Thursday, July 21, 2016

Adria rules out low cost business model


The CEO of Adria Airways, Arno Schuster, has said he does not see the airline operating as a low cost carrier in the future. This is despite the company currently utilising a hybrid business model, where passengers have to pay extra for a number of additional services. Speaking at the recent Star Alliance meeting in Ljubljana, hosted by the Slovenian carrier, Mr Schuster said, "We invest a lot in order to meet the needs of our passengers and want to offer the best possible fares to all our travellers. The future of Adria is not in the low cost model, since we are members of Star Alliance, which has high standards. The alliance enables Adria to improve its connectivity, lower its prices and gain more visibility".

Adria's former management began the carrier's transition into a hybrid/low cost airline in 2014 by charging economy class passengers for food and beverages. This was followed with the introduction of low cost car park options at Ljubljana Airport, as well as a new approach to online sales including first-minute and last-minute fares. Most recently, the airline introduced "hand-baggage only" fares, charging passengers fifteen euros per every checked-in item with the aim of reducing ticket prices. However, Adria has also relaxed some of its policies over the past few months and no longer charges economy class passengers for water and has rolled out a free of charge in-flight entertainment platform which can be streamed to passengers' laptops, tablets, mobile phones and other hand-held devices.

The airline says its current business model is based on industry research showing that passengers prioritise pricing and scheduling over amenities. Adria's former CEO, Mark Anžur, who oversaw the introduction of the hybrid concept, previously said, "With the option to purchase on board, we do not earn much. However, we significantly reduce the need to stock our aircraft with supplies. As a result, we achieve substantial savings. Using this approach we are shifting towards other low cost airlines. When a low cost airline lands at an airport it does not have many expenses, only the bare essentials, which is fuel". He added, "Analysis of our competitors, as well as trends among regional carriers, to which Adria belongs to, indicate that the passenger value safe, fast and competitively priced transport to their final destination the most".

57 comments:

  1. To me it makes perfect sense. With all due respect people in exYu will always prefer cost over quality. Those that want to pay extra for the quality can. So Adria leaves nobody out.

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    1. I would agree with you but then they charge me over 220 euros from Sarajevo to Munich without any additional 'perks'.

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    2. While ASL charged me for flights to much more distant AMS and back 170 euros, all perks included. In July!

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    3. sometimes I wonder if this is aviation or low cost bus rides...220€ for return ticket Sarajevo - Munich? Go by car if it is too expensive. Or by bus. You can eat what you want on the bus. ASL on the other hand is trying to get planes full by offering low price for legacy confort. Somebody has to pay for it. As far as I know, that is Serbian taxpayer...

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    4. 220 euros for four flight segments is reasonable, especially in the high season and if the flight was not bought ahead of time.

      The costs of operating a hub are really large.

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    5. "Somebody has to pay for it. As far as I know, that is Serbian taxpayer..."

      You are talking about Wizz and Ryan flights from Nis?

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  2. JP please return to MBX... base one CRJ900 at MBX

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    1. Won't happen. Their new CEO said last week they have no plans to fly from Maribor unfortunately.

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    2. They fly from Poland, Kosovo and Albania but they can't fly from another Slovenian city where they would get subsidies....

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    3. Why would they fly from MBX? They tried it in the past and it was always a stupid idea.. Again, people from that are can use GRZ, VIE, ZAG, LJU... Apart from this, unemploymeent in the area is higher than Ljubljana part, people are looking for tickets to be as cheap as possible and Adria can't offer this. They had LON, but it was a disaster. And again, it's a one hour drive to LJU... people are used to driving further than this to get on a cheap flight.

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    4. The way they tried with LON was a failure from a beginning. It was JP who did it wrong not MBX. Sales were good. The problem was that if you want to be successful like LCC you must reduce costs... That can ce a problem if you fly an empty plane twice per day (when MBX-LON operated) on MBX-LJU route.

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    5. Where would JP fly from MBX?

      From GRZ there are 4 daily flights to FRA, MUC, VIE, 2 to STR, a lot of fligths to TXL, IST, ZRH, ...

      JP would not attract a lot of people from Austria and Maribor is 40 mins by car from GRZ, not to mention that the whole region is not doing so well (unemployment, etc.).

      Is the solution to fly LON 4pw and have the aircraft parked for the rest of the time?

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  3. Charging passengers for meals is absolute nonsense in my opinion. It only tarnishes your image. The average price of a HOT meal for each passenger is just 5 euros. They could just offer a sandwich free of charge. It would do a lot of good for your brand. Niki which was much more of a LCC then Adria use to offer free drinks and sandwiches to all passengers in addition to an on board menu. Don't know if they dropped that concept later on. Remember Adria has a few longish flights and does operate to Moscow and London as well.

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    1. To make it even more of an inconvenience until recently you could only pay for food/drinks in cash at JP. Thank god they finally introduced the possibility of paying with electronically.

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    2. Yeah and you could only pay in euros which was not too convenient for us from the UK.

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    3. And ofcourse, you would like to pay in sterling pounds... Why? Because is the official currency where? In the UK, which has nothing to do with Adria, Slovenia...and soon with EU. I can't pay with EUR in London, why would there be an option to pay with GBP on Adria flights?

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    4. So everyone is just supposed to have Euro notes before stepping onto an Adria flight?

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    5. Flying to Ljubljana? Yes, it would certainly help... Or, pay with a credit card.

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    6. Every LCC takes at least currency of both airports + Euro. And that's the bottom when it comes to customer service.

      You pay 300€ for a ticket and then you can't pay for a bottle of water in Sterling. Top deal, really.

      Mind that a lot of people withdraw cash in foreign currency after landing at the first ATM. Not everybody has time to go to the bank before travelling.

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    7. 5 € times 1.000.000 passengers equals what?

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  4. Maybe they should depart from the LCC model. It hasn't produced profits. In fact their 2015 loss is quite high.

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  5. They have cut a lot more than meets the eye. They closed down almost all downtown offices (I think Moscow, Frankfurt and Zurich are the only ones left), they cut pay, restricted discounts for employees etc

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    1. Didn't they also outsource a lot of their crew to Kosovo and Albania which get paid less and work longer hours? I remember the Slovenian crew union was complaining about it recently.

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  6. They are not low cost or even hybrid at all their prices are very high unless you book a bloody year in advance!

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  7. Perhaps retire that gas guzzler called the CRJ 200. Your expenses might reduce too.

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    1. Didn't they say they were going to retire it early this year?

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  8. Star Alliance "high standards" - where you have to pay for luggage, seat, endure frequent cabin crew/pilot strikes... the more proper name is LCC+ standards. At this point the only positive difference between Star Alliance "high standards" and LCCs in Europe is connectivity.

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    1. TK is an exception there. The only thing they've changed for worse recently is their loyalty program which now sucks more or less like any other. However, they serve very good meals and beverages, allow proper amount of baggage and do not charge good seats.

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    2. Star Alliance is not only Lufthansa, but also Singapore , Thai, Asiana, ANA (among others) and also Swiss. Not quite LCC:)

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    3. In Europe they are LCC+. + is for connectivity. Good for Turkish for taking proper care of its passengers and not following crappy Star Alliance "high standards".

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  9. There is hardly anything low-cost about Adria that would appeal to potential passengers. The fares are still much higher not only of what low-cost airlines charge but also compared to many legacy carriers in the region, resulting in many people avoiding LJU altogether.

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    1. There are just some things I don't get. They ask pax to pay for food and introduce a fee on checked in bags yet they spend millions to install entertainment on planes.

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  10. haha that photo looks creepy :D

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  11. Adria has a great model. They offer LCC service yet charge inappropriate legacy prices.

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  12. Wow they got rid of the water charge. They use to price it at 3 EUR per tiny bottle until recently. What a nice surprise for people who paid 250 euros for their "low cost" ticket.

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  13. Sorry for the OT does anone know what was flights MMZ 641 to Bangui from Belgrade this morning? Operated with B767.

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    1. It was a Euro Atlantic Airways flight

      https://upload.wikimedia.org/wikipedia/commons/e/eb/Euro_Atlantic_Airways_Boeing_767-300ER_Ramirez.jpg

      Thanks

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    2. Since it was going to Bangui, my guess it is carrying Serbian UN peace keepers.

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  14. Koliko moze vremena opstati jos Adria?

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    1. Sve zavisi od novog vlasnika. Trenutno mi se nesto ne svidja njihova strategija ali videcemo.

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    2. My guess is they will declare bankruptcy in about three months. There is simply too much debt and no more state sponsored life lines.

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    3. Don't think they will go bankrupt. But like I said a few days ago, I'm not happy a former liquidator is the CEO.

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    4. @AnonymousJuly 21, 2016 at 1:37 PM
      Why not? They have tons of debts, the planes have been half empty for the past decade and there is no state to pull them out. Where will they get the money?

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    5. What would be the point of buying a business 3 months ago and just letting it go bankrupt a few months later? I think Adria still has money they received from the state as equity when the sale was finalised. They will probably use that to survive the winter.

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    6. Just compare. When JU was privatized in less then 3 months new aircraft started arriving and 5 routes were launched. At JP two aircraft were leased out and 3 lines suspended.

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    7. And yet, for 3 years JU was unable/unwilling to pay their own airport charges, which were payed by the Serbian government.

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    8. If only you knew how much money Adria owes to Ljubljana Airport... FYI it wasn't unwilling or unable, it was part of the agreement between the Serbian government and Etihad as part of Serbia's investment. Open the agreement on the Serbian government website and get informed.

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    9. AnonymousJuly 21, 2016 at 1:49 PM
      ""What would be the point of buying a business 3 months ago and just letting it go bankrupt a few months later?""

      Easy - they paid only 1 million euros, which they already got back through salaries and consultancy fees. Please explain to me, how will AA pay its debts with half empty planes and virtually no assets?

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    10. I know it was part of the agreement, but still, I wouldn't brag about how well JU was doing right from the start, when they were not even paying the airport charges. It's like you get a rent-free apartment in London and say how you don't have financial problems with 1000 GBP/month :)

      And FYI, situation with JU was different. Of course they had to bring newer and more efficient aircraft than 30 year old B733 (which they are still using). What would you change in a fleet of JP? A319s are quite new (6 years), CRJ9 more or less fits the network and aircraft are still not that old (9 years), they got CRJ7 almost for free and there is a single CRJ2 that could be retired.

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    11. Ryanair has it's first recruitment tomorrow in Ljubljana. They want to be prepred when Adria goes bankrupt, to fill in the hole... Malev #2 :)

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  15. It will be interesting to see what they will do with their fleet this winter. They are currently leasing planes to Air Serbia and Austrian. I doubt they need more planes for the winter than they do in the summer so we will see where these planes will go.

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  16. Does anyone know how much they are getting for their deal with Nordica?

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  17. OT: Went to Helsinki from Dubrovnik with Finnair Airbus A321 on Wednesday 13th of July (plane almost full, just a few seats left), came back to Dubrovnik yesterday with A321, LF around 85-90%. Not bad!

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