Friday, November 24, 2017

Macedonia to extend LCC subsidies


The Macedonian government will introduce a new round of subsidies for low cost airlines next year in a bid to attract more carriers and develop connectivity, a move which will not sit well with authorities in Kosovo who say the policy has distorted competition in the region. Speaking to the "Srpska ekonomija" monthly, the Macedonian Minister for Transport and Communications, Goran Sugareski, said, "The government of the Republic of Macedonia is strongly committed to the development of air transport. We will maintain the policy of subsidising low cost airlines, which has resulted in cheap fares for Macedonians. The contract with the airline currently benefiting from incentives for the introduction of new routes [Wizz Air] expires next year. After this, we plan to issue a new public call, which will be open to all interested budget carriers. The end result will be an extensive network accessible to all citizens".

The Macedonian government launched a three-year subsidy scheme for low cost airlines in 2012. It proved successful with Wizz Air opening a base at Skopje Airport, which has, in turn, led to significant passenger and traffic growth. A fresh round of subsidies was offered in 2015, with Wizz Air basing a further two aircraft in the Macedonian capital, launching a handful of new routes and introducing services from Ohrid as well. However, the Kosovo Civil Aviation Authority has filed a complaint with the European Commission over the policy, while Pristina Airport says it is unacceptable for the state to provide such subsidies. It argues that they should come in form of incentives from the airport operator instead. Pristina and Skopje airports are now neck and neck in terms of passengers handled.

Speaking to EX-YU Aviation News, a European Commission spokesperson said, "The Commission is aware of concerns raised about the financial incentives' scheme granted by the government of Macedonia since 2012 to both domestic and foreign airlines to fly from the "Alexander the Great" Airport. It could possibly distort competition between airports in the area and indirectly between the airlines concerned. DG MOVE [Directorate-General for Mobility and Transport] is in contact with the competent Macedonian authorities and is examining this matter. This is taking place in the framework of the European Common Aviation Area Agreement, which was signed in 2006. While this Agreement is not in force yet, it is applied administratively". In its most recent annual progress report on Macedonia in the area of air transport, the European Commission said that "concerns about possible state aid in the aviation sector need to be addressed".

Several low cost airlines have previously expressed interest in launching flights to Macedonia, including Ryanair, Norwegian Air Shuttle and, most recently, Eurowings. Over the past few months, the Macedonian government has held talks with a number of carriers, such as LOT Polish Airlines, Onur Air and Arkia Israeli Airlines, which are considering potential operations to the country. "At this point we believe that the capacity at Skopje and Ohrid airports is not fully utilised and we are working hard on attracting new airlines", Mr Sugareski said. He added, "We are in negotiations with several carriers that want to fly to our country, however, these are only preliminary talks related to terms and conditions, as well as possibilities for cooperation".

112 comments:

  1. I really don't see an issue with these subsidies. If I remember correctly they were open to all low cost airlines and were offered on a tender. Obviously selecting Wizz Air was a smart choice since they have opened so many routes and based aircraft in SKP. As far as I'm aware they haven't dropped a single route all these years.

    ReplyDelete
    Replies
    1. I would be expanding like crazy if I had privileged status, no competition and assistance for new routes. They also chased out Ryanair the first second it looked like they could get some actual competition.

      Delete
    2. Love them or hate them, they have done wonders for Skopje.

      Delete
  2. Good news. But I hope we finally see another airline using these subsidies. Wizz Air needs some competition.

    ReplyDelete
    Replies
    1. Fingers crossed for Ryanair.

      Delete
    2. The question is why has Skopje never diversified its offering? I'm sure Wizz Air was not the only low cost airline interested in operating flights to Macedonia yet it seems they are the only ones that do.

      Delete
    3. Ideal scenario would be for a war between Wizz and Ryanair like in Sofia :)

      Delete
    4. Bulgarian market is a bit larger so it can have a pricing war between LCCs.

      Delete
    5. It nearly happened 2 years ago. Ryanair was to launch new routes to Skopje. But then something happened, they cancelled all plans and Wizz launched similar routes.

      Delete
    6. Wizz launched similar routes and they moved to Nis :)

      Delete
    7. I think we are stuck with Wizz.

      Delete
  3. It was one of the few good things to come from the previous government. It's good that they will extend them until 2021.

    ReplyDelete
    Replies
    1. This policy was one of their better ones. The passenger growth speaks for itself really. I support that they continue with this.

      Delete
    2. They would be mad not to.

      Delete
  4. PRN should focus more on lowering fees and attracting LCC if it wants to be competitive rather than complaining about others.

    ReplyDelete
    Replies
    1. Governments should not be allowed to distort the market. If SKP wants to attract airlines then it should come from their own pockets. They were given up for concession for a reason.

      Delete
    2. I don't think it distorts competition because these subsidies are only being offered for new routes, not for Wizz to keep its entire network in Macedonia.

      Delete
    3. Anon 9:08 Tell this to Vucic if you can :)

      Delete
    4. It applies to him too.

      Delete
    5. There is a very weird system in Pristina. The concessionaire doesn't actually set the prices. The government does. The concessionaire is aware that the prices are high and that is why they made a huge incentives program.

      Delete
  5. I think they did the right thing here. They managed to lure Wizz Air to base 4 planes. That's a good deal.

    ReplyDelete
    Replies
    1. They created a completely new market from Macedonia.

      Delete
  6. If Wizz Air does win it again, which new routes could we see from them?

    ReplyDelete
  7. I think the government will try to put more focus on Ohrid instead of Skopje this time around.

    ReplyDelete
    Replies
    1. They have said this too but the problem is Ohrid can't sustain too many year-round flights.

      Delete
    2. Let's try it this way.
      Most of the diaspora living in north, northeast Italy (Friuli Venezia Giulia, Veneto, South Tyrol or from Udine to Treviso and Venezia, Padova and Trento/Bolzano) are from the region of Ohrid, Struga and Debar.If they pay 100-120€ For bus ticket and 24hrs driving (they are 2, in some days 3 daily), why would they not use the plane?TSF is obvious.
      Similar with Malmo/Copenhagen,adding Prespa and Bitola regions.Compare 2,5 hrs vs 40 hrs plane/bus.
      Same goes for DTM/CGN.And Rotterdam/Eindhoven would be good if they cannot do it to AMS.
      TSF (3), MMX (2),DTM/CGN (3),RTM/EIN (2).Maybe not enough to base a plane, but they can do it from other bases.Also, in what percent this would affect SKP, since all these people are using SKP...
      As for seasonal flights, Poland could work well, Russia should be a good hit and Belgium (they had different carriers in summer, don't think it is a full season material).
      BTW, when Luton flights (also in smaller number to Basel) are on schedule you can see a lot of albanian car plates at the airport, let's not forget that.They even go to Skopje for routes such as BCN...

      Delete
  8. Does Wizz also get incentives from TAV for things like handling, landing, use of gates?

    ReplyDelete
    Replies
    1. They should because the subsidies we are discussing here are from the government and not from the airport. So the airport should give them additional incentives for handling so many passengers each year, starting new routes etc.

      Delete
    2. If they don't, TAV has one of the best concession deals ever.

      Delete
    3. I don't think they do. If you get the one you can't get the other.

      Delete
  9. Maybe this is why Eurowings cancelled its planned Dusseldorf flights. If they realized there will be a tender for subsidies next year, why risk it when you could get money for flying to Skopje.

    ReplyDelete
    Replies
    1. I highly doubt that was the reason. They had tickets on sale. They just didn't sell enough tickets.

      Delete
    2. Eurowings will not open a base anywhere anytime soon. They are focusing on the post Air-Berlin mess (defending the german market for LH)

      Delete
  10. What I love about Wizz Air is that they are the first to complain about unfair competition, government subsidies etc but they have been accepting government handouts ie tax payers money in Macedonia for 6 years!

    ReplyDelete
    Replies
    1. +1 hypocrisy at its best.

      Delete
    2. as much as i dont like wizz but do you think Ryanair is any better in this? Come on give me a break.

      Hypocracy is written all over the aviation market

      Delete
  11. So what is the amount of these subsidies?

    ReplyDelete
    Replies
    1. The first one 2012-2015 was 5 million EUR. Not sure if the second one was the same or more.

      Delete
    2. cheaper then selling LHR slots

      Delete
    3. Or having a national airline

      Delete
  12. I hope that easyJet uses this as an opportunity to start flights to SKP.

    ReplyDelete
    Replies
    1. They fly to Pristina.

      Delete
    2. So what if they fly to Pristina? It does not mean they can't fly to Skopje. Wizz Air flies to Pristina and Skopje. The two routes they fly from Pristina are also served from Skopje.

      Delete
    3. I gave up on EasyJet to be honest

      Delete
    4. Well if the suspend BEG-GVA they def. wont come to Macedonia.

      Delete
    5. They are not suspending it.

      Delete
    6. Of course the are cancelling BEG-GVA.

      Delete
    7. Sure. That's why they lied last week that they are not cancelling it and are working out the final scheduling before tickets for 2018 summer go to sale. I guess you know everything, even better than them.

      Delete
  13. Better then wasting money into a national airline.

    ReplyDelete
    Replies
    1. But that way money would stay in the country.

      Delete
    2. You mean the money would be eaten up in the country. At least this way you get something worthwhile for your buck.

      Delete
  14. Very good news BUT Macedonia must allow new players in the market. If not, then W6 will be the absolute dominant carrier. Transavia, Air Baltic, Aeroflot, Ukraine International, British Airways, Cathay Pacific, Korean Air. Aló those airlines fit nicely.

    ReplyDelete
    Replies
    1. Cathay Pacific, Korean Air?

      Delete
    2. i think you are forgetting Aerolineas Argentinas!

      Delete
  15. Excellent news. I don't care if it is "controversial" for Pristina.

    ReplyDelete
  16. So PRN still fuming lol. If Skopje and Nis both managed to get LCCs without complaining then Pristina should too.

    ReplyDelete
    Replies
    1. I think PRN is just a bit annoyed they didn't think of it first ;)

      Delete
    2. The problem here is that more and more people from Kosovo are using Skopje and Ohrid.

      Delete
  17. Are any legacy carriers planning to start flights to SKP?

    ReplyDelete
    Replies
    1. Only LOT has shown some interest. That's about it.

      Delete
    2. Aegean too as reported here

      Delete
    3. Oh yes I forgot about Aegean. They are definitely coming next year. I think it's 3 or 4 weekly.

      Delete
    4. Aegean has not launched operations to SKP due to the political reasons, one of which was the name of the airport. We'll see if the Greek managed to overcome their ego.

      Delete
    5. They have officially announced Skopje as a new destination. It was published here too. As word goes, by June next year when they plan to start flights, the airport's name will be changed.

      Delete
  18. Good news. But i want to see someone else than Wizz Air.

    This might be an opportunity for Eurowings again. Transavia would be a nice addition for AMS-OHD.

    ReplyDelete
    Replies
    1. Hope so to. Transavia, Norwegian, easy, Ryanair and Eurowings would all be welcome. Hell even airlines like Volotea.

      Delete
  19. This policy has been a great success really, beyond any doubt.

    ReplyDelete
    Replies
    1. It was a great success for Wizz but name me one European LCC that has come to Skopje since 2012.

      Delete
    2. *one European LCC other then Wizz.

      Delete
  20. These gd subsidies and government sponsored gulf carriers are ruining the market with capacity and yields which as per market economy rules should not exist. They are a big threat to our industry especially for our salaries. Its time the EC gets active.

    ReplyDelete
    Replies
    1. BA i LH nisu bas nevini. Dobili su ogromnu drzavnu pomoc u proslosti. Isto i velike tri americke avio kompanije. Pricas praznu pricu.

      Delete
    2. Huh? And LH getting AB on a silver platter is not a form of government protectionism?

      Delete
    3. So in your understanding of justice, injustice should be compensated with injustice?. U dont get far with this policy
      And BA and LH subsidies date back to decades back when the aviation market was differently setted up

      Delete
    4. +1
      It is common in these areas to fight injustice with injustice. It seems to give people the sort of satisfaction that is dating back millions of years and appeals to the lowest human instincts.

      Delete
    5. what about the JU deal? Is it not runing the market?

      Delete
    6. Since JU launched, Wizz Air has based a second aircraft in Belgrade, Transavia has launched flights to Belgrade, Ryanair has has entered the Serbian market which was unthinkable a few years ago, easy jet launched flights to Serbia. I would not say it's ruining the market.

      Delete
    7. the only ones that got hurt from the Wizz success at SKP were the ex-yu airlines

      i dont see TK struggling, OS is back on track

      Delete
  21. I don't have anything against the polciy but why are they continuing it? I think the market has matured enough that airlines can establish and sustain flights without subsidies.

    ReplyDelete
    Replies
    1. The failure of Eurowings has showed that the market has not matured enough.

      Delete
    2. 3/4 subsidies are expired already. Wizz hasnt dropped a single route yet. Think twice

      Delete
    3. So if they haven't dropped any routes, why are they continuing the subsidies?

      Delete
    4. Also is Wizz Air paying normal fees at SKP?

      Delete
    5. subsidies were for opening a base (basing an airplane)

      Wizz had strong ties with the previous gov.

      Delete
    6. How come? Where did that connection come from?

      Delete
  22. There is a very big possibility that this will be blocked by the EU. Both sides have submitted documents and the EU is now investigating the case.

    ReplyDelete
    Replies
    1. I highly doubt it. Wizz is a EU airline. They couldn't care less when it comes to their own.

      Delete
  23. very good news for Skopje. But I would like Ryan or Easy to come, just for a bit competition.

    ReplyDelete
    Replies
    1. I would like to because Wizz is now building a nice monopoly in Macedonia.

      Delete
  24. SKP must attract some legacy carriers. The demand is there for Frankfurt, Moscow, Munich and Amsterdam.

    ReplyDelete
    Replies
    1. lets say there is some demand but is it enough?

      Delete
  25. This could mean 5th Wizz plane in Skopje.

    ReplyDelete
  26. Great news for Macedonian consumers again.

    ReplyDelete
  27. So wait, is the moral of the story that Wizz Air would never have introduced any routes to Skopje if they were not paid?

    ReplyDelete
  28. So what happens with SKP if INI becomes a base or receives more destinations?

    ReplyDelete
    Replies
    1. we will close our airport. happy now?

      Delete
    2. INI catchment area is larger and wealthier, so I doubt SKP was that successful without the subsidies. When FR solve pilot issue, at least 1 plain will be based for sure in INI

      Delete
    3. @Anon 12:21

      INI chatment area larger and welthier?! HAHAHA

      INI wont get close to SKP in the next 5 decades!

      You cant tell me that a small city in southern Serbia is more wealthy than Skopje. Also the catchment are is at least the same with SKP cleary leading! SKP combines whole Macedonia & Kosovo, East Albania, West Bulgaria and South Serbia! There are even some Passangers from the greek North!

      I think that INI peak will be reached very soon!

      Delete
    4. lol look at the unemployment rates, have you heard of Fiat, Leoni, Tiger tires..
      INI is between BEG, SOF, SKP, PRN -> larger catchment area with big population

      Delete
    5. please don't start this.. we have enough of it when its about BEG and ZAG

      Delete
    6. the INI fanboys make my day

      Delete
    7. Always funny to read comments about the glorious INI Airport

      @Anon 1:54
      If you ever looked at a map you can see that SKP is between INI, PRN, SOF, SKG, TIA and even BEG.

      Catchment area SKP = over 5 million
      Catchment area INI = under 2.2 million

      Just google the catchment areas.

      Delete
    8. I am sorry but the five million is just hillarious. First thing first, you can exclude all of southern Serbia, with the exception of Kosovo whose citizens still use SKP.
      Furthermore, the fact that SKP is extending the subsidies goes to show that the situation is not that rosy or that demand is not as great.

      With Wizz Air expanding in PRN things will become much worse.

      I am sorry but I doubt SKP will surpass 2.5 million any time soon.

      Delete
    9. By the way, are you telling us that even though the airport has a five million catchment area it couldn't make work EW flights to Germany? It would be funny if ti wasn't sad.

      Delete
    10. dont they have 9 routes to Germany?

      Delete
    11. @anon 3.50

      you are really the new Einstein thinking that Wizz is gonna namjerno hurt their own flights to/from SKP.

      Generally svaka ti cast na logici! (Im sure you are INI-INN)

      Delete
    12. Unless PRN gave them a better deal. ;)

      Delete
    13. It is always very nice to see such an intense competition amongst SKP, PRN, INI and SOF just because they are all close to each other, this is like the Rheine-Rhur region so many airports, so many traffic. The area is indeed packed with people so it is normal to have demand. INI helps SKP while SKP helps SOF and PRN helps SKP, etc, etc. Get a life it is not a competition of who has more but rather PROSPERITY for the region! Southern Serbia needs to develop too as it has industry and tourism. INI plays a very important role. I would love to see OHD airport start to attract more destinations too. Good luck all.

      Delete
  29. I'm surprised. I didn't think the new government would continue this policy.

    ReplyDelete
  30. I guess this puts a final nail in the conffin for that national airline plan.

    ReplyDelete

EX-YU Aviation News does not tolerate insults, excessive swearing, racist, homophobic or any other chauvinist remarks or provocative posts with the intention of creating further arguments. A full list of comment guidelines can be found here. Thank you for your cooperation.