Sunday, November 13, 2016

Wizz Air and Sarajevo Airport talks stall


Negotiations between Sarajevo Airport and Wizz Air over the carrier's potential operations from the Bosnian capital have stalled over high fees. The low cost airline announced last spring it was resuming talks with the airport's management, following a failed attempt to negotiate new flights in 2015. However, the two sides have again clashed over the same issue. Wizz Air planned to launch several routes from Sarajevo, among which was Budapest. Both the airline's and airport's management held a preliminary meeting in May, with talks continuing in June, however, there has been little progress since. The low cost airline previously said, "After Tuzla, which continues to be our main base in Bosnia and Herzegovina, we intend on establishing flights from Sarajevo, which we consider a very important destination. Furthermore, we are also interested in investing in Sarajevo Airport".

Since the talks, Wizz Air has put a greater focus on its Tuzla base operations and will launch several new routes and station a second aircraft in the city next year. The airline's CEO, Jozsef Varadi, noted recently, "We need to make a proper commercial agreement with Sarajevo. We are in talks with Sarajevo Airport but they are simply too expensive. They need to lower their costs”. He added, “We are highly excited for Bosnia and Herzegovina. Wizz Air is very well suited for that environment and we hope to replicate the success in Tuzla across Bosnia. The country is absolutely right for our business plan”. Sarajevo Airport has continuously played down the talks noting it was analysing "all options" when it came to future cooperation with the budget airline and that negotiations were at an "early stage".

Low cost carriers have generally avoided Sarajevo Airport due to a double tax surcharge. Apart from a standard eighteen euro fee per passenger, travellers are also subjected to an additional ten euro Federal tax, introduced in 2005. However, both Tuzla and Mostar airports have been exempt from the additional charge. "The Federal government's unwillingness to abolish the tax and Sarajevo Airport's reluctance to reduce its own fees are the main reason why so few low cost airlines operate services to the city", a spokesperson for the Sarajevo Tourist Board said, noting that budget carriers would provide a vital boost to the city's economy and tourism sector. Currently, Eurowings and Norwegian Air Shuttle are the only low cost carriers flying to Sarajevo. They are accompanied by hybrid airline Flydubai.

46 comments:

  1. They could have really boomed with Wizz.

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    1. No chance for Wizz in Sarajevo due to strong of LH group presence and their major influence in airport authority management

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  2. 18 euro per passenger? Who the hell they think they are?

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    1. It comes up to 28 with the other tax.

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    2. And on top of that they can't even keep the airport open 24 hours!

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    3. The Federal tax is officially "for the development of air transport in Bosnia and Herzegovina" lol.

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    4. Crazy people! BiH is not Schweiz you see. Why don´t they ask them 100€ fees? How will they expect to grow if they know that TZL has already made a better deal?

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    5. Reply for "AnonymousNovember 13, 2016 at 11:42 AM"

      They need to sleep of course, ne bi ranije otvorili ni za neku domacu kompaniju, gubila kompanija para i putnika briga aerodroma. They also need to hurry home, because of UEFA Champions League (football).

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  3. I bet in a million years SJJ did not expect another airport in the country getting traffic. Now they have to comoete with them.

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  4. What a shame. Wizz would be a welcome addition

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  5. But wouldn't Sarajevo flights impact on their Tuzla base? I'm sure a lot of people from Sarajevo and surrounding now use their Tuzla flights.

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    1. W6 Base in SJJ would destroy TZL!

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  6. I expected that SJJ would sabotage this. What is their problem? They chased away CSA too.

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  7. Apparently they wanted to open up 4 routes from SJJ as far as I am aware.

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  8. Wizz destinations from Sarajevo with great potential are Copenhagen, Bratislava,London, Rome and Frankfurt.

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  9. What did they mean by "investing in the airport"?

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  10. Another missed opportunity for Sarajevo but hey at least we get Kuwait Airways! -.-

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    1. Cilj Armina Kajmakovica je da Sarajevo bude spojeno sa cijelim srednjim istokom. Da postane regionalni hub za arapske destinacije, kakav Wizz Air, cilj je trenutno kao sto si napisao Kuwait Airways i Iran Air.

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  11. Lol.. suprise suprise. Cheap-ass-Wizz wants everything for (almost) free and greedy Sarajevo wants everything for the max-price,

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    1. The slight difference is that Wizz can live happy without Sarajevo forever while the airport would need operators to bring passengers. Clearly noone wants to use SJJ therefore sticking to the exorbitant price is a commercial suicide.

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    2. SJJ is also growing steady YoY even without W6 presence... If they go down on price to W6, they would need to do that for all of other (decades long operators) companies... That would mean more passengers, and not necessarily more money... I'm sure that W6 also asked for some money to fly from SJJ, and while TZL would not have flights without paying for flights, SJJ is not in same situation...

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  12. With a few flights from Wizz, Sarajevo would be handling around 1 million passengers. Now we know why Sarajevo is underserved even though there is so much potential.

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  13. Isn't Tuzla still losing money despite having Wizz Air there?

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    1. No they'r playing quitte of passenger income, the real income comes from parking, rent a car, restaurant, duty free shop

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  14. It is now clear that Wizz will stay in Tuzla, and after rejecting Sarajevo there is a greater chance that Wizz wil come to Mostar for sure.

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  15. OMG EIGHTEEN EUROS?????? This is suicide!!
    Come on, INI charges 3, SKP 11,5, SOF charges 5,5 using T1, OTP and BUD 14. Even ATH is 13,4.
    Come on man....why are they being so greedy??? This is really insane! :(

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    1. 18 + 10 .. 28.

      Crazy.

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    2. How much does BEG charges for T1?

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    3. 12 euros at T1 and 16,5 at T2.

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    4. BEG is 21 total (security + tax) per person.

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    5. SJJ is doing the right thing. Wizz makes profit with those BEG prices too. Proof:

      (Source: http://www.airliners.net/forum/viewtopic.php?f=3&t=1347353#p19176201 )

      "80% of routes are profitable. On a country basis, ALL markets are. New routes are normally expected to breakeven by year 2 and be profitable a year after that"

      That means, for example, that INI can be considered close to "breakeven". Therefore Serbia (INI+BEG) market is profitable, which means BEG alone is profitable for Wizz even with those prices.

      BTW there are other interesting things in that link. For example, Wizz is still living in a fantasy world where they expect Ryan to allow them to share CEE market 50/50, ha ha ha. They also foolishly expect countries and airports in CEE to roll over and allow Wizz to do as they please as they don't expect any significant competition in CEE.

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    6. Wizz's market share is way higher than a 50/50 split in CEE. But do keep pumped with your hate.

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    7. What hate? Did you read info from the link? Info was from WizzAir earnings call. It says: "Wizz Air sees the CEE market as being split between itself and Ryanair".

      We all know WizzAir has more than 50% of CEE right now, but Wizz knows Ryan is coming. Wizz hopes Ryan will stop at owning 50%, and that's what's so naive and funny.

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    8. SOF, INI, RIX and TLL are best examples of how Ryanair is after Wizz Air.

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    9. They are "after" Wizz in BUD, WAW/WMI, GDN, WRO, KTW/KTW, POZ, VNO etc. a long time ago and the best they could manage was 50/50%...

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  16. People, it is what it is. Why do you want to give an unfair advantage to an LCC like Wizz over any other airline ? Do you want to chase away all the network carriers like has happened in Skopje, with an existing network carrier cancelling operations every few weeks ?

    The price is the price - if Eurowings and Norwegian can make it work, then why can't Wizz ?

    They put their tail between their legs and went back to BEG airport after claiming their fees were too expensive.

    This is pure racketeering and extortion. They are free to fly just like everyone else. What SJJ shouldn't do, is give them an unfair advantage over any other airline.

    Good on you SJJ - hold the line. Tuzla and Mostar is not Sarajevo and never will be.

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    1. Good on you SJJ - hold the line and shrink further and further with pride.

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    2. No one is preventing Wizz Air from flying. The price is the price. I don't get your logic. If other airlines can fly there at the price list set by SJJ, then why can't Wizz ? if they don't like it and it doesn't work for them, no issues, they can continue to fly to Tuzla, Mostar, Belgrade, Skopje and anywhere else they care to fly to.

      Why is this such a difficult concept for you to grasp ? They are free to ask for whatever they want, but equally, SJJ has the right to not meet their ask.

      Why aren't they flying to ZAG and why doesn't ZAG have a plethora of LCC's flying there ? Because they set their prices accordingly and airlines are free to fly there or not.

      Airlines can't extort and pressure airports to charge them what they want. They are customers of the airport and choose to fly there or not, based on the prevailing price list.

      That's how markets work.

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    3. Which part and why ?

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    4. The whole thing. It gives the odour of theoretical debate with an agenda. Here are the highlights nonetheless:

      "If other airlines can fly there at the price list set by SJJ, then why can't Wizz ?"

      Because it's new destinations/markets they are serving. Since there are significant losses - most of the people on this blog would use the word enormous - on any single destinations, there is normally an incentive scheme. Check with anyone in the business, in many cases this is a commercial agreement with limited public exposure.

      "Airlines can't extort and pressure airports to charge them what they want."

      In any free market a player's size is very relevant lever used to leverage negotiations. The pressure is on whoever is posting unsatisfying results. *That's* how markets work.

      Now, the reason SJJ can get away with their behavior regardless of their poor performance just goes to show the performance targets are extremely low and there are other - political - factors in play which have nothing to do with market behavior. Public discourse is not at a very high level in B&H unfortunately, so this will perpetuate ad infinitum.

      ZAG is a completely different story altogether. I reckon they have the right and the means to play hardball with whomever they please.

      Lastly, Wizz Air's performance is actually pretty stellar. They were just awarded the best LCC airline award at CAPA's event and have the 2nd best margin performance in Europe. I'd say they are in no rush to serve whatever market - they know their CEE market rather well and are obviously pretty good at setting the charge level demands at the exact level they know the market can perform. One confirmation to this is the 2nd BEG aircraft.

      So there's a few bits about the market coming from a seasoned European professional. I normally don't comment much, but from time to time the debate becomes so absurd that it bears setting the record straight. Cheers.

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  17. Any news regarding wizzair flights to ex-yu countries that is sponsored by hungarian government?

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  18. Priprema za let Er Srbije Beograd-Toronto? Poseta šefa srpske diplomatije Kanadi... rekao je da će tokom njegove posete biti razgovora o sklapanju nekih sporazuma, među kojima i o vazdušnom saobraćaju.

    http://www.b92.net/biz/vesti/svet.php?yyyy=2016&mm=11&dd=13&nav_id=1198828

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    1. No need to get unnecessarily excited... a bilateral agreement already exists between Serbia and Canada, allowing for 2 frequencies per week for airlines from each country ... so not sure what this guys is on about

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  19. Kad bi se Wizz Airu u Sarajevu smanjile takse i cijene usluga to bi imalo domino efekt na druge kompanije koje bi trazile isto, Turkish na prvom mjestu pa onda i ostali. Jedino bi sezonskim i carter kompanijama mogli drzati cijenu. Tuzla bi se onda mogla zatvoriti sa svojim letovima a kako cujem vec traze alternativnu kompaniju ako se slucajno dogodi da Wizz predje u Sarajevo. Moje pitanje je kako zive radnici na aerodromu Tuzla koji nemaju par mjeseci platu,mislim cak tri mjeseca. Koliko je dobar ugovor sa Wizz toliko i ne valja ali su se neki ljudi uhljebili dobro.

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