 |
| Wizz Air records Belgrade passenger growth in spite of reduced operations |
Low cost airline Wizz Air has recorded an increase in passenger numbers at Belgrade Nikola Tesla Airport during the first half of the year despite a spat over fees and charges, which have seen it steadily reduce operations from the Serbian capital since May. The budget carrier handled 217.978 travellers on flights to and from its Belgrade base, up 13.6% compared to the same period last year. As a result, Wizz Air maintains its position as the second busiest airline in Serbia ahead of Lufthansa (down 8.4% on last year) and Montenegro Airlines (down 7.5%). However, the no frills airline has seen its passenger share decline slightly from 12.7% in the first half of 2013, to 11% this year.
Over the past six months, Wizz Air has been involved in a much publicised quarrel with both Belgrade Airport and the Serbian government over fees, benefits and protectionism. The airline cancelled its flights from Belgrade and Charleroi in May and rebased one of its two Airbus A320s from Belgrade to Riga. However, Wizz Air has introduced new flights to Larnaca, which are to be maintained during the winter season as well. In April, the airline said the Serbian capital had become the most expensive in its network and announced a cut in capacity of 130.000 seats during the year with 700 fewer flights operated this year as a result of the airport’s decision to increase fees. Earlier this month, the airline said it was monitoring the situation in Belgrade, noting its continued presence in the city has been put into doubt and that its growth plans for the country have been undermined.
Wizz Air opened its first operating base in the former Yugoslavia in Belgrade in 2010. Last year it handled 480.000 passengers to and from the city. The airline has gone on to open a base in Skopje as well, which has now surpassed Belgrade in both network and fleet size. The low cost airline is now considering basing an aircraft in Tuzla in Bosnia and Herzegovina and launching up to seven new routes from the city, which could further affect its operations in Serbia.
Comments
However, Budapest was desperate after Malev's collapse and Riga was worried because airBaltic's future seemed uncertain.
Prague (11,0 million pax)
Warsaw (10,7)
Budapest (8,5)
Bucharest (7,5 million)
Riga (4,8)
Sofia (3,5)
They all look like little villages compare to Belgrade, Nebaska Metropola of the World...
...not to mention some of the airports they are flying to like Tel Aviv, Istanbul, Cologne, Thessaloniki, Bologna, Rome, Lisbon, Moscow, Madrid, Barcelona, Geneva, London Luton, Glasgow...
Prague (11,0 million pax)
Warsaw (10,7)
Budapest (8,5)
Bucharest (7,5 million)
Riga (4,8)
Sofia (3,5)
They all look like little villages compare to Belgrade...
...not to mention some of the airports they are flying to like Tel Aviv, Istanbul, Cologne, Thessaloniki, Bologna, Rome, Lisbon, Moscow, Madrid, Barcelona, Geneva, London Luton, Glasgow...
4 months letter:
Wizz - cut 50% capacity
Germanwings - totally leave BEG
Lufthansa - cut frequencies
Swiss - cut routes and frequencies
Turkish - cut frequencies
Belavia - cut frequencies
EasyJet - will terminate Rome and Geneva
...and by contract with Etihad, Belgrade cannot give bigger discount to any company more than to Air Serbia which must have more at least 50% discount to all services + Serbia is paying 50% of the price of petrol in NIS.
Da je bilo fizički moguće, oni bi dodali još dva aviona ove godine i ispunili kvote AIP uslova sklepane za Air Srbiju. Tek bi se tada digla buka. Ali nisu ni oni ludi da se takmiče protiv nameštene situacije, videli su koliko je sati i napravili sasvim logičan biznis potez. Još kad bi neko u Srbiji razmišljao dalje od nosa.
- Wizz has more pax and more operations in BEG compared to the first half of 2013
- Swiss also has more pax and more ops
- Foreign carriers in total have more ops
- decline of LH and its babies did not affect anything
... and by contract with Etihad, Serbia agreed to negotiate with NIS a 50% discount for INTO-PLANE DIFFERENTIAL. Now, into-plane differential is NOT the price of fuel. Learn what it is and then you may feel better.
(and NIS agreed to cut the into-plane differential by 50% so the government will pay NOTHING there)
"Poor airport" that had to slash its prices for Air Serbia saw its NET PROFIT in first half of 2014 rising 15 TIMES or so. Revenues are 30% up and they have 1M new pax.
Now go and pity Wizz and Germanwings, and cry about the doom Air Serbia brought to the entire region. Whatever rocks your boat.
They opened their first base in Poland and then they concentrated on expanding all throughout eastern Europe where local carriers could not cope with the neo-liberal economic policies imposed on these lands by Western countries. I am sorry but I am not buying this whole argument that they are leaving because the airport is expensive. They are leaving because Jat Airways is no more and it's much more difficult to compete now.
And some of their other marketing strategies are beyond me...
However, I wish them good luck and all the best on Serbian market.
Germanwings "totally" left Belgrade. Yes, first they cut Koln/Cologne 2.5 years ago, before Air Serbia even existed. Then they held Stuttgart with prices that were nowhere near low cost.
Swiss - they reduced Geneva routes because of easyJet and Etihad regional, not because of Air Serbia, since Air Serbia did not fly Geneva route at all!
Turkish did cut the frequencies, but due other reasons. Mainly because there was an interstate agreement between Serbia and Turkey that calls for reciprocity in frequencies. Serbia knew that it cannot have as many frequencies as Turkish and Pegasus, but they both agreed that Turkish reduces frequencies for a little bit, just to make it more equal.
You are talking about Lufthansa. Hm... Do you really think that Germany would allow any systematic disadvantages imposed to Lufthansa, especially by their beloved Vucic?
OF COURSE some of the airlines, especially ones who have competition on the same routes Air Serbia flies, will get affected by 70% increase in operations and insane prices dumping! Especially now when Air Serbia orientates towards transit pax, those very same that use Belgrade to travel to LH destinations like Frankfurt for example.
And of course Belavia can hardly compete with Air Serbia on Budapest route since Belavia has two or three weekly departures while Air Serbia has seven, plus, as I said, with dumping prices. They will rely on its Minsk segment and if that is enough to get sufficient amount of pax, they will stay here.
So again, if you really really think that if a flag carrier of a country boosts operations for more than 70%, that it should not reflect to prices, routes and frequencies of other airlines that fly to that airport, then you should check some economy books before you start commenting here.
Problem is that Air Serbia has 50% discount to all prices in BEG + some of free services + 50% by NIS + subventions by Government of Serbia.
In same time BEG does not recognise traffic of some other companies like LH group, Wizzair, Turkish... in percentage which should give them privileges not as big as to Air Serbia but at least in percentage they have in BEG traffic. By this policy other companies cannot be competitive to Air Serbia, and they have no alternative but to cut frequencies, routes or even to leave Belgrade.
At the end, Air Serbia will take 80% of traffic share, will almost kill al competition and then will raise prices to heaven.
INN
Even if your extreme scenario ever comes to fruition, isn't monopoly/high price environment exactly the breeding ground for LCCs? Especially with purchasing power as is in Belgrade catchment area, having dominant and (as you predict) expensive legacy carrier focused on transit passengers should be ideal opening for more O&D focused LCCs out of BEG. To me, it looks like market will allow both types to have their niche at BEG.
Even with that joke there are 4 bases much MUCH bigger than BEG. Compare to PRG, WAW, OTP and BUD, BEG is just little provintial airport. So you are right BEG can nit compare to them.
Budapest: their massive expansion started there once Malev collapsed. The airport was desperate for more airlines to step in and fill the void. The situation there is very much different than in Belgrade. Not to mention that Wizz Air IS a Hungarian airline.
Prague: CSA is a joke, not an airline. They suspended so many routes among which were London, Athens and Geneva. They are also selling their 6 A320. All in all, the Czech market is less competitive than it should be. Wizz Air just used this opportunity.
Buchrest: It's the only market where they are fighting and actually winning- then again neither Tarom or Blueair are really that strong.
Why isn't Wizz Air flying in the West? When I say flying I mean having a base there and actually offering flights the same way they do in the east. Simple reason is that they can't. Competition is too strong for them. They are you classical bully. The spot a weak kid and then they go after them. That's why I am happy they are slowing starting to pack up and getting the hell out of BEG.
So no. The airports you mentioned there do not make Belgrade seem like a provincial airport. Ok, only Warsaw could it. Hardly any of the other three could- especially not Budapest. It's a low-cost central.
INN
He tweeted his solution for JAT sale: “Potrebno je popisati imovinu i dugovanja, koja se onda konvertuju u kapital, i tako se traže investitori. Čisto.”
In other words, valuation and 1:1 debt/equity swap with risk sharing. Why would any reputable investor make a deal under those conditions, after previous repeated failed attempts to sell JAT, after decades of loss making and bad, politically influenced management in a high risk country with a high corruption index? Previous potential JAT investors had experienced M&A experts on the team and were fully aware of this standard “clean” approach and yet failed to make an offer. So his plan would not sell JAT.
How good is his plan if it doesn’t sell the company? Might be good for his political ambitions but he is clearly a bad salesman and a poor negotiator. JAT would continue to be a cash sinkhole for taxpayers. Better option than his solution (or bankruptcy) had to be found, and Etihad offer seemed to be the best market would pay. As Chester Karrass said: In business, you don’t get what you deserve, you get what you negotiate.
How much was JAT debt? He said in a tweet: „Naša procena je da preuzete obaveze od JATA iznose preko pola milijarde evra.“ He never even bothered to produce detailed breakdown of how he came up with that number. Same with valuation: „Procenjena imovina JAT-a je preko 200 miliona dolara. Vrednost slotova je 80 miliona.“ Never stopped for a second to back it up with facts and detailed breakdown of his own analysis. Slots around the world he mentioned in AJ interview? Never bothered to follow up with a single fact. Worst of all, he repeatedly fails to recognize JAT debt would be still be there (and inflating with every passing day) even without Etihad deal, and therefore must NOT be counted against deal value. Under the circumstances, historical JAT debt repayment should not be expected for Etihad to carry out and share the risk.
He was already asked by twitter critics: „Jel mozete da napravite cost-benefit analizu?Jel moze da se proceni vrednost EY sistema, podrske i know-how“
He refuses to provide his own detailed cost-benefit analysis of the deal. He also refuses to look at similarities with Alitalia-Etihad deal where some investors had to take at least 30% haircut and where Eithad also got 49% of ownership for less than 49% of investment.
In case of Air Serbia, he refuses look at the bigger picture and describe long term benefits of the deal. WTTC/Oxford Economics analysis, although slanted, does hint at significant benefits for Serbia’s economy as a result of the deal. Other independent industry experts also point at turnaround at Air Serbia as a driver of economic growth.
He refused to recognize responsibility for debts and mismanagement that occurred at JAT before 2012, blaming it all on current government. He refuses to recognize massive increase in passengers and revenue at Belgrade Airport and ecosystem of service industry around it, and fails to recognize professional management effort at Air Serbia that clearly creates value.
If it was up to him, he would probably block Tito’s famous offer to McDonnell Douglas in 1971 to barter Yugoslav ham and mineral water for DC-10. In hindsight, that offer enabled global growth of the most important airline in the region.
It doesn’t take a lot of vision to recognize potential Air Serbia has with Etihad deal, so future successes of Air Serbia will be measure of Sasha Radulovich’s failure as an aviation expert, salesman, economist and ultimately political figure.
Prague - CSA is joke. True. But Travel Service is not. They took most of CSA routes and now have code-share on those. And there are 70 more airlines that Wizz has to compete there!
Budapest - it was Wizz base with some 20 planes much more than Malev get bankrupt
Why Wizzair does not have base in Western Europe? Because East Europe is where they have business, they are East Europe specialist. And for sure it is much harder to work in some banana states they start to fly. The same question you can ask for Germanwings which does not have base out of Germany, and Transavia without base out of Netherlands and France. But to say that they don’t fly a lot to west is at least not serious. For example in London Luton they have more than 30 destinations (without base) and they are biggest company there after easyJet.
omparable to 90% of Wizz bases. And that is not true in case of PRG, OTP, WAW, BUD, SOF...
Prague - CSA is joke. True. But Travel Service is not. They took most of CSA routes and now have code-share on those. And there are 70 more airlines that Wizz has to compete there!
Budapest - it was Wizz base with some 20 planes much more than Malev get bankrupt
1. during his time in the ministry he didn't do anything concrete.
2. he expected to enter the parliament, we all know how well he did.
3. he is gasping for air, trying to get some publicity so that he could remind the people he actually existed/exists.
Good post though.
I hope they launch Hamburg, that's a large market left unserved.
I would love if they would launch Paris so as to finish off Wizz Air and their pathetic two rotations to Beauvais.