Macedonia annuls airline subsidy tender


The Macedonian Ministry for Transport and Communications has, for a second time this year, annulled a tender for the granting of financial support to an airline in order for it to launch new routes between 2019 and 2021. Wizz Air, which has benefited from similar financial incentives between 2012 and 2018, was the only carrier to apply. However, the Macedonian Minister for Transport and Communications, Goran Sugareski, said the budget airline did not comply with the terms and conditions outlined in the tender brief. According to the rules, the selected carrier had to establish and/or maintain a base with at least one aircraft in Skopje or Ohrid by January 10, 2019 at the latest for the duration of the financial support program. Furthermore, the carrier in question had to launch at least two new routes from Skopje by January 10 and four new routes from Ohrid, the first two in January 2019 and the rest within a year of being granted state support.

However, Mr Sugareski noted, "The tender rules clearly state that an airline is obligated to introduce two routes from Ohrid by January 10, 2019 and two more within a year of signing the contract. Wizz Air offered to introduce all four destinations in August 2019. As a result, the tender commission concluded that the conditions of the public call were not met and recommended that this public call be annulled". The government will launch a new tender under the same rules as soon as possible. A similar public call held earlier this year was annulled after the single bidder allegedly failed to clearly write its address on the submitted envelop. Mr Sugareski denied media reports that the tender was being fixed for Albania's newly launched national carrier Air Albania, which is yet to introduce scheduled flights after taking delivery of a single Airbus A319 aircraft from its part-owner Turkish Airlines. Air Albania does not meet the tender requirements.

During the first three quarters of the year, Wizz Air handled 1.098.511 passengers on flights to and from Macedonia, resulting in a passenger share of 60.3%. Among low cost carriers operating to the country, Wizz Air holds a 92% share. The Macedonian market has emerged as having the largest share of passengers handled by low cost carriers in Europe. Some 65.6% of those travelling to and from the country are carried by no frills airlines. Despite having the largest share of passengers handled by low cost carriers, neither of the three busiest LCCs in Europe - Ryanair, easyJet and Norwegian Air Shuttle - maintain services to the country.

Comments

  1. What a shock...

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  2. Make room for Air Albania :)

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    Replies
    1. Do you see them transporting 10 mil pax over night?

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    2. No, but I see tender requirements change

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    3. In that case, you can expect Adria & the likes more than happy to come knocking on the door as well.

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    4. And what if tender would say: Carrier of his owner must have at least 10 million passengers?

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    5. AirAlbania replacing Wizz as de facto national carrier of Macedonia?!

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    6. @9.23 if you read, he says tender requirements will be exactly the same.

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    7. The Air Albania crap is just a story concocted by the opposition party and their media. Same way how they made up that news that Aegean Airlines withdrew their application to fly to Skopje.

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    8. exactly the rightwingers press

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    9. The opposition party or more likely foreign-financed propaganda channels. God knows the Balkans is such a ripe territory for just that type of 'product.'

      'Suspicion is enough, no proof required' mentality.

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    10. wait til b92 copy and paste it again

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    11. They already did! haha

      https://www.b92.net/biz/vesti/svet.php?yyyy=2018&mm=10&dd=17&nav_id=1457126

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    12. hillarious!

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    13. Air Albania the national carrier of Macedonia?? lol

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  3. What the Ministry seems to fail to understand is the basics of airline business.

    You can't expect somebody to be at your call with a 3 months notice for such an investment, especially when there's only a handful - and in this case only one - interested parties.

    It is the most basic business planning - due to a number of reasons, both operational and commercial, planes are already allocated 9 months in advance. No airline is going to wait around for Macedonia's new government to learn how the business works, especially if they're not willing to listen.

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    1. Agree with you but what's the solution? I don't see the government's end game here. They will just repeat the same tender with the same results.

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  4. First off, no other LCC will embark more aggressively, because this is Wizz's territory. Government should have thought this one through and should have diversified the airline structure much earlier. Off course, should they have done that, this client would not have been growing at a rate of 20% for 5 years i a row. Nemozes biti jeben i pošten. Simple as that.

    Secondly, no tender ultimatum will do a difference. One Wizz will unlikey bow down to the tender rules of single small market. It has plenty of markets where they can exercise their policy.
    Now, if SKP is a money making machine, that would have been different.

    From what I heard among people in TAV, they are not happy with SKP in regards to the finances.



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    1. +1

      However, TAV are the last ones to be trusted. They've milked that cow way beyond their initial ROI assessment and are just greedy for more.

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    2. Petar, what do you mean by TAV are not happy with SKP in regards to the finances? What finances?

      It's not clear to me as a reader what you mean by this point.

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    3. I would also say that Wizz Air has milked the cow and are just greedy for more. What? They can not open a single new route without being given money from the government?

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    4. @09:47

      +1'000. Something I said in 2012 and is still valid, even though nowadays the law of diminishing returns kicks in. Back then it was way too obvious.

      However, put yourself in their shoes. Why would they launch anything if they know nobody else is interested, there are no obvious picks and the money's lined up in any case? The only time they did it when Ryanair was sniffing around and they launched CPH, BTS and SXF.

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    5. That means, in order to work with a traffic stimulating LCC you have to lower your charges to such a level that you won't be able to make any money. Most probably the airport was making more money with 700k passengers before Wizz.

      Worst part is (which is likely to start soon according to these news), once such LCCs occupy a significant share of the airport's traffic, they start to blackmail the airport, tourist board etc. either to maintain the initial financial support received, or to increase it. Then it becomes the story of a frog in boiling water. In order not to lose half of the existing passenger traffic, airports tend to bow to pressure, until there's no money left to feed the hungry beast. But SKP is operated by a big holding, it'll be interesting to see the clash.

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    6. Sorry, but now you're just speculating :( I'm not saying the reasoning is bad in theory, but it mostly applies to Ryanair way of doing business, and not to this particular one.

      In reality other airlines are still paying the original list charges and Wizz is still paying a pretty high level because TAV won't give any significant volume discounts because they claim Wizz don't need any due to the gov't stepping in. Hence they pocket most of the cash from the subsidies. And they (TAV) have otherwise no leverage beyond local political arm twisting. They're actually just a bunch of greedy Turks who, as we say, have found a village with no dogs in it..

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    7. @anon 9:20
      Quoying one manager from TAV that I briefly spoke to..."while the traffic volumes are increasing at SKP, financial KPIs are not good."
      It was not an appropriate time nor place to discuss more...


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    8. Oh, don't get me wrong. I believe you 100% that they said that.

      It's just that evaluating financials can depend on the benchmark. It can be the original ROI, it can be year over year growth expectations, or similarly it can be the 2018 budget. I know for certain that by the first criteria SKP is an overwhelming success. But it might not be for the 'here and now' criteria, which is where the greediness kicks in.

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    9. Thanks for the follow-up Petar.

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    10. Tell me those new destinations proposed by wizzair

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  5. Mr Sugareski let me help you out. What he meant to say was that "the tender rules clearly state that Wizz Air applications must not be considered."

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  6. What's going on here??

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  7. Love affair with Wizz officially ended?

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    1. My thoughts, too.

      If I were MK Gov I'd be careful fooling around with an operator that has more than 60% market share in the country. Be warned, W6 will not have made 100s of millions of Euro investments that 'Tranquilis' informs us about and then be pushed around. They will use every means at their disposal, judicial and commercial, to protect their market and more importantly their investments.

      I found it preposterous that the previous tender was cancelled. In my opinion, it could have been a strategy of the MK Gov to open W6 offer and then reach out to FR/U2 and say "here's the offer you need to beat. Can you improve on that?" It appears that the answer was no, but they still won't take 'No' for an answer.

      It's not clear what can the MK Gov achieve by cancelling the second tender when launching the third one will anyhow push the new route opening dates towards the end of the summer season schedule anyhow. What is clear, however, is that W6 and MK Gov do not seem to be talking or at least agreeing on much.

      Nicht gut.

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    2. :)

      Cute.

      I find none of what has transpired surprising.

      The news of any disturbance in the force have been greatly exaggerated ;)

      I can only agree on the last point, which is that the MK Gov and W6 do not seem to be agreeing much. But then again, Mr. Sugareski has made a statement that he doesn't intend to develop relatioships with companies applying to their tender(s). A man of principle or something else, you be the judge.

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  8. It is now clear that SKP will be stagnated during 2019. The chances of seeing any new (hopefully legacy) airline is highly unlikely.
    Oh well, the N Macedonian taxpayer cannot continue paying all the time.
    Nice try though.

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    1. thanks for the insight Nostradamus- the other Nostradamus projected SKPs decline for November this year.

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  9. The explanation they gave is so dumb. If they repeat the tender in October and declare results in November, which airline is going to start bew flights by 10th January. Ludicrous.

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  10. If they don't want Wizz Air to win the tender, why make all the requirements benefit only Wizz Air?

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    1. And easyJet and Ryanair. And a handful of other stable airlines, just not the local dropouts.

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    2. It does not benefit Ryan or easy jet. I don't think that any of those airlines would be prepared to schedule flights, put tickets on sales and open a base in less than 3 months as is required from a market they have never flown from.

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    3. Well, if you go by that reasoning, then the same applies to Wizz. See my first comment above. The lead time for allocating an a/c is 9+ months.

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    4. It does not apply to Wizz Air which already has 4 planes in Skopje, flies from Ohrid, handles over 1 million passengers from Macedonia, has staff in Macedonia. Definitely not the same.

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    5. (facepalm)

      And how do you allocate the capacity (available planes) for new routes? Out of thin air?

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    6. It is much easier when that is your only issue. Wizz has more than enough planes arriving each month to allocate another to Macedonia.

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    7. Sorry mate. I've tried shedding some light but it's to no avail.

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  11. This seems like a really odd decision.

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    1. its also very odd to apply for something when you know youre not meeting the criteria

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  12. Glad Wizz Air is not going to get more money. They got enough. Now do something without the government if you are so committed to this market.

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    1. Entitlement will not get you anywhere my boy.. =/

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    2. yes but he is right

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    3. :) Црно-бели свет..

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  13. So what happened with those stories from Macedonian CAA how easy jet and Ryanair are interested?

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  14. Why isn’t anyone else interested in the tender?

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    Replies
    1. Because no one could open a base and launch so many new routes at such short notice.

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    2. aka 'Why has none else been interested in these tenders EVER'...

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    3. With such a huge share of passengers on a relatively small market, maybe airlines realize there is simply nothing they can do to beat Wizz.

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  15. This is bad news in my oppinion. Macedonia needs Wizz. It has done a lot of good for air transport in the country.

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    Replies
    1. Wizz is not going anywhere. But if they really want to support new traffic, especially from Ohrid, they need to learn to be a bit more flexible.

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  16. The government currently has much bigger fish to fry.
    This tender takes very little attention right now.

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  17. It is now even less unrealistic that any airline could do all that they are asking for within what 3 months.

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  18. I just don't get where the rift with Wizz occurred? I mean first you reject them because of an envelop, second time you reject them because they plan to start four routes from a holiday leisure destination in August instead of the middle of the dead season in January.

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    1. these routes are not seasonal, so it doesnt matter when u open them

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  19. I'm quite interested in the four routes they proposed from OHD and the two from SKP.

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  20. If Wizz Air apply for a third time, they will just look stupid. They would send a strong statement by not applying for a third time.

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    1. You mean 'if the gov't published the third tender with the exact same conditions they will just look stupid'?'

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  21. That is good news for INI!

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    1. :)))))))))))))))))))))))))))))))

      Идемооооооо!

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    2. bravo, this opens a huge business opportunity for !N! GO INI!

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    3. Agreed. INI will benefit greatly from this move. I even think they can station 2 Airbuses from SKP to equally distribute the traffic.

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    4. what could be the routes?

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    5. All the weak performing routes from Skopje:
      Barcelona, Luton, Paris, Berlin, Hahn, Budapest, Rome and Nuremberg.

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    6. it would be very difficult to find free slots at INI for all these flights

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    7. ali
      BCN-INI
      BUD-INI

      hahahah

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    8. popping some expensive champagne today :D
      Barca and Paris here we come! haha

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    9. PRN and TIA will benefit even more from this move

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  22. it would habe been more fair they dont enter the tender with a statement we are very interested but cannot fullfil the criteria re timing

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  23. What a pity. This is just going to drag on and on.

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  24. Lets wait to see if they will change the conditions for the new tender.

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    1. The minister said it will be exactly the same.

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    2. And you trust him?

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    3. Yes actually. The conditions were the same in the first and the second tender.

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    4. well they changed it already from the original one

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    5. no, they werent the same

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    6. What did they change?

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    7. well have a read, its everything online even on this blog

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    8. 1st: 2 based a/c, one in Ohrid, one in Skopje
      2nd: 1 based a/c, Ohrid *or* Skopje

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    9. Thank you Anon, didn't realize that.

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    10. Well it would be stupid for them not to change some of the rules if they failed to get an airline to meet those obligations.

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  25. Rock the boat too much and Wizz Air might leave. This is a dangerous game...

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  26. And in November they annul it for a third time :D

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  27. hey at least they see growth opportunities for two aircrafts in MK

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  28. This is just so odd. What is the government playing at?

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    Replies
    1. Somebody probably didn't get paid so the tender is annulled for second time.

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  29. Does anyone know when the new tender will be issued?

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    1. Probably mid next month. So far all of the tenders were around that time. That is the absolute last minute they can issue tender. So let's say 13 November - 13 December. If they issue it any later we have holidays, Christmas, New Year.... But it's still ludicrous that any airline wins a contract on 13 December and has to open a base on 10 January. Crazy.

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    2. It’s not XMas in Macedonia before Jan :))))

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  30. Thanks for Wizz, a large portion of young Macedonians were able to afford to see the world for the very first time.
    What Macedonian Gov is doing is wrong. Wizz can easily turn to PRN, as it has already started doing so apparently.

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  31. What has TAV been doing all this time? Why aren't they doing more to attract non-Wizz airlines so they are not so dependent on an airline that launched all its flights because of subsidies.

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  32. Maybe the idea is for the government to run tenders to show how they want to give subsidies to airlines but in actual fact they won't. After the third time no one applies (because Wizz will probably give up) then they will say there is no interest for this kind of incentives and money will be used for something else.

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  33. This was expected. You just can't put your whole eggs in one basket. If Wizz doesn't get what they want Macedonians might soon begin to fly out of PRN or INI as well. Which isnt't that tragic after all.

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    1. Sorry mate, but this is just so dumb..

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    2. How is that dumb Mr.? If the carrier holding 65% of the entire countrys air traffic pulls away, it means shit has hit the fan and it won't be pretty!

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    3. There is no reason to suggest Wizz will be pulling out *any* capacity out with no extra funding. They even upgraded from A320 to A321s for free for crying out loud.

      The suggestions that they will close their base if the pocket money they’re getting from the govt stops are either dumb or malicious. You can take your pick.

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  34. Fish stinks from the head, does it not? i think here is the ticket mafia influencing the tender. they want to have the marked under their hands. they are buying massiv tickets from wizzair in sesonal period (like summer) You can see now that the prices on the website are massive rising up. And if somebody is abel to have a lokk to the bookingsystem from wizz, they would see that 2-3 person are buynig 75% capacitiy from a airplan....

    pozdrav...

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