Wednesday, May 17, 2017

Croatia Airlines eyes further expansion


Croatia Airlines plans to further expand its network in order to keep up with increasing demand for leisure destinations. The carrier says that additional growth will be fuelled by Croatia's thriving tourism industry in the years to come. Apart from the four new seasonal routes being launched out of Zagreb later this week, Croatia Airlines also introduced another four summer destinations last year. "After several years of recession, there is a slight recovery in the Croatian economy and the market requires new leisure destinations. This is why we expect that many travellers, both from Croatia and our new markets, will use our products more", Croatia Airlines' CEO, Krešimir Kučko, said. He added, "Croatia has been a tourist hit at a global level for several years, not only during the summer season but also in winter. In accordance with these trends and our capacities, in the future, we plan to further expand our European network of destinations and strengthen our position as a regional leader".

Croatia Airlines faces strong competition as low cost and leisure carriers continue to dominate along the coast, with their numbers growing year-on-year. Furthermore, legacy carriers are increasingly starting to take note and are launching seasonal flights to leisure destinations in Croatia. This summer, KLM introduced services to Split, LOT Polish Airlines and Lufthansa to Pula, while British Airways will also commence flights between London Heathrow and Pula later this summer. Last year, Croatia Airlines' market share in its home country averaged only 20% during the peak summer months of June, July and August, when it generates the bulk of its annual traffic. "In the last few years our market has been inundated by competitors such as KLM, Qatar Airways, a bunch of low cost carriers and many others. Under these circumstances it is logical that our market share has decreased", Mr Kučko previously said.

The airline's CEO noted that out its four upcoming new routes from Zagreb, Oslo has proven to be one of the most successful. "Our four new routes this year have been introduced based on internal analysis and market research, which showed significant potential in the Scandinavian and Romanian markets. So far, there is great interest for flights to Oslo and this route has proven to be a big hit", Mr Kučko said. He added that bookings for its four seasonal routes launched last year have now exceeded the total number of passengers transported on these flights in 2016, which the CEO says "confirms the fact that we have made the right business decision".

116 comments:

  1. Well they have the right idea but I fear it is a little bit too late when the coast is concerned.

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    1. Why would it be too late? The demand is there and without all foreign carriers only a fraction of pax would be there. OU would need a fleet of more than 50 aircraft to cover all that demand. They are doing pretty well concentrating on ZAG, as IB concentrates on MAD ond not on PMI etc.

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    2. It would be nice for OU to have some routes to the coast from Europe during winter.

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    3. Alen Šćuric PurgerMay 17, 2017 at 11:29 PM

      It has:

      SPU-MUC
      SPU-FRA
      SPU-FCO
      DBV-FRA
      +code-share on LH SPU-MUC

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    4. Is a Zagreb-Dublin direct route being considered given the 120000 Croatians now living in Ireland? The current options for these passengers all involve connections through other European cities that make weekend or holiday trips to see friends and family unattractive.

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  2. Interesting that Oslo is the most successful out of the new routes being launched. Would have thought it would be Stockholm which might also attract actual P2P passengers rather than just tourists going to Dubrovnik or Split.

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    1. Norwegian is to start Stockholm flights also, so it would be huge fight with OU.

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    2. From what I hear Oslo is the best performer and Bucharest the worst. From last year, best performer is Lisbon worst Prague.

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    3. Prague is no doubt impacted by CSA.

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    4. ^It was a bad decision not to extend it during the winter. They would compete better against CSA if they flew year round. CSA is prone to retreating from markets. OU probably would have forced them out.

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  3. What about Moscow and Dublin? They could work out of ZAG.

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    1. They could cancel LED and go to Moscow instead.

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    2. Because serving both would be overkill while I think Moscow has much more potential than LED. Their average loads last year were 60%.

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    3. They have to compete with Aeroflot on the Moscow route.

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    4. From what I heard, LED is going really well, surprisingly!

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    5. Russians are making a big comeback this year with numbers already up around 30% this year compared to last so not too surprising that there's demand for 2 or 3 flights per week.

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    6. I think the flights to LED have now been rescheduled and offers better connections onto other flights within Croatia. So hopefully this will translate in better results.

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  4. Happy to hear the routes from last year are performing well.

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  5. Ughhh, I will start to hate words like: Eyes, Consider, Evaluating, Sees etc. Hahah

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    Replies
    1. Let's not forget the one that's overused - "Soar"

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    2. Not to mention 'regional leader' - which I guess they are in terms of the other ex YU airlines. OU is the only airline expanding, 8 new routes last 18 months. JU and Montie are diminishing at a rapid rate meanwhile Adria is still trying to find its place in the world.
      Congrats OU and great news for Croatia

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  6. Again with the "regional leader". It is such a political statement, he kind of knows his job depends on how many times he repeats it.

    Say what you will about Dane but his interviews always seem to be above politics and devoid of petty regional squabbles and envy.

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    1. +1000, especially because OU isn't the regional leader

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    2. OU is regional leader, in region of: Bosnia, Montenegro, Kosovo, Albania, Slovenia and Hungary (if we're talking about legacies), so yes, it is regional leader, it's catchy

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    3. Leaders don't sell their engines and LHR slots. At least I would not follow such leaders.

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    4. ever wondered what "regional leader" means? NOTHING! In what sense? in terms of growth? In terms of innovation? In terms of productivity? Business results? Considering that there might be some truth in the statement.

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    5. How on earth Croatia is leader in

      - Montenegro: JU 40 flights, JP 7 flights, OU 0

      - Albaina (JU 7 flights, JP 10 flgithst, OU 0

      - Kosovo (JP 14 flights, JU and OU 0)

      - Hungary non of those have flights

      Even in Bosnia OU is not so big, as OU 13 flights, JU 10 flgihts, JP 7 flights.

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    6. ^ actually JU is 9x per week to TIA.

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    7. Anon 10.09. Depends how you define regional leader. Perhaps the reason why OU don't fly to the markets you have tabled is because the yield is low and aircraftbare better positioned on other markets. Make sense given the financials of both Adria and Montenegro. JU? Still awaiting on their financials. I'm not expecting any ground breaking results

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    8. JU has 12 weekly to Bosnia with 7 to SJJ and 5 to BNX.

      Also JU has 10 flights to LJU and 18 weekly to Macedonia

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    9. I was just reacting to note that OU is "leader" in Montenegro, Albania, Kosovo and Hungary, what for sure is not. Did not say they should fly to those destinations.

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    10. Ma ljudi moji, zaste se odmah tolko napalite kad god Kucko to izjavi? Pustite ga da fantazira :)

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    11. They are BY FAR the regional leader - in selling slots, especially LHR slots, which most airlines kill for.

      My vote for MVP - no contest

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  7. Fly days 5,7 during WITT ZRH to SPU so we could enjoy late autumn or early spring sun in Split or nearby

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  8. Has OU ever served Madrid?

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    1. They did briefly in the 1990s.

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    2. I think it could be a good choice of destination. Spain has recovered a bit from the crisis and now MAD has more business and connections to South America, Carribean and the Iberian peninsula + Canary Islands.

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    3. That demand is served by Iberia which flies 5 times a week to Zagreb!

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    4. Oh yeah, completely forgot about Iberia flying to ZAG. Thanks.

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    5. Iberia Mainline 319/320/321s are operating, next year that could be a daily ops

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    6. Any chance of them going year-round?

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    7. @AnonymousMay 17, 2017 at 10:52 AM

      They're bound to do that by 2020.

      They started with twice weekly service in 2012 I Think, soon it went to trice weekly service and now 5 weekly flights, they extended the season from July and August flights to May to late October.


      Perhaps they'll consider trice weekly service in winters from 2019 and daily service or 6 weekly flights from May 1st to October 31st.

      Forgot how many Spanish visitors in Croatia in 2016, i know it is over 220 000. Zagreb had 12 000 Spanish visitors in 2016, nearly 1% of all foreign visitors in Zagreb. 15-20 000 Spanish visitors are expected this year in Zagreb. current projections of 30-32 000 Spanish visitors in Zagreb by 2020. This would clearly demand some sort of daily flights between the two capitols.

      And Vueling is looking to expand in Zagreb in coming months and years, things are bound to become quite interesting.

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  9. Great news! They should now concentrate on making those 8 new destinations year-round in the middle term to increase fleet utilisation. Zagreb will work well in the winter as a destination from those markets.

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    1. I agree. I think their priority now should be extending those during the winter or at least some of them before they open more new routes.

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    2. In winter season is also seasonality. But that's no problem to make an interruption on some routes in mid January/February.
      Other (network) airlines are also doing this. These weeks could be used e.g. for base maintenance..

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  10. 20% market share in summer. Yikes. But there is massive competition I agree. I don't know how can they overcome it.

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    1. Well Easyjet flies SPU-LON up to 5 times a day in summer. OU has been flying to LON from SPU 4 times a week. On top BA flies 5 times weekly and DY flies 2 weekly while WIZZ flies daily. OU could never have served that amount of flights. Easyjet and others have CREATED that demand.

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    2. But when you study history of LCC developments, you'll notice that the same demand disappears very quickly, once LCCs cease flights. Meaning that the model is not sustainable in many cases as the demand is artificial and depends on specific type of aircraft operator.

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  11. What I'm getting is that future expansion will be more focused on "leisure destinations" which means the coast I assume.

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    1. Or foreign holiday destinations out of ZAG?

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  12. Reading the daily updated this month I can only say this: jatovanje is raging all over the exYU lands!

    I have never seen so much fake announcements and empty, meaningless talks from Vardar to Triglav. This is truly and utterly shocking.

    The whole region has turned into some bizarre PR land where real activity is nose diving to the ground and the only thing that is truly booming is the industry of cheap announcements, fake considerations, and badly photoshopped renders. Matrix at its best, not only in aviation.

    Just to clarify: there is absolutely nothing to blame on the admin. He does his job professionally and he has to work with what is available. Such a shame he does not cover some region where something real is going on.

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    1. It's the mentality of the people in leadership positions in this region.

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  13. The next route after London where Croatia Airlines will feel pressure in Zagreb is Paris. Two French companies are currently planned to start flights from France to ZAG next year.

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    1. Volotea and Transavia?

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    2. They have a lot of bases in France

      http://www.exyuaviation.com/2017/01/transavia-and-volotea-plan-zagreb.html

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  14. Romanian market: CLJ, TSR easy and close despite presence of LCC. Few legacy carriers.
    Bulgarian market: SOF to compete with JU on Balkan cities. Now connected with many CEE capitals excl. ZAG, LJU
    Spain market: MAD business recovered a lot + code share with IB - excellent connections to Latin America
    Ireland: DUB - now on the rise after Brexit

    As you can see, lots of opportunities for OU.

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  15. There is no master plan here. Everything seems to be just spoken words without an actual business model to show for. Show me a detailed investor report on how this will be action with timeframes, costs and profit margins.

    I'm a huge supporter of Croatia having its own national carrier but without innovation, without a detailed business case to show it all seems like bright ideas with no basis.

    Flick this cowboy CEO, invest in a CEO that has experience, vision and innovation and then let's see what he future holds. I'm certain it would be far more successful if there was a experience aviation visionary running the show.

    Either way I wish the future endeavours well but think this could be a hell of a lot better.

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    1. His term is coming up which is why there are so many empty announcements.

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    2. Air Serbia did exactly the opposite. They were fast in the realization of their "ideas" which now live up to reality- so I guess it better to remain realistic. New routes are costly and can decide the fate of a company. Lets see what happens with Air Serbia in the medium term. They seem desperate changing their bullish business model to a more realistic one. Kondic was celebrated as the perfect guy who decides and does, but now? Could they not have forseen the future 2 years down the road! Thats what I call BAD! So Kucko is realistic and know what a small airline is capable of/ or not.

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    3. Air Serbia is based on transit passengers and Croatia Airlines is a feeder airline and an end of the line carrier. Totally different model and rightfully so!

      If Croatia is a holiday destination then make the airline the one stop holiday booking service and make money from ancillaries. No airline makes money from flying customers from A to B but making money from +++ after making the flight reservation is how Airlines stay afloat in today's world.

      This business has a good foundation and needs to be built on innovation. Perhaps a little investment in that before investing in routes would be a visionary idea?

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    4. Anon 10.254. JU is based on feeder? Really? Apart from selling really cheap flights uneconomically from a few cities not sure what you are describing. Add the massive flight reductions and destinations last 3 months I don't understand your science.
      I can't say I agree with what you are trying to say

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    5. JU tries to compete with the likes of Ryanair or EasyJet. They sell for example Berlin-BEG-ATH for a cheap price, while easyJet offers the route direct. The problem is that JU will get the Pax only if the are cheaper. Unfortunately they cannot rely on a sufficient demand from its local market to support a daily flight. In the end it puts pressure on their business.

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    6. Anon 11.45, Croatia feeds traffic to other carriers, Air Serbia prefers to transit or hub its passengers and not the the way you read it and subsequently responded.

      1.19, correct Air Serbia hub passengers on intra-European services which is crazy considering low cost carriers do it non stop for cheaper. Its like Air Serbia is trying to be the Etihad, Emirates or Qatar hub airline for Europe. It works for ME3 carriers because of the vast distances they fly.

      Croatia airlines needs a revamp badly!

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    7. the question is who feeds whom? Considering the flow of pax from the WORLD to Croatia it is more logical to assume that Star Alliance is feeding Croatia Airlines instead of the other way round. Its not an outbound business.

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  16. Most of you guys dismissed when they said last year they would open new routes from Zagreb in 2017 and here we are now.

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    1. But what happened to regional bases? Regional planes? We will see if they keep their promise that last year's seasonal routes from ZAG will go year around in 2017.

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    2. Why would they keep routes in winter if they dont make financial sense? Just because you will see if they keep a promise? Will you fly those routes. They will keep them if there is demand and if they can make them financially viable. Simple as that. No need to be offended if they don´t keep them ;)

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    3. Not offended. But there is no need to announce anything if you don't know if it will happen.

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  17. As the Aussies would say, 'don't piss on my back and tell me it's raining'.

    There needs to be innovation and I agree. examples are:

    -Easier, simplified booking online booking system
    -Seat selection at time of or post booking
    -One stop shop such as hotel bookings, car rental, tour bookings at time of reservation. Imagine buying ticket to Zagreb and prepaying a bus ticket at time of flight purchase.
    -Align itself with tourism industry partners so Croatia Airlines can sell products via its website.

    Has the CEO of Croatia Airlines heard of Air Asia, Qantas or Easyjet where you can book everything at time of ticket purchase? Why is Croatia Airlines not charging for more ancillaries? I believe Qantas makes more money for, ancillaries such as excess baggage, seat selection, hotels etc than any other airline in the world and it's a full service. Premium airine.

    I'm no arm chair CEO but I agree with anon 9.39am that OU needs to be one step ahead of innovation and bring the power of other Airlines and adapt it to its business.

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    1. +1 agree about about those improvements. They are necessary and would give OU itself a big boost.

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    2. To have all of that you have to do a lot of logistical type of work, right IT platform et. It also requires some forward thinking and we all know how tjat works in Balkans.

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  18. Bravo Hrvatska!

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    Replies
    1. Bravo only when a bravo is deserved. Action speaks louder than words Mr CEO.

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    2. Anon 10.02
      +1,000,000,000,000

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  19. While I'm not a fan of the current CEO, I think it is better to have him then the former one Misetic (who seems to be a candidate for the job again) who did everything purely to align OU with Lufthansa. At least with Kucko we see some new routes and plans that are not entirely dictated by mumma Lufthansa.

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  20. Good luck OU. Wish them all the best.

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  21. Other than the coast, Osijek developing and getting new flights will probably have an impact on some Zagreb routes.

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    1. How much can one Osijek with few seasonal lines impact Zagreb that is some 280 kms away? It might have some impact on BEG, but barely.

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    2. Continental Croatia was forced to use either BEG or ZAG but then TZL showed up and now it seems OSI is waking up.

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    3. Losa ti je logika. Nece nitko nikome otimati vec postojece putnike, vec je potraznja za avioprijevozom veca iz dana u dan
      Sad jasnije?

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  22. Ridiculous, OU already missed chance to dominate on SPU and DBV during the summer! On my opinion, they still have chance to operate number of destinations from PUY and ZAD, even from BWK now when they have longer runway. Also, they should start with more summer destinations in RJK, at least on route FRA-RJK, before LH or someone else started that route.

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    1. With which planes exactly? Do you have any idea how many they would have to either wet lease or buy to dominate the coast?

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    2. They can lease one more plane during the summer, like this year. With one plane they can operate new routes to ZAD,PUY and RJK.

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    3. Aahaha, you guys are funny :) To "dominate" the coast they would need at least 50 new planes. How do you suggest the plane gets to RJK that is supposed to fly to FRA? Triangle won´t work since their product ZAG-FRA, which is a cash cow would not be performable.

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    4. @AnonymousMay 17, 2017 at 12:51 PM

      Currently OU has a fleet of 12 aircraft and wet leasing two.

      On order 4 more A3320 Neo and before 2020 most probably 6 CS 100 will join the fleet. So by 2022, OU will have a fleet of

      6 A319
      2 A320
      4 A 320 Neo
      6 CS 100
      6 Q400

      22 aircraft in total, however expanding to fleet this size right now, would be stupid and suicidal. Airline barely makes profits as is.

      OU will expand, but gradually. however OU must expand its network to at least 40 destinations. It must keep busy in winter times, especially during December period, when Zagreb attracts 100 000+ foreign visitors. This number is bound to triple or quadruple by 2020, As Zagreb Advent becomes a major thing.

      And keeping airline busy with 40 destinations could prove a success in winter months. All they need to do is brake even in Winter months, as they make massive profits in Spring and Summer months, and soon in December.

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    5. Sorry made mistake with the number of A319s,

      4 A319
      2 A320
      4 A 320 Neo
      6 CS 100
      6 Q400

      22 aircraft.

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    6. 6 CS-100 ???!!!! with what money ????

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    7. Once they sell the remainder of their LHR slots, they can sell their CDG slots and bingo, there's the money !

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    8. @AnonymousMay 17, 2017 at 6:23 PM

      Lease to own, same way they've got Q400s, lease to own, airline buys an aircraft on 10 year lease and final agreed payment. OU purchased 6 Q400 for $150 million, next year all aircraft will be finally paid off. After that OU can agree CS 100s on same deal, 6 CS100 for $250 million paid over 10 years on lease to own. OU will need to improve load factor somewhat, 70% lf is really low. Most EU carriers have 75-85% Load Factor.

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  23. Would be good if we saw some winter routes from the coast by OU. Eurowings will be flying year round to Split, TK is now flying year round to Dubrovnik. I'm sure there is enough demand.

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  24. Does anyone know how the Osijek-Dublin charters performed during the winter?

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    1. Horribly, extremely light loads but OU didn't lose a cent since the flights were subsidized. A friend of mine flew DUB-OSI and they were 26 onboard.

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    2. Is that the same passanger that know how many pax where on return flight? :)

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    3. ahahahaha tip trola

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    4. From what I can see you are mocking him but no one is actually saying otherwise... and the fact that OU dropped this route goes to show how much potential there was. ;)

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    5. @1:39 PM
      You mean, that one that said he's a steward for OU so he flew on every flight?

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  25. At least they are focusing on development.

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  26. I still think they need to be more active in the region. They could fly to Tirana, Sofia, resume Pristina and Podgorica too.

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    Replies
    1. There is big potential for ZAG-SOF. It could work on year round basis with DH4.

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    2. @Anonymous May 17, 2017 at 3:04 PM
      +1

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  27. Alen Šćuric PurgerMay 17, 2017 at 3:04 PM

    Tender for new CEO of Croatia Airlines is finished. There were 8 candidates.

    Today they had interviews with Jure Šarić and other two members of selection committee which are not from air-business.

    2 candidates were eliminated as they did not meet the criteria

    final candidates are

    - Krešimir Kučko, present CEO

    - Jasmin Baić, present Director of Controlling and Internal Audit at Croatia Airlines

    - Boško Matković, ex Zagreb airport CEO

    - Tonko Rilović, ex Director of Marketing of Croatia Airlines, present head of London office of Croatian tourist association

    - 2 more candidates that I don't know their names

    With Rilović and Baić I was in 3 8-hours meeting as they were in same positions whan Srećko Šimuunović was CEO.

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    1. i posle Tita - Tito, rekao bih

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    2. Who would be the best one and when is a decision expected?

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    3. Still no outstanding candidates from this list - just retreads.

      What a lost opportunity to bring in a proper outside airline professional. There are so many good high calibre Croatians working with other European airlines who know their shit and are not tainted.

      Shame .... expect more of the same nothing with this lot

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    4. Alen Šćuric PurgerMay 17, 2017 at 11:47 PM

      The 5th candidate is

      - Josip Milošević air accidents investigator

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    5. Purger, why didn't you apply?

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    6. Purger is a commentator - not a CEO. And i say that with the biggest request. Commenting and analysing is one thing, but leading and running an airline is a completely different skillset

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    7. ** meant to say, "with the biggest respect..."

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    8. Writing articles with educated guesses is very, very far from actually leading an airline. Two completely different things.
      Purger himself can have an opinion if he has the capacity for the job or not, but overall, apples and oranges.

      Delete
    9. Alen Šćuric PurgerMay 18, 2017 at 8:48 AM

      I am not even near to that position. I have a private company of my own where I am more than satisfied for 27 years now, and have a huge experience in managing. But as I said unreal people destroy Croatia Airlines. One has to be real. And my knowledge is not even near to be on that kind of position.

      Unfortunately most of previous CEO, including present one were also not even near.

      Delete
  28. They were thinking about starting Split-Milano this year but did not in the end. Maybe in 2018.

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  29. Anyone knows why was yesterday canceled ZAG-ZAD OU632 ?

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