LCCs eye new Macedonian subsidies

European low cost carriers (LCCs) are assessing new opportunities in Macedonia as the country prepares to launch a tender later this month to stimulate budget airlines to introduce new routes to the country over a three-year period. It will be the third time that Macedonia will be offering incentives to no frills carriers, following the policy's success in 2012 and 2015, from which Wizz Air was the sole beneficiary. However, the exact terms and conditions of the upcoming tender are yet to be finalised. "A public call will be announced very soon, where all interested low cost airlines will be able to apply. They will receive state support for the launch of unserved routes. We are currently analysing the funding model and drafting the conditions of the tender", the Minister for Transport and Communications, Goran Sugareski, said.

Wizz Air is in prime position to apply and collect the latest round of state subsidies, which have been valued at 1.7 million euros. The low cost airline, which dominates in Macedonia with a market share of over 50% and with 1.8 million seats for sale from the country this year, has put a greater emphasis on Ohrid recently. This is in line with the government's policy to generate passenger growth at St Paul the Apostle Airport, with Mr Sugareski noting that the focus of the upcoming state support for LCCs will be on the development of traffic at Ohrid Airport. Apart from the planned launch of flights from Vienna to Ohrid this November, Wizz Air is also upgrading its seasonal summer service between London Luton and the lakeside town, which will now run twice per week throughout the year.

Norwegian Air Shuttle, which has been expanding rapidly over the past five years, said, "Macedonia is definitely of interest to us in the future. We always explore the possibility to add new destinations to our network. This is a very important market for Norwegian. We’ve had scheduled flights to the Balkans since 2004 and our presence and network has grown every year". The no frills airline currently maintains year-round services to Belgrade, Zagreb, Pristina and Sarajevo, as well as seasonal flights to Dubrovnik, Rijeka, Pula, Split and Tivat. On the other hand, easyJet has said it is unfazed by Wizz Air's expansion on the Macedonian market and will only launch flights to the country if there is sufficient demand. “easyJet is focused on its successful strategy to expand across Europe and operates in the best interests of the company and its customers ensuring the attractiveness of its network. This means the airline concentrates its efforts on maintaining and developing routes which prove popular with passengers. We consider competition only in regards of tactic opportunities that can be complementary to our strategy”, the airline said.

In 2015 Ryanair confirmed it would introduce flights to Skopje and noted it was negotiating with the Macedonian government over a range of routes. This was quickly followed up by Wizz Air announcing several new services to Skopje from Ryanair bases. Ultimately, Europe's busiest budget carrier shelved its plans to enter the Macedonian market. The CEO of Turkey's TAV, which runs Macedonia's two airports, Sani Sener, recently said that despite being a Wizz Air stronghold, there is room for more low cost players in the country. "Skopje is already a successful Wizz Air base, but we think there is considerable opportunity for more low cost operators", Mr Sener said. Commenting on Ryanair's shift towards the east, the airline's Chief Marketing Officer, Kenny Jacobs, noted last year, “It’s going to be more Ryanair and Wizz going head to head. It’s going to get harder [for Wizz], given our scale, our cost advantage, and our fare advantage. It’ll be an interesting scrap in the coming years”.

The Macedonian government has said that the upcoming tender to stimulate low cost airlines to launch new routes to the country will be fully transparent.