Tuesday, March 6, 2018

Croatia Airlines to focus on merchandising


Croatia Airlines will be taking a similar approach as its regional counterparts Adria Airways and Air Serbia by focusing on merchandising and boosting ancillary revenue streams in a bid to increase profitability, reduce costs, maximise efficiencies, protect revenues and expand sales. The Croatian carrier noted it has already implemented the first stage of the merchandising and retailing program by introducing hand baggage only fares, marketed under the FlyEasy tariff, last summer. This will be followed up in 2018 with an extra fee for assigned seats/upgrades and buy on board catering. Furthermore, the airline plans to roll out a "Time to Think" option, allowing travellers to lock-in a particular ticket fare before finalising their booking.

Croatia Airlines has partnered up with Amadeus Airline Ancillary Services to help maximise its ancillary revenue, which should increase customer upsell through customised offerings upon booking. This is in line with similar measures introduced by Adria Airways and Air Serbia over the past years which have led to their classification as hybrid full fare - low cost airlines. Croatia Airlines' former CEO, Krešimir Kučko, who left the company in November of last year to head Bahrain's Gulf Air, spoke out against such a business model, noting, "Many airlines have attempted to adopt a hybrid business model and failed. You have to define yourself in one niche instead of doing a bit of everything. The only real hybrid company in Europe at the moment is the Lufthansa Group. They, however, are big enough to allow themselves to operate different models within the same company. I think that Air Baltic's no-frills product for example, with so many selections available at an extra fee and even business class, is a bit too complex for such a small number of seats".

Only a few airlines have so far applied merchandising techniques in a comprehensive way, primarily low cost carriers. Several full service airlines are meeting the challenge of LCCs in their markets through ancillary offerings similar to budget carriers in areas such as baggage, seat assignment, packs of services, cabin upgrades, Wi-Fi with in-flight entertainment, as well as boarding privileges. Croatia Airlines' CEO, Jasmin Bajić, noted last month that the carrier makes money only during the tourist season in the third quarter of the year. Revenue is then used to cover losses incurred during the other three quarters. The national carrier last week posted a record 3.6 million euro profit for 2017, although figures were slightly skewed as they included the sale of valuable slots at Heathrow Airport.

131 comments:

  1. No. No. No. No. A thousand times no!

    You are not flying out cheap airports like INI, TZL or OSI. You are based at an expensive airport. Your costs are not extremely low which means OU will in the end offer expensive tickets while charging for everything and anything.

    Jesus.

    ReplyDelete
    Replies
    1. +1

      Same thing with JU.

      Delete
    2. The only thing is that JU is forced to do it, like JP, because they have far more LCCs at their home airport.

      However JU should have copied Aegean, not Ryanair and Wizz Air.

      Delete
    3. Well I wouldn't say Croatia Airlines doesn't have competition, especially from the coast.

      Delete
    4. I think it's safe to assume that OU has become a minor player on the coast. I mean overall their marketshare in summer is 17% Zagreb included.

      It's time to focus on protecting what can be protected and that's Zagreb.

      Delete
    5. Agree with Anon 9:16, but maybe they could try some new underserved routes form the coast, especially Split and Dubrovnik.

      Delete
    6. Which routes you think are underserved from Split and Dubrovnik?

      Delete
    7. LEJ, DRS, ERF, RLG so basically the whole Eastern and Northeastern part of Germany except BER.

      Delete
    8. New York during summer! Could definitely work!

      Delete
    9. Judging by the number of tourists and their nationalities, I'd add Seoul, New Delhi or Shanghai (seasonally, of course).

      Delete
  2. Seems like every airline is going down the same path.

    ReplyDelete
  3. The only thing I approve of those measures is the "time to think". It's a good option.

    ReplyDelete
    Replies
    1. Agree. Quite a few airlines have it nowadays.

      Delete
    2. It won't be free. KLM has the option but they charge like €20 for it.

      Delete
    3. Seriously?! I thought it was free. I know on the Etihad website you can lock in a fare for 24 hours and it's free, at least for now.

      Delete
    4. I know LH had it for a fee. Don't know if it still applies today.

      Delete
    5. Iberia has it for a fee. Don't remember how much it was.

      Delete
    6. So we will have to wait and see if Croatia Airlines will charge for it. My feeling is they will.

      Delete
    7. Usually companies charge for this 5 EUR. And that is OK. Not expensive, but still nice revenue to company.

      Delete
    8. It is the great option. I only used it once with LH 4 years ago. They only had it for their own flights, not if segments included Austrian/Swiss. I think they rolled that option out in the meantime as I have not seen it during the booking process in a while. I have also seen it with KLM. It is a wonderful opportunity to get a well priced ticked and still have time to coordinate plans before actually spending money.

      Delete
    9. Well, would be nice and refreshing if they would charge for it, but refund the difference when buying the ticket. In other words, if you change your mind and decide not to buy the ticket - you pay the fee; if you get the ticket, the fee is deducted from the total price, making this option free.

      Delete
    10. That was exactly the case with LH in 2014.

      Delete
  4. Ok, so now I understand how they plan to remain profitable in 2018.

    ReplyDelete
    Replies
    1. Much better option than to sell more planes, slots at LHR or Techiks.

      Delete
    2. But can you really generate that much cash by charging meals and seat selection?

      Delete
    3. With 2+ mil. passengers? I doubt it.

      Delete
    4. Not be few chargings, but if you combine it and passengers buy average 10 EUR per flight (for example reservation of seat + meal, or extra luggage + insurance) it is 20 million extra EUR.

      Delete
    5. And they certainly won't. Those "perks" will probably use only few.

      Delete
  5. The lines between full fare a hybrid airlines is getting very blurred these days.

    ReplyDelete
    Replies
    1. The moment you stop serving a free snack or at least free drinks is the moment you stop being a full service airline, at least to me.

      Delete
    2. +1 last anon

      Delete
    3. 'Main airports' is the only mantra left. Although that is being erroded quickly with even Wizz flying to VIE and Ryan to FRA. Easy already flies to main airports

      Delete
    4. The only "main airport" left without LCC is LHR. But that will probably change with the third runway. So the only "prestige" airports left are going to be smaller airports in the middle of cities with no possibility to expand like London City or Milan Linate.

      Delete
    5. Alen Šćuric PurgerMarch 6, 2018 at 2:08 PM

      Even LHR has:

      Eurowings 6 routes
      flybe 2 routes
      Iberia Express 3 routes
      Vueling 2 routes
      so, it is not big number, but still that is 13 LCC routes out of LHR.

      Delete
    6. Dear Alen,

      Thanks for this addition! So even LHR!

      Two questions if I may:
      What do you think about both JU and OU moving to London City (with smaller aircraft) under prospective pressure from LCCs?
      And what about idea of JU possibly selling LHR slots and moving to cheaper LGW when it could still have lots of O&D and quite a few transfers?

      Delete
    7. With what aircraft? Dash or ATR? They both need smaller jets/ the famous 100 seaters.

      Delete
    8. The biggest planes London City accepts are E190 and A318. So in theory YM could be operating this flight for JU. :)

      Delete
    9. YM doesn’t have a plane that can land at LCY, as E195 is not certified for it. So that’s a no.

      Delete
    10. They can fly with their Fokkers :D

      Delete
  6. Has anyone purchased the fly easy tickets? Are they genuinely cheaper?

    ReplyDelete
    Replies
    1. Yes. Flew ZAG-FRA and ZAG-DBV with FlyEasy, and both were cheaper than they were before.

      Delete
    2. That is great news!

      Delete
  7. I will miss their snack boxes :(

    ReplyDelete
  8. Introducing BOB will be easy for them since they already have that in addition to a complimentary snack on longer flights. I assume they will just get rid of the snack and charge for drinks too.

    ReplyDelete
    Replies
    1. Is there anywhere we can see their menu?

      Delete
    2. Yes you can see it here

      https://issuu.com/mpacaric/docs/skyshop-katalog-2017-edit/2?ff=true&e=2039979/56061705

      Delete
    3. You can also pre-order a cake and champagne in case of a special occasion onboard

      Cake - 25 euros
      Cake + champagne - 30 euros

      :D

      Delete
    4. haha good idea.

      Thanks for the link.

      Delete
  9. I don't understand why people oppose this. In Western Europe it's already the norm. There are no more airlines which offer free checked-in luggage and the ones that serve food on board - well, the food is so minimal it almost makes you wish for BoB.
    So if the economic reality in Western Europe is such that everyone is going LC or hybrid, I don't see how we in the impoverished Balkans are going to resist that trend.

    ReplyDelete
  10. Bravo Hrvatska!

    ReplyDelete
  11. Kucko is right, although I find it funny that this is his doing since they started this programme last year.

    ReplyDelete
    Replies
    1. Yhere are a number of airlines that have successfully implemented this hybrid model. Air Baltic which he is calling out is one of those.

      Delete
    2. Kucko also said how he would also open bases across the Balkans so I would not take what he says too seriously.

      Delete
  12. Videla žaba da se konj potkiva pa i ona digla nogu! Dok bude tako letecemo LCC jer su ove kvazi LC skuplje opcije!

    ReplyDelete
  13. Hybrid airline operating models are effective in mature, large and robust markets - hence it’s application in the Western Hemisphere, in companies that pioneered it and have perfected the ancillary generation path.

    At the same time, many legacy carriers tried this the world over only to revert back to their core. Heck even LCC carries are these days slowly creeping up to its legacy competitors by introducing FFP, through check-in, certain perks and privileges for higher fares types. The reason? Competition. Why pay for something here that can be received for free there.

    Bottom line is that you can’t be half pregnant. Kučko was right in his thoughts; diluting a legacy model to bare bones in hope to still sell a legacy product at the end of each booking through upselling - will backfire, pushing passengers towards LCCs even more.

    ReplyDelete
    Replies
    1. Exactly. The difference also is that in these western markets ticket prices on full fare airlines have gone down after they introduced this model. But that doesn't seem the case here, at least not in Slovenia and Serbia.

      Delete
  14. Who would have thought. Montenegro Airlines - the only full service airline left in ex-Yu!

    ReplyDelete
    Replies
    1. I'm confident they will be "merchandising" within the year too.

      Delete
    2. It would completely go against the local mentality. Montenegro Airlines is still highly regarded locally and will not be downgraded with "merchandising". Plus that will not save the company finances.

      Delete
  15. Which full fare airlines in Europe charge for food except for Adria and Air Serbia?

    ReplyDelete
    Replies
    1. - British Airways
      - Aer Lingus
      - Icelandair
      - LOT (free drinks and a chocolate offered)

      Delete
    2. Thanks. BA has really brought its standards down over the year. It was once one of Europe's better airlines.

      Delete
    3. They are also humiliating themseles in business class. Passengers flying on short haul get to chose what they want from the BoB menu free of charge. lol

      There was also a lot of backclash from their premium passengers on long-haul so now they have to make changes.

      Btw BA also removed a second meal/snack on all flights shorter than 9 hours!

      Delete
    4. wow. Just one meal for 9 hours. That's really pushing it.

      Delete
    5. Oh yes, they really went too far. At least airlines like JU, LH, AZ, LX, OS ... give you a meal and a snack when flying to the US and a meal and breakfast on the way back to Europe.

      Delete
    6. BA was always a bit strange - backwards facing business seats, etc. But UK still has the most competition when it comes to air travel so many options to choose from.

      Delete
    7. UK is also very rich so they are helping other airlines steal their premium passengers.

      Delete
    8. Czech Airlines

      Delete
  16. Adria saw it all coming years ago.

    ReplyDelete
    Replies
    1. True but they went overboard like charging for a cup of water. At least JU gives a bottle of water for free to everyone under this new BOB system.

      Delete
    2. Last year Adria stopped charging for water and now also gives it for free. It was very unpopular.

      Delete
    3. Adria is quite ahead in the extra services it offers for a charge. You can now pay for a free seat next to you, you can also bid for an upgrade to business class.

      Delete
    4. I assume JU and OU will eventually introduce those options too.

      Delete
    5. Charging for water is ridiculous! Is AS offering free bottles of water under the new system? Where did you find that?

      Delete
    6. Sorry not a bottle but a cup of water is free. They reported this on the news. But if you want more you have to pay for a bottle of branded water.

      Delete
    7. JU was already serving only glasses of water on their regional flight this summer.

      Delete
    8. Fake news. JU is NOT offering water for free, unless it is a delay with pax onboard or medical case.

      Delete
    9. It's not fake news.

      "Besplatna je jedino flašica vode, i to samo prva, dok će žedniji drugu platiti 240 dinara."

      http://rs.n1info.com/a368739/Biznis/Er-Srbija-ukinula-besplatno-pice-i-obrok-na-svojim-letovima.html

      Delete
    10. Samo zato što je neki novinar sa N1 tako rekao ne znači da je istina. Ne deli se ništa besplatno, pa ni voda. Flašica vode je 2e/240din.
      Posada ima samo rezervnu vodu za slučajeve kašnjenja i medical emergency.

      Delete
    11. It's funny how you provided a link to an article that has nothing to do with the truth and said It's not fake news.

      Don't believe everything you read, especially at N1. Due to being politically bias they can't be taken seriously.

      The only people who get a drink and a snack for free are the people who purchased Economy Red, Business Silver. Economy Red also includes the people who have purchased their tickets prior to the new tariffs being public.

      Unless you are having a heart attack, the only way to get water free is to purchase it.

      Delete
    12. Will you calm down? If it's not true ok, no need to bite my head off! They obviously recounted an experience of one of the passengers who was actually on board a flight. If it's not true fine. For goodness sake some of you need a chill pill.

      Delete
    13. I was surprised when watching that on N1 the other day as it was non correct info in favor of AS in very critical report. They did in rush and not checked all the facts. Sadly, situation is ever worse than they reported.
      Initial AS 2014 concept with handing out small bags with 0.25l bottles of water with wet tissue and snack was great. Very convenient for crews and made such a great impression for few pennies.

      Delete
  17. Ne mogu da smanje broj linija koje lete van najgusce sezone nego ce se baviti mrcdajzingom. Nema drugog resenja za sezonalnost. Sve je to bolesno, dobije polozaj i umislja da su prebogata Lufthanza. LH ima deset nivoa posluzenja u svojim avionima pogledajte na njihovom sajtu razne ponude keteringa. Ovi ni sendvice ne znaju da prave da nisu gnjecavi samo jednom sam pojeo pristojan sendvic u JATu i AS. I jedan solidan obrok preko Atlantika drugi isto nije bio vredan pomena.

    ReplyDelete
  18. Nothing surprising.

    ReplyDelete
  19. I bought my BEG-Split ticket for the summer and it wasn't at cheap at all, taking into account that it was economy blue, then I had to add everything to it, like luggage, advanced seat reservation. Finally it added up to 19 000 RSD

    ReplyDelete
    Replies
    1. 160 eur for 50 min flight (return) and then you get to pay som 12 eur for sandwich and coffee!

      Delete
    2. Wait, did you buy the blue or the white tariff?

      Delete
    3. Sandwich and a coffee on a 50 min flight?! Now, thats a problem with people on Balkans!

      Delete
    4. Where did you buy it, considering Split's still not bookable on the Air Serbia website?

      Delete
    5. You can book it everywhere including their representative office.

      Delete
    6. @ anon 11:32 you are missing the point. It is ridiculous not to get anything if you already paid 160 eur for the ticket.

      Delete
    7. Hi! I booked Split on JU website! It is not listed on their booking drop menu, but via Google it can be found and then Google redirect you to JU's booking site. Unfortunately, it is not working well!! Only available in Serbian (?) and lists price in RSD! :)
      As for it was Blue or Red or whatever fare, I do not know, since it was not written nowhere....

      Delete
    8. JU was never able to have a proper functioning webpage. I am constantly experiencing problems when booking. Up until year ago I was regularly forced to call their customer service which would then find my booking and execute payment!

      Delete
  20. I'm actually supportive of this. It's the way the wind is blowing in the aviation industry and it is what people (not avgeeks necessarily) but the general public wants.

    ReplyDelete
  21. I am writing the same thing as for JU other day - sad development, but only when it comes to food and drinks.
    1. Charging food and drink degrades the brand and savings from not serving cup of coffee, coke or water together with nicely packed snack are minimal
    2. Charging for seat assignment is fine but should be only offered to passengers with cheapest fares.
    3. Checked baggage fee has now become the norm in Europe so no problem with that. It is the segment that really costs extra money as you have to pay to ground handling services in both O&D airports.
    4. Pay to think option is great!
    Overall, they should have sticked to LH standard at the moment. Cheapest fare (drinks and snacks included but no seats assignment and baggage) / for 20 eur more per segment one gets seat and one peace of luggage / flexible ticket which is expensive. Hope they reconsider and streamline the offer a bit.

    ReplyDelete
  22. This is all still peanuts compared to Adria who not only introduced this years ago they have now also installed seats into their planes with no recline! Talk about low cost.

    ReplyDelete
    Replies
    1. Now that's just low.

      Delete
    2. Again who needs to recline a seat on their flight when 98% last 2 hours?

      Delete
    3. No recline? Pls dont lie

      Delete
    4. Not lying at all.

      https://i.imgur.com/WiESRs9.png

      Delete
    5. Non reclining seats are actually the good thing. It is so annoying when somebody recline the seat in front of you in a packed plane.

      Delete
    6. I agree. Especially since they fly short flights there is really no point in reclining your seat.

      Delete
    7. There is a great difference between having seat in front of you reclined on short European flight of 2h when you are trying to get some work done(30" pitch), and flying 8+ hours with 34" pitch when everybody sleep for a big part of the flight.

      Delete
    8. 34' pitch? Unless you are flying premium economy you are not going to get it. Austrian Airlines' B763 have 30' pitch!

      JU has 32. LH has 31.

      Delete
    9. OS has the slim seats though, so you actually have more space not less.

      Delete
    10. The seats on their B763 are not the classical slim seats, they are more robust. On top of that, can you imagine the horror of sitting on a slim seat for like nine hours.

      Delete
  23. Who cares about a meal? Their longest flight is LED right?

    ReplyDelete
    Replies
    1. I do. Not because I'm hungry but because I'm going to be getting less for the same price. I wouldn't have a problem if prices go down.

      Delete
    2. We we still haven't seen their fares under this model so let's wait.

      Delete
    3. Considering Adria and Air Serbia have no reduced fares under this model I highly doubt Croatia Airlines will. All three are in the same league.

      Delete
    4. This is typical of Balkan people. On a bus journey of 2 hours they pack food like nomads going somewhere for ages.

      Delete
    5. Yes but now you can't even bring your own water onboard ... which is something you can on a bus.

      Delete
    6. TLV and LIS are longer than LED. Not sure about DUB to come. They also have RAK (Marrakesh) charters, those are actually the longest

      Delete
    7. Ok thanks, but still none of the routes are that long that a person can't live without a meal. They can eat at home before the flight or pack some chocolate with them.

      Delete
    8. exactly anon at 10:30

      Delete
  24. May the Schwartz be with you: https://imgur.com/gallery/EzrDd

    ReplyDelete
  25. Amadeus must be making a lot of money by selling these programs to airlines.

    ReplyDelete
  26. Another legacy carrier turning into a hybrid monster.

    ReplyDelete
    Replies
    1. They have to find a way to effectively compete against LCCs.

      Delete
    2. The best way to compete with LCC is to have mid range prices for good and standardized/classical product people are used to when flying national carrier. If you never offer a segment for less than 60 but never for more than 200, plus control costs diligently you can run a successful business model.

      Delete
  27. The charge I hate the most is seat selection. I understand that you charge extra for exit row but charging extra for all seats in the place is just crazy.

    ReplyDelete
    Replies
    1. +100
      Charging a fee to select for example a middle seat is nuts.

      Delete
    2. Like Wizz Air which doubled their charge in just a year. Before they charged around 600 Dinars to sit in the rear section while now it's around 1.400!

      Delete
    3. I can kind of even overlook that since it's an LCC and you expect these hidden charges from them all the time. But airlines like OU, JP and JU charging for things like this is not on in my opinion, especially with their fares.

      Delete
    4. JP dosent charge for seat selection

      Delete
  28. I think this is a good plan and way form the future.

    ReplyDelete
  29. Good luck Croatia Airlines.

    ReplyDelete
  30. I'm not very surprised about catering. Croatia Airlines already offers an additional menu you can order from for a charge. I never understood that they had both a free snack and this buy on board menu. Always thought it was a matter of time.

    ReplyDelete
    Replies
    1. Well that's not such a bad thing. It means their crew have had time to get used to working with on board purchases and also passengers are better prepared for a transition like this.

      Delete

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.