Monday, April 24, 2017

Air Serbia looks to boost long haul performance


Air Serbia is satisfied with the results of its long haul service between Belgrade and New York, launched less than a year ago, but is exploring ways in which to further improve its transatlantic service. Speaking to EX-YU Aviation News, Air Serbia's CEO, Dane Kondić, said, “We have been pretty happy with the way it has been performing. The thing we haven't been happy about is the things that we can't control - prices in the market. We are not a price setter, we are a price taker". He added. “We have to follow the market and that is something we can't control. Our loads have been great, well in excess of anything we expected, but the market fares have been much lower than what we projected in our initial modelling. Therefore, in order to counter that, we have to do a better job of connecting more of our regional flights to our long haul service. We have some unique city pairs that other airlines don’t have, so that is an opportunity, especially in the off peak season. That however, is a challenge in itself, due to slot constraints at JFK that dictate the timings of these flights. So if you change something at this end, you lose other European to European connections”.

The President and CEO of the Etihad Aviation Group, James Hogan, said recently that Air Serbia's New York route is a "long-term investment" which will take several years to achieve its full potential. Mr Kondić echoed those words, adding, “It is a long-term game, especially for us since we are a non-aligned carrier flying across the Atlantic. We can't get as quick traction as other carriers who are part of SkyTeam, Oneworld or Star Alliance because they are part of a club that works together. Over 85% of transatlantic capacity is tied up in the 3 major airline alliances. Despite this, people need to remember that we have been flying to the US for less than twelve months and we are making great progress. Our cargo business for example, has been performing beyond expectations". He noted, "We have to make it work based largely on our own efforts. We are having discussions with a few airlines in the United States as well as other airlines in our region to see how we can better connect our flight with their networks. We will see what comes of that but I'm quite hopeful of a good outcome there”. Montenegro Airlines recently concluded a codeshare agreement with Air Serbia on flights to New York, which is pending final regulatory approval, while Turkey's Atlasglobal is set to follow suit.

Air Serbia will operate up to five weekly flights between Belgrade and New York this summer season, whereas three weekly services were maintained between the two cities for the better part of last winter, except over the Christmas/New Year peak, with four services per week. Commenting on the utilisation of the A330 jet during the winter months, Mr Kondić said, “What drives the economics of flying are the fares in the market. We are not going to fly an aircraft to lose more money than we would if it were parked on the ground. There is a reason why airlines ground aircraft, because the conditions in the market are such that while it is always possible to drive volumes and fly more people, in doing so, you need to be able to do so profitably. Going forward, as we continue to build momentum and connect more destinations and airlines to our JFK service, we will similarly see better returns”.

116 comments:

  1. So it looks like they are talking about codeshares with US carriers. It would really be useful for us living in California and I'm sure they would get more passengers from the States

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    1. I wonder who it is. Jet blue or American I assume.

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    2. The code-share with a US airline won't happen. American Airlines and JetBlue happened only because Etihad helped. Neither airline has an interest to deepen its cooperation with a small airline such as Air Serbia, simply put... they can't make enough money from this deal.

      Kondic has been speaking of these code-shares for about two years now and nothing happened.

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    3. Yeah this article says nothing new. Same same and slightly re paragraphed from previous articles.
      In summary, so we are told, good loads, unprofitable yield therefore loss making.
      Freight is performing really well. Perhaps convert the A330 into a cargo plane? Then again the leasing costs per month are apparently excessive.

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    4. I actually find the interview interesting. It seems open and honest.

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    5. AA je više nego zainteresovan, čekalo se samo na Sabre da bi se to moglo uraditi.Znam da će i to nekima da smeta ali na putu je da se ostvari i taj ugovor u narednih nekoliko meseci. DL isto pregovara sa AS ali ipak mislim da je AA ipak ta koja će da uradi interline a posle i codeshare ugovor u vrlo brzom roku.

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    6. JU already has interline agreements with AA, JetBlue and Air Canada in Nth America - more than enough to cover its current needs...

      Codeshare would be nice, but a good interline agreement gives you 90% of what a codeshare would provide anyway

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    7. Hot Lane, is your information as credible as when you said that the JFK flight was full when in reality there were 62 passengers?

      AA doesn't care about JU, they are not even close to being on their radar. There will be NO code-share agreement. The interline is the best JU can do for the time being.

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    8. Also, you are showing how clueless you are. They don't need Sabre to introduce a code-share agreement. Duh.

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    9. ^ And you seem to know everything...

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    10. Well it's been two years since the JFK project was launched and still nothing as far as the code-share goes. So it seems that as far as this topic goes, yes, I know everything...

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    11. Err - you need to update BOTH your calendar and facts.

      1. Flight was announced on Nov 9 2015
      2. All regulatory approvals were grated on May 13, 2016
      3, Flight launched on Jun 23, 2016.

      So:-
      1. it hasn't been anywhere near 2 years
      2. no US carrier will enter into any serious codeshare discussions until ALL regulatory approvals have been granted
      3. Cooperation always starts with an interline agreement in order to evaluate viability of a codeshare
      4. They have only been flying for 10mths

      So, there is still probably some way to go for a US carrier to evaluate the viability of codeshare potential with JU.

      BUT, they are flying to JFK while others in the region can only dream of it - FACT

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    12. Anon at 2.26pm - actually, seems that you know very little....

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  2. Kondic mentions alliances which got me thinking why haven't they joined one? Oneworld or Sky would fit well with them since we have Star in Croatia and Slovenia. I'm sure Air Berlin or Alitalia could sponsor them for one of those two. Is it a difficult process?

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    1. AZ is not on best terms with AF/KL so I doubt JU should want then as a,sponsor

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    2. AZ might not be around at the end of the month

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    3. ^ I have been hearing "Alitalia might not be around >insert time frame>" for a decade now. No one is going to bankrupt Alitalia just ahead of the elections in Italy where the 5 star movement which is leading all polls and has said it will hold the government responsible if Alitalia collapses.

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  3. Lol... Dane, if your airline's brand was stronger you could dictate the prices because people would be willing to pay more to fly with you like they do with some other bigger airlines. Look at LO in Belgrade. Their JFK flights are more expensive than JU's but they still capture a part of the market. Another silly statement is that they offer city pairs others don't. Which exactly are those? BEG-OHD? BEG-BNX? What connections does JU offer that TK or OS don't?

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    1. they've been flying long haul for less than a year.. I'd give em more time

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    2. The point I was trying to make is that prices can be dictated by them (for the Balkan market at least) if they had a stronger brand awareness which they don't have because they are refusing to promote their flights in neighboring countries.

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    3. Banja Luka?
      JFK has been a BIG mistake for JU

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    4. Banja Luka, Tivat and Ohrid are three destinations served by JU that are not served by any other airline that offers JFK.

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  4. I think the new Montenegro code share will be very good for them. These flights to NYC are very popular with Montenegrins and prices are actually competitive.

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    Replies
    1. Yes but they need to reschedule those MGX flights to Belgrade, which I think is planned.

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    2. Ok, but Crna Gora is a very small market. It's a pity they didn't succeed with Ukraine being a very big one, also Moldova was never look at and other Polish cities with huge diaspora such as KRK, GDN, WRO, etc. VAR never made it because it was not daily.
      Like we all previously mentioned, NYC is one of the toughest and most expensive routes worldwide.

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    3. Anon at 9.16am - Montenegro may well be a small market - so too is Serbia. 2/3 of the traffic comes frm the US, so the importance of YM codeshare is not outbound, rather, for inbound traffic

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    4. @9:16 - There is nothing more to say so i prefer to stay out of the discussions. The reasons why JU focusses only on the poorest region in Europe is borderline idiotic and pathetic. So are the results.

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  5. So loads are good but yields not so good. It's an expensive thing to do. Hope they manage to put their plans into practice.

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  6. One question. They are introducing now a new business model. Would this be happening had JFK not been introduced or is it JFK that put financial pressure on them and forced them to introduce this new model?

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    Replies
    1. it would happen. financials are pretty grim even without JFK. that route only makes it worse

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    2. Care to share that crystal ball you have re the financials being so grim ?

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  7. This is how I see ASL's JFK service. Definitely a great/bold move - absolutely yes. And now, as Mr. Kondic says, it is in ASL's interest to work on its product quality to improve the yields. In parallel to these efforts, Belgrade and Serbia need to work on their destination product - there has been a nice progress, so just keep up the good work...

    An Ex Yu solid expample of how destination product is being developed is Zagreb and it's Advent season... Several nice developments for the winter that is otherwise "dead" in Croatia: EK, Eurowings (DUS) + Monarch announced going year round to ZAG. Monarch is more special given that it is a tour operator whose program includes a "city break" concept and will mostly bring the Brits... On May 4th we'll know more...
    http://www.breakingtravelnews.com/news/article/monarch-goes-year-round-on-zagreb-croatia-flights/

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  8. Now we have an answer why A330 isn't flying to other places. It's cheaper to keep it on the ground then fly it around and make even bigger losses.

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  9. everything is "beyond expectation"- the question now is how big the expectations were?

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    1. Exactly my thoughts. Either Kondic is simply lying or he is incapable to get more realistic (rough) estimates or this simply equals in a way manipulating the public, if you ask me. They were apparently expecting a very very low LF for example - not very credible when we read often on many blogs that LF is not strong at all in average (over the whole year).

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    2. What are the "many blogs" you mention? If you are reffering to this one when someone posts loads for one flight once per month, you do realise that they only post when the load is light. For example last week flights were packed but no one posted the loads for obvious reasons. You can't nit pick a few days per year and make an assumption of the LF.

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    3. Anon 6.28 PM - What were last weeks load factor?

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    4. Fares to NA have been consistently low for three years now. What were they expecting, exactly? With fuel prices going down at the same time?

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  10. I still think they should have introduced Chicago first

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    1. Alo bre u Cikagu zivi samo oko 20 hiljada Srba Pitsburg, Milvoki ili Detroit su mesta sa vise Srba u okolini. Iskljucivo gastosko dok iz Njujorka im lete i cifuti za Tel Aviv i arapi iz Bejruta. Dosta vise tog Cikaga.

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    2. Nemaš pojma.

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    3. ORD is the second biggest market in North America, right after New York.

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  11. The problem is that JU doesn't have an adequate network for feed its JFK flights.
    Regional night flights are operated on a seasonal basis while there are no early morning departures either.

    So of course they are struggling with yields, your network is not adequate so all you are left with are bottom feeders looking for the cheapest deal out there.

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    1. Well they to mention this

      "we have to do a better job of connecting more of our regional flights to our long haul service. We have some unique city pairs that other airlines don’t have, so that is an opportunity, especially in the off peak season. That however, is a challenge in itself, due to slot constraints at JFK that dictate the timings of these flights. So if you change something at this end, you lose other European to European connections.”

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    2. Yeah but this requires a big investment, that is a lot of money. Introducing one weekly flight to a relatively small and poor market won't cut it, especially since your competition offers six times that.

      Also, will this Atr come from TGD?

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  12. They will change time for Sarajevo daily flight on Friday this summer . This new time will perfectly fit for New York flight

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    1. So morning flight to Sarajevo?

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    2. Even though it's a step in the right direction it still won't be enough to make this work. JU and LX will offer one weekly connection between SJJ and JFK while OS will have six!

      I don't see why JU is insisting on ex-YU, they should better concentrate on much bigger markets. I mean they failed in SOF, that's much more worrying.

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    3. Because there is much more P2P connection on ex-YU routes, so you can have higher yields. You need to have more P2P passenger for better yields. You can routes like Beirut where majority of passengers are transit but yields will be low. In case of Beirut this is not problem as you use plain through the night when you can't use those plains on better route, but during day it is much better to use planes on routes where you have more P2P passengers.

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    4. Yeah but the early morning departure to SJJ will see no P2P traffic since a return flights costs well above €130.
      Most people will still opt for a bus or a car.

      The P2P potential is there, JU just doesn't know how to make the most of it. Just like they failed to secure their own share of the Israeli tourist market.

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    5. I agree with you. If the return flights costs less and if you have more than one daily flight you will have it. I am always using JU when I travel to LJU because I can go there and return it on same day. If I go with my car I will lose more than one day. Sarajevo is closer but you still need 4-5 hours to get from Belgrade. If they have double daily ,they will have much more passengers.

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    6. Zaboravljas da poslovnjaci putuju cesto zajedno kolima i da ne mozes da pobedis tu ekonomiju. Pogledaj sta radi nesrecni Purger kako muci zaposlene da se voze kolima. Velika sramota su dve granice do Ljubljane na kojima se beskonacno ceka. Za 4-5 sati ne mozes ni do Zagreba ako postujes propise.

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    7. Alen Šćuric PurgerApril 25, 2017 at 12:15 AM

      Ja mucim zaposlenike? O bože mili, stvarno svašta!!!!!!

      Prvo, od kako je u Zagreb došlo bitno više konkurencije i cijene su ozbiljno pale, ima već dvije godine da nismo koristili letove izvan Zagreba. Jednostavno se ne isplati. Moji djelatnici nikada nisu putovali izvan Zagreba samo zato da se uštedi 50-100 EUR. Ali ako je ušteda par stotina EUR... Bit će da radite u državnoj firmi ili uopće ne putujete okolo ako vam ova koncepcija nije jasna. Moji djelatnici ne putuju autom ni do Beograda, Zadra, Splita, Sarajeva, a nikada, baš nikada u posjednjih 20 godina, nisu potovali autom do Dubrovnika.

      Drugo, moji zaposlenici su jako zadovoljni, hvala na pitanju. Nikada nisu ostali ni gladni, ni žedni, kraljevski se pogodste na putu, niti su smješteni u manje od hotel sa 4****, voze se u superluksuznom terencu sa najvišim mogućim luksuzom, plačeni su daleko više od prosjeka i to baš za svaku minutu koju rade... Zato, ljubazno molim da se ne iznose ovakvi nonsensi.

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  13. A bit unrelated but somewhat is. Have BBC turned on in the background and suddenly hear some trumpets and see a Serbia commercial. Finally came to their senses that some international promotion doesn't hurt. It's a good commercial too.

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    1. Serbia made some truly great commercials in the past but unfortunately they never made it onto foreign tv channels.

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    2. This one was quite nice. Saw it today for the first time so I think the campaign just started.

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    3. This is the commercial that will be playing on a few cable channels starting today. It's ok I guess. They had better.

      https://www.youtube.com/watch?v=MBFVzCc281o

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    4. Једина ствар која ми се допала у споту је добар музички аранжман. Сама идеја и порука коју спот носи је давно превазиђена у свету. Уопште нема инвентивности нити емоције, нема поруке.. иде класична тралала порука коју сви врте "богата историја и добра храна" па побогу која земља има сиромашну историју и лошу храну ?

      Видео обрада је као да је радио неко ко тек стиче знања из струке па вежба са основним функцијама програма за обраду, док је избор кадрова досадан.

      Просто када се ради промоција она мора да има свој циљ и јасну поруку за публику којој се обраћа, а не да се ради нешто тек да се одради.

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  14. They are all so funny these Airline Managers. They add more and more capacity into the market and wonder why yields are decreasing. Of course u can control prices. Stop trashing capacity and u will see what happeneds.... Kondic comes anglosaxion business environment.... growing is their basics

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    1. What are you talking about ? JU has been reducing capacity and will be doing so in the upcoming summer season.

      How do you figure that they are trashing capacity ?

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    2. Thats what he means, trashing capacity = reducing flights.

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    3. JU started last year with longhauls to JFK in a market already facing overcapacity. So JU did not reduce capacity, it added 5, later 3 weekly flights. The market doesn t needs those flights, without government sponsored Etihad they also would never be here
      So u can ignore this all and add capacity but dont hve to wonder why prices are not increasing ;-)

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    4. I think it's great that JU fly to JFK at super cheap fares. I liken it to being a regional charity airline. Fares are subsidised for the travellers by the airline and I guess the Serbian tax payer?

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    5. Funny - you must be the only person on this site saying that JU fares are cheap - the majority sentiment is that they are way too expensive !

      Lucky for you to have snagged a cheap fare !!

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    6. JU are dirt cheap to JFK from other cities but BEG. Always the cheapest. Also see below comment by another. I think you are referring to P2P from BEG in this case choose Wizz. Wizz have good fares and are great to fly with.

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  15. Air Serbia is neglecting the European market which is more than important in making sure the regional network stays profitable. By leasing out YU-APD we can see that there won't be any serious increases but rather the contrary.

    Does JU expect a single A332 to fill its entire regional network? Destinations such as CPH, ARN, DUS, TXL and AMS must be at least daily in winter and at least 10-11 weekly in summer.

    Seems like Kondic and Etihad started building their house from the roof and now they are in panic mode because they realized how unstable the whole structure is.

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    Replies
    1. I don't think JFK was ever a decision made by Air Serbia's management. It was a condition made by the Serbian government when Etihad took over Jat.

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  16. Flights from New York to Belgrade are currently packed in both classes. Not sure from BEG but it all depends at what price the tickets were sold.

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    1. Load factors or is this just a general statement?

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  17. There is room for improvement on this route but it seems to be doing ok so far. With more Balkan connections and a codeshare in the US it could be doing extremely well. The focus should be on filling the plane during the winter since this route is extremely seasonal, which is demonstrated by their frequency changes.

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  18. Give it a few years people. The line was launched just 10 months ago.

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  19. Isn't Newark a cheaper airport compared to JFK? Why not Newark?

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    Replies
    1. It is but I guess the idea is that you could have more connecting passengers from JFK, plus Etihad flies there so they use same handling, lounge etc.

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    2. but Newark isn't a bad airport at all. It is the hub of United Airlines.

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    3. Have you ever been at Newark? JFK is not among the best airports in the world, but it is light-years ahead of Newark. The place is overcrowded, the inter-terminal shuttle train is way too small for the traffic it handles, food and retail options are few and far in between... And, it's primarily a United hub, which JU doesn't cooperate with.

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    4. To nije jednostavno tacno i blizi je Menhetnu od JFK i ljudi iz Filadelfije i NJ lakse tamo stizu. Zasto mora da se AS uplice u borbe sa americkim prevoznicima. Svi imaju nesto protiv njih ne mora jos da ih AS podstice.

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    5. Cene karata iz JFK za BEG sa AS su strasno skupe, nema ispod 1300 EUR, to je stvarno previse, ove godine su duple cene.

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  20. They should have strengthened the short haul network first before going into any long haul flights.

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    1. I agree but if the company persists it will become established and an option for more people in SE Europe who might otherwise use TK, LH or OS.

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    2. I can just imagine the comments on here if they started Newark insteaf of JFK...

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  21. Has anyone here flown this route? What was the service like?

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    1. I have flown with them. Very pleasant crew, standard economy seats, good IFE (I liked that they had Serbian movies too). Specialized crew taking care of kids is a nice touch. They also got a kids pack.

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    2. Recent trip report with pictures:

      http://www.skyscrapercity.com/showpost.php?p=139547924&postcount=10361

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    3. Was that trip paid by Air Serbia?

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    4. You accept only negative reviews as genuine? (I still haven't seen a negative one though)

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    5. Ja sam leteo i ekonomskom i biznis klasom. Sasvim ok i posebno je dobar metalni pribor za jelo koji pojedini ismevaju.

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    6. I flew last week from Beg in business class, plane was almost full in economy, a lot of transfer passengers from Tirana and Zagreb. Business class almost empty, only 5 of us. Service is still much better in comparation with LH, BA, VS, DL, charming CC, but I have feeling they downgraded product a little bit. Anyway, prices are still among lowest,only TY had lowered with long layover. And btw, my ticket was upgraded to business from some reason. Such a pleasant surprise :)

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    7. Sedis sa svetom iz ekonomske klase bljak. Imaju potpuno pogresan avion. Dovoljno je cetri mesta u biznis klasi ostalo puni ekonomskom i podnosljivom ekonomskom klasom.

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  22. will these flights also be subject to a 30E airport check in fee? I bet this fee will create chaos at the airport since more than 50% will not be registering online. Imagine the queing in front of one existing teller desk in operations, that will lead to departure delays almost positive.

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    Replies
    1. Only in BEG if they don't do it online. Those from NY are not affected (or transfers).

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    2. BEG is opening 5 self check in counters at the end of this month. People can just check in there if they forget online.

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    3. Do you know how computer literate are average ASL travelers? i would dare to say that 25% has no comp skills. I can imagine the morning wave at 6 AM with 500 people waiting in front of 5 check in desks and paying the fee at the cashier desk ... I can tell you the printer they use there will run out of ink pretty quick!

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    4. These same "computer illiterate" people all probably have facebook and viber accounts which they use on their smartphones. That being the case, if you can play in the social media space, checking in online using your smartphone is a walk in the park

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    5. Anon at 12.14pm - you don't need to checkin at a kiosk or use a computer at the airport - what's wrong with using your smartphone ?

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    6. Live and learn, live and learn. With 30 euros at stake, trust me, they will manage.

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  23. I agree that Air Serbia should join an alliance. I think it would also make the airline much more competitive.

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    1. Why do you say that ? Based on what evidence ?

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  24. Good article. I hope they keep working and improving this route. At the same time they will have to work on their short haul network but with the new business plans I'm not sure that will happen.

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    1. JU is working on its new business plans. Dropping routes and schedules. Adding more seats and dropping its boutique airline service offering. Not sure how this will contribute positively to its JFK flights

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    2. I don't think anyone is expecting "boutique" or any kind of premium service at 300-350 euro r/t fares. If they are, well, they are in for a surprise.

      By the way, the best way to make pax feel welcome and nice during a long haul flight is also one of the cheapest - send cabin crew every 30 minutes or so through the cabin with a tray of soft drinks, water, OJ, etc. That's what people want the most anyway.

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    3. malo te pecka sta su stalno puni , jel to:)?

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    4. Same as Aer Lingus - short haul is in line with most other short haul European airline offerings (even BA is adopting this), while their long haul product will stay as is.

      Why should there be any impact ?

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    5. BA and Aer Lingus dropping routes and schedules?
      In response to your question both the above airlines are bigger players. Air Serbia is not. It has a small fleet, parks planes, is trying to lease out its already leased planes and is loss making.

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    6. No, BA and Aer Lingus adopting a buy on board concept across its short haul routes while maintaining long haul routes as a full service offering

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    7. You have data where it shows it's loss making?

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  25. I wonder what other airlines in the region they are talking to ?

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  26. No more sandwitches!April 24, 2017 at 1:35 PM

    Again the so called "haters" were proven right and the cheerleaders were proven wrong.

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    Replies
    1. No more sandwitches!April 24, 2017 at 1:58 PM

      With the JFK route being a political prestige progect that would cause big loses to the airline.

      Delete
  27. Maybe they can lease another A330 and in the winter, concentrate on the ad-hoc charters to destinations such as Thailand, Bali, Cancun.
    Or Aviolet short-haul to the Maghreb - Tunisia, Morocco and Canary Islands!

    ReplyDelete
    Replies
    1. Long haul charters are not profitable for them.

      Have a look at the last part of this article
      http://www.exyuaviation.com/2017/04/air-serbia-mulls-future-of-aviolet.html

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  28. Good luck to JU. Sometimes you need to take a risk and I think in the long term it will pay off. I also think it is important that you are first in the region to operate this route, not because of prestige but in a few yaers I am sure more airlines in the region will go long haul. TAROM has already announced plans to start US flights. So it helps to have your product out there for some time when the competition comes.

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    Replies
    1. TAROM are bringing 2 B777's.

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    2. Tarom has been restarting New York and Beijing since 2005. They announce it every few years

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