Air Serbia has confirmed it will be reducing its headcount and is considering other measures as the airline transitions towards a hybrid business model. It comes just days after its part-owner, Etihad Airways, posted a 1.87 billion dollar net loss for 2016, fuelled by the underperformance of its equity partners (primarily Alitalia and Air Berlin) and one-off impairment charges. The Chairman of the Air Serbia Supervisory Board, Siniša Mali, said yesterday that thirty employees have been made redundant in its commercial sector. "This is part of a business plan which will boost profitability. All of these measures are standard and part of a process where you try to reduce your losses on one side, and increase profits on the other. Air Serbia is a stable company. We have improved in all metrics compared to last year, both in profitability and passengers carried".
Local media have reported that further redundancies are expected among the airline's flight crew. Mr Mali added, "We are working on outsourcing ground handling and catering in order to reduce costs and increase revenue". Asked whether the carrier's New York service, which is believed to have put pressure on finances, could be cancelled, Mr Mali answered there are no such plans as the route has proven popular with passengers. As part of its internal consolidation measures, Air Serbia will also close its retail stores in Novi Sad, Niš and Užice in Serbia in the coming days. So far this year it has also suspended several routes, refitted its narrow-body Airbus fleet with slimline seats, reduced its on board catering offer and introduced ancillary revenue streams such as a Belgrade Airport check-in fee and Premium Lounge passes at a fee for economy class passengers or those flying on other airlines. The carrier also plans to lease out three Airbus A319 aircraft over the winter.
In a statement issued yesterday, Air Serbia said, "It is true that a number of changes are taking place at Air Serbia with the aim of achieving a more economical business, bigger savings and increased profitability in a very competitive industry, which faces numerous challenges. This is not only occurring at Air Serbia but at a number of airlines worldwide. The rules of the game are changing and the ones that best adapt to them will come out successful". It added, "The consolidation measures will contribute to better organisation, in addition to the optimal use of human resources and savings. The aforementioned measures will in no way affect the timely conduct of business activities and will not impact on the quality of service offered to guests". Furthermore, the airline drew attention to its stronger operational performance for the first half of the year.
Air Serbia rebuffed media reports that the airline is in the process of becoming a low cost carrier. It said, "Air Serbia is not transforming into a low cost company. Air Serbia serves and continues to serve primary global airports, such as JFK in New York, Heathrow in London, Charles de Gaulle in Paris and others. Low cost companies mostly use smaller alternative airports. Air Serbia also boasts a state-of-the-art Premium Lounge at Belgrade Airport, the best in the Balkans, which is not the case with low cost airlines. Air Serbia has its own frequent flyer programme - Air Serbia Etihad Guest - which now counts over 110.000 members. Low cost companies fly from A to B (point-to-point), while Air Serbia offers tickets to 42 destinations via its hub in Belgrade, as well as hundreds of other cities through its codeshare partners. Therefore, Air Serbia cannot in any way transform into a low cost company".
Comments
(amongst AirSERBIA)
Some people were even claiming that Singapore Airline's business strategy should be ASl's target!!!
Millions were thus spent on things like the business class product, catering, Wi-Fly, new lounge in the hope that there were enough flyers willing to pay extra for these things and make them a worthwhile investment.
Of course they weren't and a 180 degree turn of the business model became necessary.
All the investments on the "boutique" concept wasted and instead new investments on a far more fitting strategy of cutting costs and giving passengers what they actually want, CHEAPER TRAVEL!
The problem is that the company has way too many employees for its fleet, leasing contracts for A320s and in the future A320 NEOs that are expensive.
It can not offer people CHEAPER TRAVEL like W6 etc because its cost base is too high.
And there is the elephant in the room, the single A330-200 lease and the prestige flight to JFK.
Too expensive lease for a 10 year old aircraft flying a route with massive competition from big airlines for garbage wields.
All happening so that some politicians could brag about connecting Serbia to the the United States to the type of voters who when they are near an aircraft look under its belly to see if its a boy or a girl!
To me, this is low-cost-ish.
Couldn't agree more. Drastic measures although I suspect necessary for an airline that is 'supposedly' profitable.
Interesting times ahead for Air Serbia and I wish them all the best. FFS get rid of the A330 asap!
They could just put someone on the self check-in kiosks assisting people with their checking n and be done with it. Not make people pay so much money for a "service" that costs nothing to the airline.
LOL, why then are they abandoning their strategy from 2013 and gong to the completely opposite direction?
You wouldn't abandon an investment if it was successful and respectable, woulds you?
And instead offer some subsidies to either EW, DU or LO to fly it and fully codeshare with JU on it to provide feed to its network.
The subsides to the foreign carriers should be less that the loses JU currently has on this route.
Win win situation and it could be replicated with other destination in North America such as Chicago, Toronto, Montreal.
i am hoping that when Etihad decide to leave ASL (and this is a matter of when, not if) HNA will take its place.
I think the Chinese would be a much better partner-investor to make ASL competitive and successful in our market.
Just my 2cents.
The right airline with the right business model at the right price point for Serbia
This is stupid. First it took two years to introduce web check-in, now they charge it. Even some low-costs don't charge airport check in and/or seat selection.
But what bugs me the most is how some of people here still find a way to make this seem normal for a legacy carrier.
They add nothing to the conversation but praise for Dane and labelling anyone who questions his decisions as haters.
They obviously made a risk they cant remove the route now, halfway thru, thry need to wait until its profitable and until them they are cutting unnecessary costs, i think its a smart thing.. imagine when NY becomes a profit. Suddenöy they can afford really good expansions.
JU can rely on Europe to survive and adapt to the European model - less freebies, paid checked luggage, more connections with the bigger boys instead of the NYC route.
The A330 should be sent back to India where it belonged and JU should focus only on the current fleet.
They should apply the BA model to survive, this is the only way out.
It will be difficult to compete with the same/similar model without the scale. Very few people will fly frequently enough to ever see the benefits of airmiles. Not quite sure if lounge makes such difference since other passengers can purchase the access.
I can see Wizz, primarily, but potentially Ryan stepping in.
LCCs have uniform fleet of new aircraft with high seating capacity and a complete reliance on technology. You can buy a W6/FR/EZY ticket, check-in, buy extras, everything from your phone.
If you're going to overhaul a business, do it once and do it right. Half-hearted measure only end badly for the reasons you state. Sure, the employees will resist, but ultimately it's their own jobs they'll be losing in a few years when the cash dries up. Aviation is harsh, you have to adapt to survive. Wizz Air isn't going to stop at 2 aircraft in Belgrade.
Sounds a lot less funny than "Air Serbia, the new wings of Europe" to me.
It is stupid reading those comments, painfully stupid. Web check in is free.
Not 179 or 185 degree, but 180? Wow. That would mean getting rid of well groomed, attentive and smiling FAs and going back to previous service level? 180 turn would also mean removing wi-fi and streaming media, painting planes in white livery, leasing 737 from Bulgaria, removing web-check in and other online services, shutting down Lounge at BEG, closing routes to BEY, TLV, VCE, ZAG, LED etc, list goes on and on. Is it really 180 degree change in strategy or minor correction to reduce costs, just like most other airlines did or are doing? Just a rhetorical question.
Good ideas, but lowcosters have P2P only, lack is transfers is cost advantage for them. W6 will have high density A321NEO for CASK advantage over A320NEO. Airport fee and discount policy will have to remain instrument of choice.
the result ?
Their H1 results - released yesterday - show improved profitability to inexcess of GBP750m.
Go for it Air Serbia. make the necessary changes to improve your business and worry not about all the experts here who have all previously held senior airline positions
Storm in a teacup....
Just out of curiosity, humour me somewhat and tell me/us why you think they are fighting for their survival ... I can't wait to hear this expert aviation view
They more than doubled the number of pax they have; they were solely responsible for the rebirth of BEG airport - the benefit of which will shortly be seen in the price that the govt gets for the concession; they tripled the size of the fleet and they completely remade their product offering.
if this is off, then all of the ex-yu carriers could use some of the same
http://ir.airberlin.com/en/press/pressreleases/2017/07/28_airberlin-continues-growth-and-introduces-flights-to-Canada
Daj neki dokaz.
http://www.b92.net/biz/vesti/srbija.php?yyyy=2017&mm=07&dd=24&nav_id=1285982
Americki ambasador "Skot je rekao da uvođenje direktnog leta "Er Srbije" za Njujork predstavlja veliki uspeh za Srbiju i da se nada da će na sličan način Srbija biti povezana i sa drugim destinacijama u Severnoj Americi, kao što su Čikago i Toronto"
Wizz does exceptionally out of Skopje. Has a market share of 89% and is a massive contributor to the Macedonian economy
Air Serbia on the other hand is diminishing in size and I question if it returns a profit or is the shortfall propped up by the Serbian taxpayer?
Just to give you a bit of perspective and reality. Air Serbia added $1 billion to Serbian economy in 2016. Air Serbia provided 13,230 people with employment and added $210 million to the Serbian economy through its core operations including expenditures on fuel, maintenance costs and local Serbian suppliers. This includes 1,650 direct jobs at Air Serbia in Serbia, 5,450 indirect jobs supported by the airline’s procurement of goods and services and 6,130 additional jobs supported by staff spending their wages in Serbia. Air Serbia carried 550,000 international visitors, predominantly from Europe and North America, to Serbia in 2016. It supports Serbian events in the diaspora, sponsors events in Serbia. Finally you would be surprised how much cargo from Macedonia is carried with Air Serbia (not Wizz). Each Sunday Air Serbia upgrades Skopje afternoon flight from scheduled ATR to Airbus 319 not because they sell seats to fill an Airbus but because there is a lot of cargo.
A320
LX2512/30 11/165 (-3) ver: 12/162
LX2513/30 12/157 (-1) ver: 16/156
I am aware it's July, but this is hell good loads.
I have to notice you failed to address all three key issues Anon at 6:39 raised in the second sentence. There is no need to have civilized conversation unless you can address all three. Wizz will continue to be poor choice for Belgrade market.
http://www.exyuaviation.com/2017/07/air-serbia-steps-up-internal.html?showComment=1501343265610#c3166538041008733667
This is an extremely bad and desperate move by the CEO
Yes, let's bring back all these commy "jagnjece brigade" CEOs instead of eeal CEOs for the 21st century
How dumb do you have to be to keep repeating this lie over and over again? Online check-in is absolutely FREE for all fares. Airport check-in is also FREE at all airports other than BEG. It is also FREE in BEG for all fares except lowest economy class fare. It is also FREE in BEG for the lowest economy class fare when you are standing in line and Air Serbia ambassadors in white shirts and Air Serbia caps will approach you to check you in on their mobile phone for FREE. Fee is there only if you absolutely insist on paying it. There, if it's not clear now - you just can't fix stupid.
Growth in pax, planes, LF, revenue and profit, praise by ATW (Market Leader), CAPA, Skytrax, experts... they are all wrong? All of them? You are entitled to ignore the reality. Enjoy the soltitude.
For Serbia JU is too demanding to operate...unfortunately...
Also Etihad received awards yet look at the mess there