly example (and trust me he told me a bunch of similar details) of how attitudes of people are different there.

      Delete
    18. Perhaps the simplest and quickest way to solve the airport issue in Belgrade would be to allow Air Serbia to build its own T3. This would be financed 50/50 by Etihad and GoS.

      Delete
    19. I am afraid that won't happen. BEG will deteriorate and finally Air Serbia won't have enough space on the airport to compete with OU which may be purchased. Then Air Serbia will probably break apart and that will be the end of the story. Of course, they can build the new terminal, but noooo, decoration and adding unnecessary things to T2 is much more important! It's sad how much BEGs management stupid is.

      Delete
  4. "Alitalia and Etihad committed to offering ... access to their frequent flyer programme to new entrants"

    WTF? Why would AZ and JU offer FF access to, for example Easy or Wizz?!?!

    ReplyDelete
  5. koja glupost! da barem easy jet nije pokusao da leti pa ajde, nije bas tako da az i ju nedopustaju drugima da lete! nekad i eu komisija treba da ukjuci mozak za ovaj zadatak bi dobili u skoli losu dvojku!!!

    ReplyDelete
  6. OT: Vueling might be tge airline which will Barcelona and three other destinations in Spain from SKP http://dnevnik.mk/?ItemID=C81E7A3AF9A82B4BA61FFBE3C0AD6F5E

    ReplyDelete
  7. Anyone know how Patriarch Kirill arrived In Belgrade? Aeroflot, Air Serbia, or private jet?

    ReplyDelete
    Replies
    1. Gulfstream V private jet

      Delete
    2. Like every humble religious man - in a private jet !!

      Delete
    3. Don't say that, he probably took a bus to the airport.

      Delete
    4. Ima neko mozda sliku od tog G500, jel rent ili bas se vidi da je od crkve?

      Delete
    5. Reci da se salis? Da se vidi da je od crkve? Jeste, jeste, ima zlatnu kupolu na pola trupa i veliku krstacu, a pored vrata su mu posude za svece. Na krilima su zasadjeni karanfili... i viju se barjaci sa wingletsa

      Delete
    6. haha excellent

      Delete
  8. Nametanje novog avio prevoznika na liniji Rim Beograd v.v., od strane EU nije iznenadjenje. Drugo pitanje je koliko ce se "ovajditi" buduci avio prevoznik zbog velicine trzista izmedju velikog Rima i u pripremi brzo rastuceg razvoja Srpske prestonice. Konkurencija je dobra radi putnika, no sa ili bez novog prevozioca na ovom i drugim destinacijama tesko je bilo sta ponuditi sto nemoze dati nacionalni prevozioci AIR SERBIA kao i Rimska ALITALIA. Sam concept razvoja prvenstveno podrazumeva gosta (putnika) na celu svih prioriteta... Obe preporodjene avio kompanije u porodici ETIHAD grupe, tesko da moze dozvoliti bilo ciju superiornost u bilo kojem segment izmedju bilo kojih destinacija gde lete. Prirodno verujem i na ruti FCO - BEG. Svako takmicenje je nov izazov . Onaj ko vise daje vise dobija a za ostalo... Time will tell.
    Radovan, Son & Co.

    ReplyDelete
  9. Let's see who is next to fail on this route...

    ReplyDelete
  10. JU and AZ will always dominate on the Belgrade-Rome market. This is because they offer connections beyond Rome to places such as Spain, Portugal, northern Africa...

    What the European Commission is doing is that they are forcing a new airline to enter the market, one that will most likely rely on the O&D market. Because they have to rely on this relatively small market, they will never be able to offer more than three weekly flights, thus having a clear disadvantage when facing JU or AZ.

    So, having Wizz Air or easyJet return will not change anything. However, if Vueling would enter the market then we might see a different outcome. First of all, Vueling successfully operated flights from Barcelona which means they have some brand awareness in Serbia.
    Second of all, they are currently building a hub in Rome so they could do what JU and AZ have been doing for years now, offer connections via FCO.

    ReplyDelete
  11. Jel to magla u Sarajevu pa je germanwings iz Berlina nakon nekoliko krugova iznad Sarajeva odletio za Zagreb?

    ReplyDelete
    Replies
    1. I dont know about this morning but at the moment it seems to be ok.

      LQSA 151200Z VRB01KT 2000 BR FEW006 10/10 Q1014 BECMG 6000 NSW

      Just visibility 2000m and few clouds at 600 feet. METAR report from 1200 UTC.

      Delete
  12. I am puzzled really. I thought CEAA allows any carrier to open FCO-BEG at their own free will, so what is exactly expected from AZ and JU here? Are they supposed to force a third carrier into the route? How does this 'slot offering' work anyway? They are expected to put a pair of slots to a public tender? Or give them for free to whoever calls first to inquire? Does anyone know of similar examples so that we can figure out the process?

    Not to mention how come they did not ask the same for TXL-BEG and FCO-TXL routes...

    ReplyDelete
    Replies
    1. BA were forced to hand over seven daily landing slots at Heathrow to prevent it operating a monopoly on the Aberdeen and Edinburgh routes following the purchase of BMI. Virgin Atlantic and Aer Lingus were competing for the slots...

      Delete
    2. Perhaps - but BEG is not Heathrow and it has no slot constraints. So WTF ?

      Delete
    3. Okay, but the thing here is other airlines were interested in taking those slots, plus slots at LHR are very rare to begin with.

      Here we have two airports with loads of slots available anytime (with possibly some restrictions at FCO, but nothing dramatic really) and no competition waiting to step in.

      I would love to see a LCC operating the route as well, as this is what kept the route fairly cheap all this time. But from what we've seen, LCCs are not willing to do it anymore.

      Delete
    4. Good point you raised. And as mentioned, both airports are not slot restricted, I find it outrageous that both AZ and JU need to give up slots for a third carrier after 2 unsuccessful attempts from LCC.

      As I mentioned in previous articles, I expect to see BEG-FCO flourish with transfer pax travelling between the 2 cities. I think this is what the EU sees as well and is why they want to react before both carriers make any move.

      Im all up for competition, but BEG-FCO is easily found for 100€ return. How much lower can it go?

      Delete
  13. what will happen in no company wants to step in? lol

    ReplyDelete
    Replies
    1. Then of course the brains in BRU will surely force AZ and JU to give a certain percentage of capacity for free to any other airline who wants to take such block capacity. Sound stupid ?? Just wait and see ... when it comes to BRU and logic, nothing in the universe can be more diametrically opposite

      Delete
  14. EC je to cisto radi reda uradila posto zna da ni jedna LCC nece sad obavljati tu liniju.
    Steta je sto JU i EI toliko malo saradjuju posto za sad bi to bila najbolja saradnja za letove za USA dok ne pocnu direktno iz BEG 2015.
    INN-NS

    ReplyDelete
    Replies
    1. Ovo je dobro za BEG i JU. JU će prestat gubiti na neprofitabilnoj liniji (sigurno im popunjenost nije dobra ako ni LCC nije uspeo na toj liniji, i naglašavaju sezonalitet), a BEG će se puniti iz FCO sa prevoznikom koji će da plaća dobro za tu uslugu i transferirati putnike na istok

      Delete
  15. Is there a possibility that AZ can feed JU on some of her flights were AZ has no direct flight? And vise versa

    -- Charlie

    ReplyDelete
  16. Do we know if Air Serbia widebody aircraft for USA and Canada flights will be equipped with business and economy only, or with premium economy seats as well?

    ReplyDelete
    Replies
    1. How can anyone know that?

      Delete
    2. Management better know that, but they are not expected to say anything just yet. Supplier knows but they are under NDA.

      I am not looking for official statements, just (educated) guesses on what would make more sense.

      Delete
    3. Pearl Business: 22 flat bed seats with 180 degree recline
      Coral Economy: 240 standard seats sa IFE ja se nadam
      Tako je opremljen A332 od EY onda ce i od JU biti tako opremljen sigurno.
      Ja se nadam da ce dobiti nesto vece od A330 family :P ali ja sam jedini ovde sto u to izgleda veruje =D
      INN-NS

      Delete
    4. Ma bilo bi bre lepo da Turkish Airlines, Austrian, AlItalia, i Swiss bankrotiraju svi i da Air Serbia bude lider u juznoj Evropi! E to bi bilo lepo! I da dobije ASL 50 A350-tica i 100 A320neo i da leti na 200 destinacija! I da se sagradi novi aerodrom u Beogradu! I da Beograd bude jedan od najvecih gradova u Evropi! E sve bi to bilo lepo! Sssve!

      Delete
    5. Ne lupetaj gluposti!

      Delete
    6. To se zove sarkazam, lupetanje gluposti imas dva komentara iznad svog.

      Delete
    7. I don't see the case from Premium Economy unless they find creative ways to fill them, for example like 'bid and pay what you can' LOT model.

      Delete
    8. koje nebulozno pitanje lol
      grohotom se smijem

      Delete
    9. Tko se zadnji smije najsadje se smije!

      Delete
  17. Why is there today Adria's flight from BEG to Trieste?

    ReplyDelete
    Replies
    1. And one flight to Copenhagen via Bucharest also

      Delete
    2. Udinese played today in Belgrade with Red Star

      Delete
    3. And Danish National Team is playing friendly against Romania on Tuesday

      Delete
  18. I just wonder how long will the Commission wait for interested parties to launch flights? I mean, they should propose a time frame.

    ReplyDelete
  19. To se zove sarkazam, lupetanje gluposti imas dva komentara iznad svog.

    ReplyDelete
  20. When are we going to see mixed Air Serbia / Etihad livery on one Air Serbia plane to celebrate the alliance? Air Berlin has one, and Alitalia has both Etihad and Alitalia titles on their Expo plane.

    ReplyDelete
    Replies
    1. Mix of AIR SERBIA - ETIHAD livery will be right move to promoting Serbian air carrier as member of raising and important part in commercial world of aviation. ETIHAD AVIATION GROUP of company is crucial to all. Will be great to see that joint livery. Hope we see soon that happening.
      Rodney Marinkovic, Kraljevo /// Sydney

      Delete
  21. Air Serbia sent its B733 (YU-ANJ) to Vienna this morning. Does anyone know if it's due to good loads or due to one of the Atrs going tech?

    ReplyDelete
    Replies
    1. Good loads on the return flight, 92 passengers. 21 going there.

      Delete

Before posting a comment be mindful of other participants and readers. EX-YU Aviation News does not tolerate insults, excessive swearing, racist, homophobic or any other chauvinist remarks or provocative posts with the intention of creating further arguments. Such comments will be deleted as soon as possible. The opinions expressed by those providing comments are theirs alone, and do not reflect the opinions of EX-YU Aviation News. Thank you for your cooperation.