Monday, April 11, 2016

Belgrade Airport posts weaker quarterly results

Belgrade Airport eyes future growth following passenger decline in Q1

Belgrade Nikola Tesla Airport recorded a second consecutive quarter of declining passenger numbers, illustrating its dependence on Air Serbia, which now holds a passenger share of just over 50% at its home base. Belgrade Airport, which added one million passengers in 2014 and owed most of its success to the national carrier over the past two years, has also taken on a much more passive role in attracting foreign airline operators, a number of which have complained of high fees following the introduction of a revised pricing policy in 2014. However, the airport estimates it will handle over five million passengers this year and record annual growth of 3% to 5%. It will take part in the Routes Europe event later this month, giving it an opportunity to hold talks with over a hundred airlines and their network planners.

This summer season, Belgrade Airport will again benefit as a result of Air Serbia. The national carrier will introduce new flights to Hamburg, Ohrid, Kiev, St. Petersburg and New York and increase frequencies on a number of destinations. Last year, the airport started off with strong growth, however, during the winter of 2015/16, the national carrier cut down on its operations and suspended two routes, which had a noticeable impact on the airport's own numbers. Air Serbia's CEO, Dane Kondić, has defended the airline's decision to reduce its flight offering during the winter months saying, "The one thing that we have always had in our minds, from the very beginning, is a commercial mandate. Flying empty aircraft over the winter just to keep a schedule is crazy. So, last winter we had two years of experience behind us, meaning to say that we had two summers and two winters, and therefore we knew exactly where the pain points were in the network ... We took out capacity, for sure, and there was criticism from some that it was too much, we didn't break the connectivity, we certainly did lose some connectivity, but we pulled back frequency and so we tried to keep the integrity of where we flew relatively intact".

Over the past two years a number of carriers have either suspended or significantly reduced their operations at Belgrade Airport, among which are Wizz Air, Swiss International Air Lines, Germanwings and easyJet. Air Serbia's Chairman, Siniša Mali, who is also the Mayor of Belgrade, said the airline is much more aggressive and competitive compared to its predecessor, which has had an impact on foreign airlines. On the other hand, Russian carrier Ural Airlines recently launched services from Moscow to the Serbian capital, while Norwegian Air Shuttle, TAROM and Flydubai will boost frequencies on their existing services to Belgrade this summer. It comes in the lead-up to the airport's planned privatisation or concession. The French-based asset management company Lazard will most likely be chosen as the government's advisory in the process.

Belgrade Airport handheld 313.174 passengers this March, a decrease of 0.7 compared to the same month last year. The number of aircraft movements stood at 4.312, down 3.7%. During the past quarter, the airport welcomed 870.014 travellers through its doors, a decrease of 2.1%, while the number of flights operations fell 4% to 12.386. Despite underperforming over the past two quarters, Belgrade Airport handled a record 4.776.164 passengers in 2015.

MonthPAXChange (%)
JAN290.580 5.8
FEB266.660 0.5
MAR313.174 0.7

84 comments:

  1. In my opinion, the passenger decline (which I don't think is too huge but a decline nonetheless) is a result of lazy management which has done absolutely nothing to attract foreign airlines, a much stronger national airline which has taken off passengers from competitors and of course the decline in capacity Air Serbia made during the winter. But I think the management is mostly to blame. Sure they had 1 million pax in a single year but you could have put a 3-year-old in charge in 2014 and still record +1 million because it was singlehandedly delivered by Air Serbia.

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    1. I agree but at the same time do you honestly think that a politically appointed person to the position of the CEO is allowed to do things that will harm a political project called Air Serbia? I dont think so.

      If they wanted to increase competitiveness at BEG then they wouldn't have placed that idiot Vlaisavljevic there.

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    2. ASL/BEG have chosen this particular growth strategy and in my opinion it has been working quite well so far.

      So what if the winter numbers have declined this year... This will be overcome just fine in the summer months...

      More important challenge for BEG is properly handling the long-term capacity issues...

      The market needs some time to "settle in". You can't grow 30% in volume in one year and expect that to continue endlessly...

      There's a saying in Croatia "nemožeš dobiti ovce i novce"... so when you put up 40% more available seats, someone has to fill them, and lot of times that becomes possible through price reduction... well... you figure, someone always feels the consequences...

      My point: BEG has done a job within 2 years that most airports of this size do in 4 to 5 years... so naturally BEG will have couple of "slower" years following this expension in order to stabilize its operations, while ASL is working on improving its service quality (in order to incrementally increase their yields).

      ZAG and OU have different circumstances, and different sets of strenghts working for them...They have a natural-type of resource (deman for touristic travel) which they'll have to utilize cleverly.

      So, in the end BEG is following its own strategy and is doing fine.

      It's irrational to expect that you can have a flocking number of foreign airlines expanding at BEG at this moment when ASL is booming - I would say that it's a success that most airlines stayed in BEG, thus showing that a destination has a solid passenger base and a solid demand...

      Seriously people...

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    3. +1 Petar
      Nice comment/short analysis!

      Delete
  2. Interesting that French will likely advise. My guess is the airport will go to Vinci.

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    1. Vinci or TAV (which owns part of Aeroports de Paris). Anyway it will certainly go to the French, not because of Lazard but because its pretty much a done backroom deal with French government. My bet is Vinci though. They want to get into the region, they failed in LJU and they have excellent cooperation with Etihad and Abu Dhabi government.

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    2. Bozidar "DS forever" Djelic works for Lazard. He got the job when Air Serbia was just starting.

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    3. Good God, that man ruined our economy, he will ruin what's left of our airport too.

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    4. So "your" economy was not ruined by wars, international sanctions, hyperinflation and other nice things from the 1990s, but by Djelic?

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    5. Our economy was mismanaged after 10.2000 and there is no doubt about that, Djelic was one of the actors along with Dinkic and the rest.

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    6. Nothing and no one is ever good for you Serbs.

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    7. None of that matters, from his crimson credentials to economic measures of the past. What matters is if he will allow influx of capital from the East for Belgrade airport. Without it there is no bright future for airport and Air Serbia.

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    8. Anons 4.36 and 5.41, thank you for temporary killing my homesickness. Only someone young enough not to remember the nineties could believe this falsification of the economic history of Serbia. I can never forget 1993 in Belgrade. And many other things, for example that my grandfather's bank savings were literally robbed by the state. Until the "crimsons" Dinkic and Djindjic started to return the stolen money and pensions. And sure, the French firm where Djelic now works is probably full of stupid idiots who cannot see through his "criminal credentials". While genial average Serbian TV-consumers always knows the best. I cannot argue with that.

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    9. You speak like that because you don't live here. If you think they are not that bad then how come it was never appealing enough for you to return? It's always easy to be a patriot from afar.

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    10. Wrong! I speak from experience, not from "common knowledge" spread by tabloids. I left only in 2012, after realizing that the majority of my compatriots just decided to return the nineties. I just could not go through all that again. Once was more than enough.

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    11. Crimson likely refers to the color of his highly respectable MBA Alma mater, not some criminal reference. Have you guys ever been to Cambridge, MA? Doesn't ring a bell? It's Harvard.

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    12. It's funny, he ruined our economy with the rest of the criminals and you guys decide to defend him- Serbs forget so easily.

      Also, you left Serbia in 2012, time to move on. Enjoy your life abroad and leave us alone... also, keep your 'experts' away from us, we already have enough of those.

      Delete
  3. 'Flying empty aircraft over the winter just to keep a schedule is crazy.'

    The real question is why isn't your team doing a better job at selling these empty seats? It's not like JU has a massive network that needs trimming once winter comes with their split schedule system in place even daily flights are not enough to maintain decent connectivity.


    Everyone can fill a plane in winter time, even Adria can. The real thing is to be able to do it in winter time. What Air Serbia did was that it turned into glorified Jat in October 2015.

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    1. 'Everyone can fill a plane in winter time'

      Summer time, sorry.

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    2. That's true the winter network had hints of Jat in it. But I think it went to show the Air Serbia management that not everyone at Jat were fools when they were creating their network. Of course they were limited by aircraft but many of their frequencies (BRU is a good example) were in line with market demand.

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    3. I'm interested to see what their 2016/17 winter will look like and whether JFK will stay 5 p/w. My guess is it will be a much stronger winter than last year.

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    4. Anon at 9.06am - you are wrong. Airlines of ex-yu are unable to fill their aircraft over winter time. That's why their annual reported seat factors hover around the 70% mark. Full in summer where the demand is and empty over winter where the demand severely drops off.

      So don't make sweeping statements that "anyone can fill a plane in winter time" - when quite obviously it is a challenge for every airline, but especially the small airlines of ex-yu.

      Moreover, your comments show you for the novice that you are, because you would know that the name of the game is not to fill an aircraft, either in summer or winter, rather, it is to fly it as profitably as you can - and sometimes that means flying less people at higher yielding fares, or in better managing the mix of passengers through tighter revenue management.

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    5. Nije tesko napuniti Avion moze se lako ali Management ASL postupa pravilno da bi se izvukao profit tako da ce opet da raste broj putnika.
      INN-NS

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    6. JU is struggling to position itself in Europe that is why they needed to cut all those frequencies in winter. Let's wait and see what happens in W16 an if anything besides WAW will be suspended. That A319 will probably be rotated to KBP and LED.

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    7. I am so sad they didn't make BUD work, they could have offered connections to western Europe.

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    8. They didn't make BUD work because the Hungarian CAA denied them EY codeshare on the BEG-BUD flight. The whole point of BUD was to make it work for transfer passengers onto JU and EY's network. Without EY distribution in the Far East and Australasia, it was never going to work on the strength of JU's distribution network alone - too small and too narrow

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    9. What you are suggesting would have absolutely never, ever worked. Air Serbia would end up bleeding money on the route by offering two stop connections to Australasia and Africa while competing with Turkish Airlines, Qatar and Emirates which all offer a one stop connection (with the exception of TK and Australia).

      There is enough market from BUD to places like ATH, SKG, LCA, TLV, BEY... In my opinion, JU should have offered western connections to passengers from BUD.

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    10. They could also have used Cyprus originating traffic to feed transfer passengers onto JU's network by keeping some flights to LCA.

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    11. Well, Larnaca was kept as a seasonal route which I guess is ok given that they lost almost all O&D to Wizz Air. Until they have enough aircraft to introduce at least a one weekly flight with normal times they will have to rely on the transfer passengers.

      However, in Larnaca they have a lot of competition especially from Austrian Airlines, here is what they sent last week:

      11.04 A320
      10.04 A321
      09.04 A321
      08.04 A320
      07.04 A321
      06.05 A320
      05.05 B772

      Mind you, the B772 has become quite common. Around Eastern they used to send it a few times per week.

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  4. It's strange, almost all the airports in the surrounding area have good figures. SOF has already surpassed BEG from January to March. Let's see what happens in summer with JU...but yet again BEG needs new carriers.

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    1. BEG needs a strong lowcost and it seems like W6 has kind of lost interest. I am sorry, launching Baden Baden is not enough, especially after two years of inactivity.

      One good thing is that foreign carriers are finding ways at how to compete with JU which can't keep on dumping fares. The moment they increased their fares their passenger loads went down (especially in places like SKG or OTP).

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    2. On that topic, Nemjee said a few weeks ago that Norwegian has earmarked Belgrade as their point of expansion in the region. Does he or anyone else have any more details?

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    3. Hey, funny you mention it because yesterday I was informed that things in Oslo are moving along quite nicely and that the whole project we are working on is getting a lot of attention there. More information will become available in the next few months. All I know for now is that DY has not given up on BEG just yet.

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    4. Thanks Nemjee. Keep us updated when you can.

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    5. Oh my gaaahhhd, I am all up for good news, but Nemjee is one of the biggest liars this world has ever seen. Go dream somewhere else please!

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    6. Chill it dawg, A-ight?

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    7. "BEG needs a strong lowcost"

      Exactly. It it weren't for government protectionism we would now have a lot more low cost flights, possibly even Ryanair would have opened several routes like they did in Sofia. I agree that we need a national airline but not at the cost of destroying the competition with mindless protectionism and extorting money from our own people who want/need to travel.

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    8. [continuing from 9:93]

      ASL's prices for European short haul are insane. 250 eur to Berlin, 300 to Paris etc. I would be willing to bet that less than 5% of people who travel in Serbia care about the supposedly higher standard of service that ASL offers especially on such short flights, and would gladly fly with "inferior" Wizz, Ryan or Easyjet like the vast majority of Europeans do.

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  5. OT

    Great shot of the new terminal at ZAG:

    https://scontent.fbeg1-1.fna.fbcdn.net/hphotos-xta1/t31.0-8/12967988_1543107795985046_2144804803465962319_o.jpg

    Photo by Josip Skof

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    1. Wow, simply stunning, can't wait for it to open!

      Delete
  6. OK, but A330 and CRJ900 are coming to JU. This will help.

    Haplek

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    1. I think there is a chance JU will also get an A319 from Etihad when they are retired at the end of the winter season. But let's wait and see.

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    2. Why would they paint them if they were leaving the fleet?

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  7. Airlines that suspended or significantly reduced their operations at Belgrade Airport:
    - TAP
    - Adria
    - easyJet
    - Alitalia
    - Lufthansa
    - Turkish
    - Wizz
    - Germanwings
    - Etihad Regional
    - FlyDubai
    - Swiss

    In same time there is
    - decline in passengers number since August is 81.607 (and there was one more day in February and catholic Easter was in March this year)

    - and there was 1.648 flights less since June (what is average of 165 less flights per month)

    Airport announce huge reconstruction and
    expand the capacity of the terminal (new gates in C zone, 2nd floor, new shop area, self baggage check in/tag machines, reconstruction of A6-A10 gates...) and nothing happens. Even more one year latter there is no signals that can show us when those announces reconstructions and expansions will start.

    Something is not good!

    ReplyDelete
    Replies
    1. A lot of the airline said that decreased frequnecies are not a result of either the airport or Air Serbia.

      - TAP had huge internal issues when they started these flights (they didn't have planes most of their BEG flights were delayed by several hours). They said that there just were not enough passengers anywhere outside of June, July and August. Air Serbia does not fly to Portugal and they have absolutely no competition. They failed here on their own.
      - easyJet suspended Italy routes which are also very seasonal. Wizz Air suspended Rome years before Air Serbia arrived and when they competed against Jat which was falling apart.
      - Alitalia was required to cut frequencies by the EU following purchase by Etihad. Since both Air Serbia and Alitalia are owned by the same company they had to cut frequencies and had to give slots to third airline. Not a single other airline applied for those indicating what I said above for easyJet.
      - Etihad Regional was and is a mess. At the same time they had to compete against easyJet and Swiss. We all knew that at the end of the day there would be only one airline standing on this route.

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    2. BTW I do agree with you that something is not right at the airport but concerning some airline it really didn't have much to do with factors such as JU or BEG.

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    3. Look, I did not say Air Serbia is guilty for TAP or easyJet. But os those companies comes (invest in route, not good reputation when you terminate route) airport could make some efforts to make them stay. They did not. In same time newcomers are rare.

      I did not have information that EU ask Alitalia to cut frequencies. Can I ask you to give me source of that information?

      - Etihad regional is in mess, that is true. But Etihad Regional is company owned by Etihad and Air Serbia and it would be normal that Belgrade was last destination that they terminated, not first one as it was.

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    4. Regarding Air Serbia - Alitalia slots

      http://www.exyuaviation.com/2014/11/alitalia-air-serbia-to-give-up-slots.html

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    5. No, that one is not the one. In this info (which I also am familiar) EU instruct FCO and BEG to give two pair of slots to interesting newcomer of other company that have will to fly on BEG-FCO route. Than EU did not instruct not Aitalia not Air Serbia to cut frequencies.

      "(...) 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”.

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    6. Which leads us to conclude that no one was interested and that Brussels bureaucrats were, once again, not doing their job.

      Despite a duopoly, fares between BEG and FCO are very reasonable.

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  8. Things will look much better this summer.

    Did anyone notice how low key Ural Airlines' launch went by? Not a single mention anywhere, not even from the airport. I think this is the only site that even reported they would be flying all through the year.

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    Replies
    1. And it's really a shame, I think they are quite a nice addition to BEG and they do open a certain new market which was historically underserved. BEG-MOW is a massive market and as such it could sustain three airlines.

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  9. Skp March 2016 - 120.668 or +26,41%

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  10. Belgrade has had good consecutive growth since 2009 so at the very least a stagnation was due. Belgrade needs to either invest in its infrastructure to make it an appealing hub option to the region or the economy of Belgrade / Serbia needs to start to see some decent improvement before we start to see the growth percentages of the past few years again. I know the extra flights will help but are there passengers now able to fill those seats?

    Could it be that around 5 million at this time is the best Belgrade can expect without seeing the above improve?

    Also, will the added frequencies by AirSerbia and others this summer really result in an extra 230 thousand extra passengers to get the total this year over 5 million?

    ReplyDelete
    Replies
    1. Not everything is about passenger numbers going through airports. I often laugh when i see people get hung up about increases or decreases and how good or bad a job various airport mgt teams are deemed to be doing with regards to this.

      Passengers numbers and therefore, the number of airline's that fly to an airport are but one part of an airport's business model.

      The bigger and more profitable part for airports everywhere, is the non-aviation/aeronautical revenue that they generate, such as retail, F&B and parking.

      Leaving parking revenue aside for the moment, the only conclusion that you can draw about BEG airport on retail concessions and F&B, is that it is appalling.

      With almost 5 million passengers per year, and little to no space constraints, BEG should be making a killing on this front.

      They aren't and for this, the airport mgt is directly responsible for doing such a shitty job.

      Massive fail on this count.

      Delete
  11. BEG ce opet od juna naglo da raste kad krenu novi Evropski letovi i jos JFK sa dolaskom A330.
    Nadam se da ce u sledecoj ekspanziji se naci malo egzoticni ciljevi.
    INN-NS

    ReplyDelete
  12. I would love to spend 6 day for vacation in kotor the last days of june.First of all let me inform that I'm from athens,so can someone explaine the extremelly high fares of ASL for ATH-BEG-TIV and back(300€ per person),although the price for the apartment is cheap(250€ for 5 nights)Also let me inform that I booked with ASL tickets to new york,the price was great 445€ late september.

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    1. Peak season. Half of Serbia goes to Montenegro for holidays. Since people are avoiding Turkey big time this year and bookings for Tunisia and Egypt are way down there is probably even more demand for Montenegro. Actually I even heard that there will be charters to Tivat which has never happened before.

      Delete
    2. Yeah, if I remember correctly the charter will operate on Saturdays.

      Have you considered flying on OU or A3 to Dubrovnik and then catching a bus to Kotor? (if there are such buses)
      Another alternative is to see if ATH-BEG-TGD might be a bit cheaper.

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    3. Which airline is flying the charter?

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    4. Air Serbia. What will be interesting to see is if it will be with Aviolet or with the Atr.

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    5. Or A330, ha ha ha

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    6. Never say never. Flew with a packed JAT DC10 15 years ago TIV-BEG.

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    7. A332 might be realistic on routes to ZRH and TIV as it could fit between the arrival from JFK and departure to it.

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    8. Anonymous @ 4:59
      I might have been on that flight with you. They combined two earlier flights to BEG and used the DC10. Yeah it was in Summer 2000 or 2001. There were no seat assignments, we just ran in and grabbed any seat we found. hahah

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    9. Could the A332 even land in Tivat?

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    10. If IL-86 could then I guess an A332 could too. :D

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    11. @ AnonymousApril 11, 2016 at 5:18 PM
      hahaha yes that was the one :D I didn't actually realise they combined the flights before but I do remember it was full and there were no seat assignments. Though they did give out boarding passes which were like vouchers on a glossy peace of paper - blue was business, green was economy :D

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    12. Well, if a DC10 can land in Tivat, I'm sure an A332 can too.

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    13. Thank you anon 2:45PM,thank you Nemjee I'll try those alternatives just because I don't want to miss this opportunity of visiting this beautiful place

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    14. Once again thank you Nemjee,I booked tickets to podgorica via belgrade much cheaper 100€ down than tivat!And the excess amount of 200€(me and my girlfriend)are way enough for renting a car and fuel to go to kotor and around the montenegro riviera!

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    15. Great! Will you be arriving on the night flight from ATH or the afternoon one? It's a shame flying into TIV was so expensive, the landing is far more adventurous than the one in TGD. :)

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    16. Sorry for the delay Nemjee.No the trip is for june not now.Leave on the 23th of june 05:00AM arrive in podgorica 08:05AM and return to ATH on 28th of june 21:45 from podgorica and arrive in ATH 03:00,but I'm sure you already know the times.All flights with AirSerbia!

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    17. ooh I forgot!!!I will be able to see the new a330-200 of air serbia the time I will arrive!!GREAT!!!

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    18. ^^Hope you enjoy your trip. Sounds exciting.

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    19. I dont get it why YM dont do some codesharing with A3, LO, RO on BEG-TIV/TGD route as there more and more polish and romanian people coming to Montenegro every summer.

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  13. What are the fares of BEG?

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  14. I also flew with the dc-10 for 120 dm back then 15 years ago.

    ReplyDelete

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