The Serbian government has rejected a complaint lodged against Air Serbia by Adria Airways over what the Slovenian carrier alleges are unfair state aid practices. The Serbian Prime Minister, Ana Brnabić, said on Tuesday, "Serbia fully respects the [European Union] Stabilisation and Association Agreement which forbids state aid. If someone wants to question that, they can, but I am certain Serbia will win". Last November, Ms Brnabić noted, “The government of Serbia will maintain its strong support for Air Serbia. This support will be in line with European Union regulations, as it has been so far, however, no one can prevent us or limit our support for Air Serbia”.
Adria Airways filed a complaint against Air Serbia with relevant European institutions over what it sees as illegal state aid provided by the Serbian government to its national carrier. “Adria Airways is concerned over the aid the Republic of Serbia has illegally granted to Air Serbia and believes such behaviour to be unlawful as it goes against free market principles”, the Slovenian carrier’s legal representative in Serbia, Dragan Gajin, said last month. Adria expressed its concerns to the Serbian Commission for Control of State Aid but received no reply, prompting it to take the matter further with European institutions. However, Mr Gajin has come under fire himself since he acted as a legal advisor to the conclusion of the transaction agreement between the Serbian government and Etihad Airways over the latter's takeover of Jat Airways. As a result, the lawyer could potentially be in a conflict of interest.
Adria Airways has refused to comment publically on its concerns over Air Serbia other than to confirm it has taken action within the EU. The European Commission itself has told EX-YU Aviation News it is not authorised to deal with such matters since it does not have direct enforcement possibilities in candidate countries. The Commission said it stands ready to provide any support or guidance to the Serbian state aid authority in the implementation of state aid control. According to the European Union, a company which receives government support gains an advantage over its competitors. Therefore, the EU generally prohibits state aid unless it is justified by reasons of general economic development. There are exceptions to the rules as aid worth less than 200.000 euros over three years is exempt.
Air Serbia has been listed as one of several companies which will receive subsidies from the state budget this year, however, the country's Finance Minister, Siniša Mali, noted this is in relation to debt accumulated by the airline's predecessor Jat Airways. "We did not have 380 million dollars to pay off Jat's debt straight away. Instead, we will be making payments over a ten-year period. We process the loan as debt repayments either through Air Serbia or directly. However, none of the money goes into Air Serbia itself", Mr Mali, who previously headed the company's Supervisory Board, said.
This "case" won't work out
ReplyDeleteConvenient for the government that they can just show all state aid as paying off JAT debt.
ReplyDeletethat is not problematic and that's why mali is saying it.
Deletehowever, 2 ways which JU directly gets the money are problematic:
1. direct subsidies shown in the annual report
2. "hidden" subsidies that are given to JU, that are used to lower the OPEX and thus not shown in official figures, but only mentioned in the notes of the report
i do not know a way in which these two are in line with EU rules
new way of support, Niš PSO, is also not legally problematic
All JU has to do is to wait for a few more months and Adria will be long gone. Maybe JU should start preparing rescue fares for the regional destinations where JP flies to. XD
ReplyDeleteAdria reminds me of the Ottoman Empire in the 19th century. A decaying system with a misled sense of importance.
+1
Deletewill you be happy then? will some cents or Euros end up in your pockets?, everyone is such a Nostradamus nowadays, and an Economics studies expert, I'm amazed by your talent that gets wasted online.
DeleteAre you implying he isn't right? That JP is a stable and successful business? Seems like you seem to be the expert whose potential wasn't recognized elsewhere.
DeleteI did not predict any future on how this will end or go on, JP has been "bankrupting" since I remember, 10 years ago. As for a stable business, I cant say anything, I will certainly not be influenced by the media. Friends that work there have been getting their salaries without any hiccups or delays.
DeleteBut therefore passengers suffer with all these cancellations, triangle flights, missing compensations etc.
DeleteI suppose you believe these are all good signs?
Including this one
https://www.exyuaviation.com/2017/04/adria-reaches-pilot-deal-to-prevent.html
Is the Adria/Air Serbia codeshare on??
ReplyDeleteYes!
DeleteAbsurd
DeleteMakes no sense to codeshare with an airline that is reporting you to the EU. And viceversa, with an airline that you think is gaining unfair advantage through state subsidies.
Deletehehe money makes world go around...
DeletePare ne smrde ....
DeleteMr Mali is well known for cooking the books...who on Earth can believe what he says!?
ReplyDeleteI mean Adria's claim is bit silly (knowing the history of JP's benefits) but Brnabic's statement is equally bizzare: "Serbia fully respects the [European Union] Stabilisation and Association Agreement which forbids state aid. " Haha
ReplyDelete+1
DeleteThis has Lufthansa written all over it. Has nothing to do with Adria. And they conveniently rem,embered to report them in the year they introduce 20+ new routes.
ReplyDeleteBut why doesn't Lufthansa just complain itself?
DeleteThey already reported them over "effective control" and it didn't work.
DeleteInteresting article
ReplyDeletehttp://www.novosti.rs/vesti/naslovna/ekonomija/aktuelno.239.html:805128-Slovenacka-avio-kompanija-tuzi-Srbiju-za-ono-sto-trazi
Is JP still running those triangle Balkan bus-like routes?
ReplyDeleteReally? Do they do it because of empty planes or because they lack planes? I mean if they combine two CRJ flights into one it means loads were pretty bad from the start.
DeleteAs of now: Adria today is cancelled (at least one leg): Skopje, Sarajevo, Tirana, Podgorica and tomorrow (at least one leg) Munich, Vienna, Sarajevo, Tirana.
DeleteWhat do you mean one leg? Are those flights that are joined?
DeleteAnon 09:39: Exactly. If you can combine two CRJ900 flights into one CRJ900 flight in the top summer season without leaving people on the ground, the original LF must have been very low.
DeleteWhich is not surprising, given the mess they've been in for a very long time now.
Some are joined and some are completely cancelled.
DeleteSo the promise they made that they would stabilise operations in July didn't happen.
Deleteand the worst thing of all is that people of Serbia are cheering for Adria, against Air Serbia. I mean, the hell?
ReplyDeleteThey even got a Serbian lawyer to represent them in this case.
DeleteWhy are you surprised about lawyers? It's a well known fact they are soulless.
DeleteI\m surprised because he used to represent the company his new client is now suing.
DeleteUsed to, doesn't represent anymore. That's like saying you are surprised to see an engineer start working for a company that competes with their former employer, or a chef moving to work for a restaurant down the street from their previous one.
DeleteHe's a professional who sells his services to those who'll pay for them, like any one of us. He's not soulless because of that.
Noncompete clauses are a norm in cases where one engineer wants to start working for a competitor. First company will not let engineer take any of their documents or even just proprietary knowledge to the competition and contracts spell this out.
DeleteIf that lawer has been exposed to any trade secret documents regarding EY/JU he would be in a clear conflict of interest position. What was he thinking??? Better get a face tat and apply at some Mexican drug cartel.
I love the fact that the lawyer representing Adria represented Etihad/Air Serbia in the past. LOL.
ReplyDeleteIt's so bizarre and an obvious conflict of interest.
DeleteKako Alitalija po zakonu dobija subvencije,kao što je Er Berlin dobio regularne subvencije dok Lufthanza nije preuzela avione i linije tako i ErSrbija dobija novac po zakonu. Čini mi se da je ovde "Laki" malo nervozan jer se bliži prekookeanska ekspanzija pa se boje za transverne putnike sa balkana.
ReplyDeleteIli kao sto YM dobija subvencije od njihove vlade ali se JP tu ne javlja...
DeleteMa postoji još brdo primara ali istina je negde tamo...
DeleteWhat You are talking about ? What long haul expansion ?...Doesn t work...
DeletePriča se,a gde ima dima ima i vatre. Toronto,Čikago, Peking,šangaj...
DeleteWhat does this mean?
ReplyDelete"The European Commission itself has told EX-YU Aviation News it is not authorised to deal with such matters since it does not have direct enforcement possibilities in candidate countries."
Does it mean Adria's claim is totally useless? Did Adria know that EC is not authorised in this case?
No, it doesn't say that Adria reported Air Serbia to the European Commission it just says "European institutions".
DeleteIt doesn't have enforcement means that it can't do anything since a candidate country ins't a member of the EU. So let's say they find some wrongdoing and then what? What can they do? Nothing. Just write a complaint to Belgrade and that's it.
DeleteThey can stop or stall the accession process. And before you say how Serbia will never join the EU or that even the Serbian government only officially wants Serbia to join, that may be, but the reason Serbia is vigorously negotiating and trying to open new accession chapters are the millions in pre-accession funds it gets as it opens each chapter.
DeleteThey are already stalling the accession process. Instead of at least 3 chapters only 1 was opened in June 2019...So they are obviously doing it.
DeleteFrom the other side it is true that they could stop it, but Air Serbia is not enough good reason to do it. At the same time they would have to do it with Montenegro, because of YM.
Only naive people think the EU will jeopardize its relationship with Serbia over JU. They saw now that policies from 1990s no longer work because circumstances have changed. Russia and China are heavily involved in various projects and Chinese sent a new ambassador who is no joke, she is one of their brightest and most competent people from the ministry in charge of our area. So the EU would be shooting itself in the foot. So JU is safe, nothing to worry about.
Delete@10:08 agree
Deletealso vučić would take this very personally, since this is his showcase project
if they however pressure you on this that means that vučić - eu relation went sour
Luckily for JU the EU doesn't seem to care. They have far more pressing issues in Brussels.
DeletePetar Čelik: ...this is his showcase project
DeleteFind me a politician in Serbia that will firmly commit to unconditionally shut down Air Serbia as soon as they take over. There is 0, ZERO, chances anyone will ever do that. Just look around! Previous government and Miskovic wanted to make Air Serbia their showcase project. Once someone else is in charge, they will put couple of their people in charge (partokratija), make a few minor changes, cut a route and open another one, and that's it! Anyone thinking Air Serbia is his project forgets that airline has been going on for 92 years.
If the EU was concerned over these subsidies which are peanuts in the grand scheme of things they would have written something in the progress report, like they did for Montenegro Airlines. But they didn't.
ReplyDeleteLet's wait and see if something changes in the next progress report.
DeleteI just find it funny that a month ago Adria, which is 100% private company was asking for government aid. And then they go and report Air Serbia.
ReplyDeleteHad they got the aid, they probably wouldn't have reported Air Serbia.
DeleteI also think someone nudged Adria to do this.
ReplyDeleteAnd yet nobody says anything against Turkish Airlines - the MOST heavily subsidised govt owned airline flying the skies of Europe
ReplyDeleteVery true. I think it surpasses even the Gulf carriers.
DeleteCorrect.
DeleteBut nobody can threaten them that they won't become EU members as they already know it.
And Turkey is not part of Single European Sky system. So they can do whatever they want.
DeleteBut they have open skies with the US and not one US carrier makes any noise about them in the same way they do about the Gulf carriers
DeleteTurkish Airlines is a company in stock exchange market. 51 % of its share are privately owned. There is no state subsidizes.
DeleteLooks like Air Serbia (read as Serbian government) found a bug in EU aviation system. As a candidate country it can benefit all advantages of Single European Sky system, but when it comes to the state aid issue, EC can't intervene because: "The European Commission itself has told EX-YU Aviation News it is not authorised to deal with such matters since it does not have direct enforcement possibilities in candidate countries."
ReplyDeleteThat's hilarious. In that case, nothing can prevent Air Serbia to become one of the biggest airlines in Europe. You benefit all the advantages of the system but avoid all disadvantages/restrictions. Kudos!
"In that case, nothing can prevent Air Serbia to become one of the biggest airlines in Europe."
DeleteHehe, do you have problem with that?
And before you reply let me remind you that it is correct that EU state members are not allowed financially to support their air carriers, but from the other side they are receiving incomparably more money from EU funds than EU candidates countries, so therefore generally speaking Serbia is here not in the better position.
i think there is a rule that once you join EU you need to return all the subsidies you received while being a candidate
DeleteNo,that rule does not exist.
DeleteOtherwise Croatia Airlines would be a history by now
https://www.exyuaviation.com/2012/11/aid-for-croatia-airlines-ahead-of-eu.html
i'm pretty sure it does, since it is hampering a lot of privatizations and business in Balkans. it covers a period up to 10 years back to date of EU accession
DeleteAny source?
DeleteHow come OU did not have to pay the money back?
They didn't have to pay it back but they had to go under restructuring.
DeleteEU allows state aid like it says in the article above - "justified by reasons of general economic development". But you can't give it to the same company for the next 10 years.
He is talking about the time when the country was only EU candidate and that rule does not exist
DeleteOk so say they have reported JU now, when can we expect some decision to be made? They are very vague with the details
ReplyDeleteThey know they can't do anything so they will most likely let this matter fade away.
DeleteNothing will happen.
DeleteFrom her comments, it looks like Brnabic is hearing about this for the first time, so it obviously isn't a massive issue.
ReplyDeleteAdria filed same claim against Alitalia last year and there has been no reaction. This will go down the same way
ReplyDeleteAgree. There will be no consequences.
DeleteI understand JP's concern about JU.
ReplyDeleteYou mean fear?
DeleteWell JP's 'new' or should I say recycled strategy is transfer airline between East and West. It has no serious chance of becoming that with Air Serbia so close by with a much more larger network. That is why they are doing this.
DeleteWhat an odd thing for Adria to do at this point in time.
ReplyDeleteThe Nis subsidy seemed to be the last straw.
DeleteHaha yes and Adria got 4 million EUR to maintain Ljubljana-Brussels route. Air Serbia got 5 million for 12 routes, Adria got 4 million for one route and to Brussels of all places.
DeleteWhat airline was the one that reported Adria about the state aid they received a couple of years ago?
ReplyDeleteRyanair
DeleteThanks. Forgot about that. I got to wonder what their interest was in reporting Adria.
DeleteThey report any EU airline that gets aid. Interest or no interest
DeleteHaters are up and early today :)
ReplyDeleteAir Serbia exist, it makes profit and is expanding its network.
Its by far the best airline among EXYU airlines.
Have a good day.
Yea it is like it has any real airline to compare with!?! ... they are all 4 of them peanuts airlines!
DeleteIt has among Eastern Europe and it is one of the beat ones officially.
DeleteTo criticise using arguments is good and welcomed.
To hate is unhealthy.
Air Serbia exists - true
DeleteAir Serbia expanding network - true
Air Serbia the best of all ex-yu - partly true ;the biggest, yes, not bad as Jat before , yes, but the best no, they are all more or less the same, within the same quality group - average
And Air Serbia making profit, for this one I can only say LOL LOL LOL. And if LOL to this makes me "hater", let be it so :)
Adria better start focusing on how to survive the winter season which is coming. They have been close to insolvency and bankruptcy several times during winter period and this year will be the toughest.
ReplyDeleteI'm afraid it will be over for JP before winter.
ReplyDeleteOfficial records at AJPES (www.ajpes.si/register transakcijskih računov) from today show us that JP doesn't have enough financial means to cover her outstanding liabilities that are due and also claimed by creditors.
It is not published which creditor claimed payment and thus "blocked" the accounts.
Few days ago it was only one business account "blocked", today there are all five (opened at different banks).
Also the newspaper FINANCE just published two articles on the topic.
https://www.finance.si/8950456/Nordica-zahteva-osem-milijonov-ki-so-jih-posodili-Adrii-Airways
https://www.finance.si/8950199/Rezervacije-na-TRR-Adrie-Airways-prevoznik-je-reven-kot-cerkvena-mis
What does this mean for Adria now?
DeleteWell, that CAA is not doing their job properly.
DeleteThey have 3 blocked accounts today due to unpaid obligations (it takes a court order to do it).
In EVERY normal European country, CAA would have revoked the AOC effective immediately to protect safety of passengers.
How can they pay maintenance or spare parts with blocked bank accounts? Pay the salaries (15th is coming)?
Not in the Balkans though...
Bye bye love
DeleteBye bye happiness, hello loneliness
I think I'm-a gonna cry-y
Bye bye love, bye bye sweet caress, hello emptiness
I feel like I could di-ie
Bye bye my love goodby-eye
There goes my baby with-a someone new
She sure looks happy, I sure am blue
She was my baby till he stepped in
Goodbye to romance that might have been
Bye bye love
Bye bye happiness, hello loneliness
I think I'm-a gonna cry-y
Bye bye love, bye bye sweet caress, hello emptiness
I feel like I could di-ie
Bye bye my love goodby-eye
I'm-a through with romance, I'm a-through with love
I'm through with a'countin' the stars above
And here's the reason that I'm so free
My lovin' baby is through with me
Bye bye love
Bye bye happiness, hello loneliness
I think I'm-a gonna cry-y
Bye bye love, bye bye sweet caress, hello emptiness
I feel like I could di-ie
Bye bye my love goodby-eye
Bye bye my love goodby-eye
Bye bye my love goodby-eye
Bye bye my love goodby-eye
Bye bye my love goodby-eye
It really does look like the end is near :(
DeleteI believe that even if JP does go bust as some predict, some other airline will make a similar case against Air Serbia with the EU.
ReplyDeleteSomeone would have done it by now if they were concerned.
DeleteDesperate measures in desperate times.
ReplyDeleteDid Air Serbia screw up Adria or was it their own management? From Darwin nonsense to SSJ disaster, from Paderborn fiasco to unstable fleet choices, it was all Adria management. They never took responsibility for a whole string of just horrible management choices. It's time to say goodbye. Adria is a great brand and it will go on as something else, perhaps as Adria Milk Chocolate or something else, but Adria Airways is at the very end.
ReplyDeleteInformation about block accounts of AA is not true, at least at this moment. All five accounts are without mark, which shows blockage. It does not help the debate to use false facts.
ReplyDeleteThe accounts were blocked yesterday. The fact that they are not blocked today doesn't change the facts from yesterday.
DeleteBypassing all those irrelevant comments from Adria haters to the actual subject of this article. It is not a level playing field when one competitor is having heavy subsidies and another paying higher cost.
ReplyDeleteNow to those Adria haters - we dont need to care any of their comments because they are the same ones that cry Adria is 10 euros expensive than Air Serbia on my travel.
Air Serbia and Adria have no route on which they directly compete. Adria competes with LH Group and is at LH's mercy right now. LH can end leases and decide Adria faith.
Delete