Zagreb Airport operator to seek concession fee cuts


Zagreb Airport International Company (ZAIC), which runs Zagreb Airport, will request for the Croatian government to lower its annual concession fee, the "Slobodna Dalmacija" daily reports. According to the newspaper, the airport's General Manager, Jacques Ferron, announced the plan last week. The operator argues that as a result of the concession fee, it was forced to increase its charges. which has in turn deterred low cost airlines from flying to Zagreb. This winter season, only one low cost carrier, Eurowings, will maintain services to the Croatian capital. However, it too noted last year that Zagreb Airport's charges are "significantly higher than most major European airports, making it less appealing for low cost carriers". Croatia's busiest airport hiked its fees following the opening of its new passenger terminal in 2017 by two euros per each international passenger for a total of seventeen euros. Similarly, it increased its fees by half a euro per every domestic passenger to seven and a half euros.

In practice, concession fees applied to airports are passed on to airlines and their passengers through artificially higher charges, making airlines and passengers pay more than their fair share of airport facilities and service costs. Nonetheless, governments do not provide additional services in return for these concession fees. The Croatian government has said it is yet to receive an official request from Zagreb Airport's operator for the reduction of the annual concession fee. "We have not received a request from Zagreb Airport International Company to reduce the concession fee and neither have we discussed it with them. The concession fee is determined based on the agreement signed between the government of Croatia and Zagreb Airport International Company. ZAIC, as the concessionaire, has so far met all of its obligations, not only in terms of making the concession fee payments but also through continual passenger growth and the introduction of new destinations", the Minister for Sea, Transport and Infrastructure, Oleg Butković, said.

ZAIC's concession fee is made up of a fixed and a variable charge. The fixed charge amounted to two million euros in the first year of the concession and will increase to twelve million in the 29th year. The variable charge fluctuates based on the overall gross revenue. It becomes payable from the third year of the concession and totals 0.5% of the total gross profit, after which it grows to up to 61% of revenue in the 30th (last) year of the concession. The International Air Transport Association (IATA) is in favour of removing rent and concession fees airports are paying to governments, as it believes it will benefit all stakeholders - governments, airports, airlines and the paying passenger. "Airport charges should be related to the cost of providing airport facilities and services and airlines should not bear more than their fair share of the costs. Consequently, airlines and their passengers should not be requested to cover rent and concession fee costs for which they receive no service in return. A decrease in the level of aviation charges and ticket prices will have a substantial positive impact on a country’s aviation and tourism industry. The growth in air traffic, tourism and economic activity related to lower aviation costs alone will significantly benefit a country’s economy and off-set any reduction in direct revenue from rent or concession fees", IATA notes.

Comments

  1. So those stories by people commenting here that ZAG isn't looking for LCCs and only wants legacies to fly there are obviously false.

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    1. In a way if you charge 17 euro per passenger you are not really looking for LCC service. :D

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    2. Yes but obviously they would reduce fees if the concession fee is reduced.

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    3. Pax numbers would immediately reache around 4 million if ZAG attracted LCCs. Even without the likes it is always around 10%.

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    4. SEVENTEEN EUROS??? That's a total rip off, man!

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    5. Isn't BEG €18.5?

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    6. No the passenger tax at BEG is 16.5 euros as per their website.

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    7. OK so taxes cannot be the reason then!

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  2. ZAG definitely needs more LCCs. One airline in winter and two in summer is unacceptable for an airport its size.

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    1. *three in summer - Norwegian, Eurowings and Vueling

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  3. Koji su ovo manevri......
    Nije uhljebnicka bagra dorasla ovim hijenama

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  4. OUCH! I have never heard something like this ever happened? They want to change the contract after it was signed? They are obviously struggling and are making much less than expected. I wonder what will the government say

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    1. The government already changed the concession agreement once to let them increase taxes so I would not be surprised if they let them again.

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    2. It's happened but its rare. It happened in Brazil a few years ago but this was mainly because Brazil was experiencing massive economic growth when the airports were given up for concession and then two years ago experienced an economic crisis.

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    3. There are also some examples in India. But it is very rare.

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    4. Could it be that the airport is seeing growth below 10% the last few months so they are going to miss their revenue targets? I can only imagine how aggressive the management is at trying to find more customers. :(

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  5. This is just hilarious. The concessionaire wants the State to subsidize the development of the airport, the very same job they were hired to do.

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    1. Reminds us of TAV / SKP, doesn't it?

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    2. It's just a question of if TAV asked them in Macedonia or the Macedonian government willingly decided to subsidize airline(s).

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    3. Please, you think the Macedonian government came up with the idea to subsidise Wizz Air?

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    4. It's true. When you think about it, it is a complete rip off. The government is subsidizing an airline while TAV counts the profits. They obviously want to do the same in ZAG.

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    5. well we are talking about the same operator here: TAV

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    6. TAV what did you expect ??? Of course Croatian government can't give them any leeway on fees, it is part of the contract and the only reason they won is cause they agreed to pay this amount of concession fee. The entire contract was a massive scam, should have never been signed, the fact is, the best deal for Croatia would be now to stop this concession deal, but that would mean Croatian government would need to pay around €210 million (inflated) to current group who runs the airport.

      Investor never spent "€244" million on current terminal, it was a massive rip off, entire terminal/investment came at around €180-185 million, investor stealing €60 million, however for that I don't have enough proof other than to provide cost for similar sized projects across the globe.

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  6. HAHAHA. I love how you some of you guys were telling me I don’t have basic accounting knowledge when we were discussing Zagreb’s results - here you go :D

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    1. Me too, so aggressive and rude.

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    2. Exactly. Obviously it does not go the way they wanted but it was up to now covered by bringing EK, KE etc to ZAG
      Now, when the numbers go down it seems they dont know what to do but to call GOC for help. Reality is not so brighty as the terminal they built!

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    3. Where exactly are the numbers going down?

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    4. Do you really believe that ZAIC is asking to pay less fee because the business goes well?

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    5. No! It is the same as Lufthansa or ANY other business in the world. Lufthansa is asking their flying staff to give up their privileges and renounce pay because LH is virtually bankrupt. That is why LH is demanding Fraport to lower their taxes as well- ""Irony Off"- The main target of a business is to make money and increase profits, like LH which makes 2 billion in profit, at some point it is simply not enough and needs to be more.. Do not be naive...

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  7. Well, operator increased taxes and now they want lower concession fee because it's to high? Gentlemens, you knew about concession fee before you took airport and, also, government changed contract and they gave you possibility to increase airport taxes even that was forbidden on tender and some other operators decided to not to run for ZAG conession because of that reason!

    Decrease airport taxes, bring more companies to ZAG and u will make more money. Small provincial airport is not JFK/AMS/FRA or CDG! Be realistic! Airport is freaking empty with the start of winter season !!

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  8. The government will probably agree to restructure payments for ZAIC.

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    1. If ZAIC asks, they'll be told to f-off. Government would need to justify why it gave in, when the only reason government agreed concession was given based on promises offered by this group. The whole thing is farcical, first the investor didn't have all the money and then the investor had to be bailed out by Government guarantees, Government should have re-run the competition and get a proper company to take over. Yes, the terminal would have been delayed by a year and would have opened sometimes in mid to late 2018, but at least we wouldn't have this farce.

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  9. Makes sense, let's hope Vinci does not pull the shame stunt in BEG.

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    1. According to that concession agreement, Vinci is not allowed to increase fees for the first 3 years.

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    2. I was referring to the concessionaire asking for lower payments to the government each year like the ZAG operator requests to do.

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    3. BEG is way busier and not as seasonal so the risk is lower. ZAG numbers have major fluctuations from one season to another. Also without any major increases this winter growth won't be above 6%.

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    4. Vinci paid (or eventually will pay) more money upfront and also more money every year to GoS.

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    5. If they eventually take over BEG it will definitely happen at one point. Sum offered is way unrealistic.

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    6. Haha "if"...lol!
      Unrealistc maybe but for ZAG standards

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    7. It is definitely unrealistic. So if they get loans needed and eventually take over the airport, we can expect to have some correction/compensation in near future. Basically ZAG scenario will repeat.

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  10. I hope the government does not agree because they have allowed the French too much comfort. They allowed them to downsize the original terminal project, to increase fees, to reduce staff so the airport can't function properly at night, for TAV to basically take over the concession... this would be too much.

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    1. The entire tender process was nontransparent.

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    2. Imagine the horror if they built the whole terminal that was initially planned. How would they pay all of it? It just wouldn't work. ZAG is empty most of the day, only twice a day is the airport really busy.

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    3. gosh this sounds like the same story as for SKP

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  11. Ovo je dobar primer da se tako ne postupa sa VINCI Airports u Beogradu. Vise aviona, vise putnika. Vise putnika i sa manjim taksama prevoznika obezbedjuje rast saobracaja i potencijalni dolazak novih avio prevoznika. Verovatno da Vlada Srbije zna da racuna na dugi rok. Zagrebackom aerodromu svako dobro i napredak...
    Rodney Marinkovic, Kraljevo.

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  12. It was bound to happen that at one point they would have to start attracting LCCs to increase passenger numbers. Now they are unable to do it because of the fees.

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  13. What year of the concession are we in now?

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    1. It is about to enter its fifth year in December. And I wouldn't be surprised if they planned to ask for this from the very start 5 years into the concession.

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  14. "The International Air Transport Association (IATA) is in favour of removing rent and concession fees airports are paying to governments, as it believes it will benefit all stakeholders - governments, airports, airlines and the paying passenger. "Airport charges should be related to the cost of providing airport facilities and services and airlines should not bear more than their fair share of the costs. Consequently, airlines and their passengers should not be requested to cover rent and concession fee costs for which they receive no service in return. A decrease in the level of aviation charges and ticket prices will have a substantial positive impact on a country’s aviation and tourism industry."

    Then why should they be giving the airport to concession in the first place?

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    1. Actually IATA is known to be against concessions and airport privatizations.

      https://www.businessdailyafrica.com/corporate/shipping/Do-not-be-quick-to-privatise-airports--IATA-cautions/4003122-4597284-jqvy1j/index.html

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    2. And only ex-Yu countries are giving up airports for concession like crazy. I guess that the "Several governments in Europe" IATA is reffering to.

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  15. If the French and the Turks are unable to develop traffic and not lose money they should sell their stakes to someone who can.
    I hope the HR government soesdoe give in.

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    1. Does not give in.

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    2. Unable to develop traffic?? The growth is around 10% yoy and that ONLY on Legacies. The majority of airports in EX-Yu could only dream of such a situation.

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    3. Nobody today counts only or not only legacies. Total number is important.
      And that total number shows that even 10% increase in ZAG is less than 6% in absolute digits (approx. 50.000 passengers less) from the nr. 1 airport in ex-Yu

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    4. Issue here is that airport probably knows what to expect in coming months based on airline forecast they get. They probably see that growth will be more modest than what they initially planned. Since May the airport has not recorded double digit growth.

      May: +11.8%
      June: +6.6%
      July: +7.9%
      August: +7.2%
      September: 4.5%

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    5. October and November expected even lower

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    6. The cumulative growth for ZAG this year is 11,2%. Source: ZAG statistics.

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    7. Actually it's 8% not 11%.

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  16. Oleg Butkovic as always unconcerned. He wasn't very concerned about OU either. Gave us a promise the management would be replaced, ran open competitions for new CEO and nothing...

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  17. Disappointing from the French.

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    1. the french? its more turkish then french

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    2. Dissapointing? what exactly? Considering the growth SKP and BEG had with LCCs once can only assume that ZAG would reach 5-6 million Pax in the next 2-3 years with Wizz or FR operating.

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    3. Wizz Air added around 950.000 passengers per year at BEG, ZAG would be around 500.000 max.

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    4. @ Anon 10:42. Please tell me waht you logic behind your statement and figures is? So if Wizz bases the same number at AC at ZAG like they did in BEG they would have only 50% LF? What is your logic???

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    5. Market in BEG is much larger than in ZAG and BEG's catchment area is much, much larger with fewer airports to compete with. BEG and ZAG are not the same so adjust your forecast.

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    6. OK thanks for elaborating. By that logic ZAG is doing really well against BEG.

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    7. ZAG and LCC. Finally you should agree if you wish to have them or not...but of course it does not depend only from you if they would come or not.

      From one side you don't want them as they do not land to so "prestigious" airports as ZAG is (but do land to CDG, BCN, FRA, BUD, AMS etc) but from other side you wish to have them in order to increase passengers numbers.

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    8. Anon 11.56

      Don't say that to me, say it to the operators of ZAG. Maybe in terms of passenger numbers it's doing well but that's not the case when it comes to finances.

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  18. We need Wizz and easy Jet to come back!

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  19. It will be interesting to see what will happen here and how the government will respond.

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    1. The government will duly oblige.

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  20. Arrival of LCCs could also hurt Croatia Airlines so I don't see why the government should agree to this.

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  21. Does anyone know what sort of incentives ZAG offers to airlines?

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    1. Year-round Scheduled New Destination Incentives:
      Landing fees: 100% discount first year, 50% second year, 25% third year.
      Passenger service charge: 40% first year, 20% second year, 10% third year.

      Year-round Frequency Increase on Existing Destination Incentives:
      Landing fees: 50% discount first year, 25% second year.
      Passenger service charge: 10% first year, 5% second year.

      Seasonal Scheduled New Destination Incentives:
      Landing fees: 100% discount first year.

      New Charter Destination Incentives:
      Landing fees: 100% discount first year.

      Seasonal to Year-round Incentives:
      Landing fees: 100% discount first year.
      Passenger service charge: 10% first year.

      Supplementary Long-haul Incentives:
      Passenger service charge: 30% first year.

      Thin Line Support (LF under 50%):
      Landing fees: 50% discount first year.

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    2. wow thank you!

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    3. It's on their website.

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  22. Zagreb definitely needs more low cost airlines. I think Norwegian and Eurowings are a good fit for the airport.

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    1. I also hope that one day we will have a European low cost airline flying domestic flights from Zagreb.

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    2. I would love to see Pegasus start SAW-ZAG. It would end the Turkish Airlines monopoly on the route and would offer some great transfer options.

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    3. Obviously there is no interest from Pegasus to start flying to ZAG

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  23. The management has identified clearly what they have to do. First they attracted legacy airlines, now low cost, and I assume cargo operators will follow. But I don't agree that this should come at the cost of the concession fee.

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    1. Their plan has a serious flaw though, they manage to get most customers in summer but once winter comes things change. EK already downgraded ZAG, OK isn't coming back, A3 won't be flying for a few weeks in winter...

      Without KE to ICN via ZAG and IB there wouldn't be anything new this winter.

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    2. Haha how arrogant :D " without KE to ICN via ZAG and IB there wouldn't be anything new this winter. " without KE to Seoul and IB to MAD... :D

      So better celebrate 2 times gastarbeiter routes to NYO for 9 EUR then KE an IB in winter :D

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    3. Well we celebrated EK to DXB and we all know how that turned out to be.

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    4. Yes we all know, ZAG is the ONLY City in EX-Yu on EKs destination map ;) And likely to remain for a long time....

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    5. Only city that's operated on a seasonal basis. However they probably launched flights as they got unbelievably good deal from the operator. We can see that they are quite desperate for more airlines so they are almost losing money. Worrying thing is that even with massive discounts they couldn't make it work in winter.

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    6. Do not forget that foreign airlines as KE, AA or AC get cash to fly to Croatia from so called "udruzeno oglasavanje" fund

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    7. Also didn't someone write on here that DBV isn't paying salaries to their employees because of heavy discounts?

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    8. How do you logics fit together?? "unbelievably good deal from the operator" but no LCC because too expensive? There is a flaw in your logic...

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    9. The pain and suffering of concerned neighbors about EK choosing ZAG to fly in the exYu never stops...

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    10. Same as when our neighbours were worried about JFK's profitability or remember the meltdown when IR kept flights to BEG.
      The situation in BEG is much better overall.

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    11. I am sure JFK flights are profitable for Air Serbia!
      Shame that they choose to keep the A330 grounded in BEG 5 days a week instead of flying more often to New York and increase their "profitability"! LOL!

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    12. Lets ask Aegean, Czech Airlines and Swiss why they do not have even 2 flights per week to ZAG during January and February...for your information it is the time of the year when JU flies 2 pw to JFK.

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    13. It is sad how ZAG has only AC, TS, KE and EK coming with big birds. They need more to keep up with the competition in the region.

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    14. year-round?

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    15. Anon 14.57

      Well half of LH long-haul fleet is parked at FRA remote stands in winter time so nothing strange about JU parking their bird for a bit during winter. And anyway, what matters is that flights are operated year-round even during the slow periods. Also JFK is operated up to 4 times per week for a month around Christmas, after that it goes down to 2 weekly until summer.

      Also BEG would have as many widebodies if they were dumping charges for their customers like ZAG seems to be doing. Also, BEG gets 4 weekly widebody during the slowest period which isn't that bad, not bad at all.

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    16. MOJ JE NAJVECI!!! !! Odrastite vise i manite se budalastina jel ima ZAG ili BEG 2 ili 3 widebodyja vise ili manje kroz 2 ili 3 meseca duze ili krace. Stvarno vise smarate i jedni i drugi, prestacu vise ovde da dolazim iako volim avijaciju

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  24. So OU need to launch new routes to take advantage of under served/non existent routes before their competition to take advantage of the discounts.

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    1. Unless OU gets more planes, they can't do much more in terms of expansion then they already have.

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    2. They use theie planes only in summer. Winter nope. So they could prolong the season in winter. But no vision at all. They think in a box.

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  25. A good lesson for Montenegro not to give its airport up to TAV.

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  26. Is it just me or is ex-Yu full of bad concession agreements.

    1. In Pristina the government is going to finance 34 million euros to extend the runway. So the concessionaire will not spend a penny but will benefit from a longer runway.

    2. In Skopje the government is subsidizing wizz air for 6 years already while TAV gets more passengers and more revenue.

    3. In Zagreb the concessionaire downgrades expansion project and now wants the government to reduce the concession fee.

    We will see what surprises the Belgrade concession will hold.

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    1. Good summary and sad at the same time.

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    2. you nailed it down

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    3. +1000
      Seems that every orivatized airport in the exyu has been a fantastic deal for the concessionaires.
      And the tax payers keep sabsidising the airport operators although they were privatised exactly so that we would stop subsidising them!!!
      SMFH

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  27. I think Wizz have knocked on the door, or TAV have invited them...

    since TAV is de-facto operating ZAG they are trying to copy what they did in SKP

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  28. ZAG really needs Easyjet.

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    1. ... to reach 5 million Pax in the next 2 years. Without LCCs it will only be 4.....do not know if there is ANY airport in the vicinity that manages such results without LCCs...

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    2. Haha your previous post was deleted and now you are looking for new space to launch your silly ideas.
      pathetic

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    3. Four? ZAG will have 3.2 this year, that's a far cry from 4 million. Also what's the point of having those three million if it's not done in a sustainable manner?

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  29. ZAG and SJJ have one of the highest airport taxes in Europe, if not the world. This is not healthy if you want to attract a large scope of airlines.

    Just read the other day that Spanish Aena will participate in the Sofia Airport concession!
    Did they apply for Zagreb a couple of years ago?

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    1. How much are taxes at other regional and European airports say SOF, TIA, OTP, ATH and LCA? Any idea?

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    2. OTP - 14€ per pax
      SOF - 5,46€ per pax
      ATH - 12,16€ per pax

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    3. So state owned BEG charges 16,5€ per passenger, privatized ZAG 17€ while privatized ATH only 12,16€.
      So why BEG which is still owned by the state didn't charge the same as SOF but instead charges us more than three times extra?

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    4. Because it can...

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    5. Well since BEG was heavily subsidizing JU which accounted for half its traffic (less now) it had to make the balance from the other airlines using it.

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    6. No "JU has not received a cent from the airport and is paying everything on time" comments. I am surprised. :)

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    7. Perhaps because today's topic is the poor financial management of Zagreb Airport.

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    8. They will come, just wait :)

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    9. That is why BEG managed to pay for all of its renovation and to keep on upgrading its facilities. That is why they charge you 16 Euros.
      Also, ATH might charge less as passenger tax but they rip airlines off for other services. For example ATH charges an airline for an airbridge but they also charge them €150 if they want the a/c running. In BEG you don't have that, you get a fixed charge (I think €80) to use the airbridge. Airlines are constantly complaining about ATH charges.

      As for SOF, isn't the airport a loss making business since slashing their prices? ;)

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    10. Happy taxpayer needs to show us how will INI with notorious 3 eur pax charge and TZL with similar "almost free" fee (both owned by governments and funded by happy taxpayers) make money for capitol investments in new facilities? Let me answer that: they won't!

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  30. So to protect OU, all the Croatian government has to do is say no.

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    1. That is why they want to sell OU.

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  31. Manje para za Hrvatsku drzavu i za radnike Aerodroma Zagreb a vise para za Francuske banke i privatnog koncesionara preko 400 miliona eura hoce da izbaci van iz Hrvatske i da osiromasi drzavu i radnike.

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  32. lol so the best Christmas market dan-dan did not help the seasonality

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