Croatia Airlines fends off LCC challenge in Zagreb


Croatia Airlines has successfully held off a challenge from low cost carriers (LCCs) at Zagreb Airport, following talks with relevant stakeholders. As previously reported by the "Total Croatia" portal, both Eurowings and Laudamotion have expressed interest in stationing aircraft in the Croatian capital. The airport's higher fees would have been avoided with the reopening of its old terminal building, which would have been used exclusively by budget carriers. However, as EX-YU Aviation News learns, both Eurowings and Laudamotion have given up on their plans for the time being following strong objections from the Croatian carrier, expressed to both the state and the airport. The company is in the midst of a privatisation process.

Croatia Airlines faces strong competition from low cost carriers across the country, however, its main hub in Zagreb is dominated by full service airlines, which account for over 90% of all seats. Since joining the European Union in July 2013, Europe’s major low cost carriers have focused on serving coastal destinations in Croatia, rather than Zagreb. Only one LCC - Eurowings - maintains services to the Croatian capital on a year-round basis, while Norwegian Air Shuttle and Vueling operate a single seasonal route. This gives Croatia Airlines a fairly comfortable operating environment at its home airport as it attempts to reduce its losses and keep a lid on costs.

Zagreb Airport's General Manager, Huseyin Bahadir Bedir, said in April, "We understand the principles by which low cost carriers do business and we are attempting to find ways to cooperate with them. However, as an airport that handles over two million passengers per year, we have certain obligations which are regulated by the European Union. The two main rules we have to abide by are transparency and a non-discriminatory policy for all airlines. Of course, if low cost carriers find some other ways to subsidise their arrival into Zagreb, we are fully prepared to cooperate". Eurowings has previously said that Zagreb Airport's charges are "significantly higher than most major European airports, making it less appealing for low cost carriers". Commenting on its absence in Zagreb, Wizz Air's CEO, Jozsef Varadi, said recently, "It is a high-priced airport environment with fluctuating demand. Should the costs come down, I think they would attract us".




Comments

  1. Probably not the popular opinion around here but I understand them. If you are trying to get privatized, having to do deal with an LCC opening a base at your home airport is the last thing you need.

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    1. LX and LH do the same in FRA and ZRH. Nothing new

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    2. The only difference is that FR started flying from FRA, no LCC based an aircraft in ZAG.

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    3. Not much of a breeze, the FR performance in FRA
      Good so, dont see why they should get subsidies and better deals than other carriers
      LCC are might an added value at small airports/smaller cities. In PRG VIE VCE BCN etc they are one factor for overtourism. Cheap tourists not bringing much of turn over but often problematic with alcohol and other negative impacts

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    4. Sorry but that's a gross oversimplification. People don't travel by LCC only because they have lower income, but also because they would rather save on something that's essentially going from A to B and invest the difference in better hotels, restaurants, shopping etc.

      Besides, ZAG is very far from suffering from "overtourism" and the country would very much benefit from the influx of additional passengers, much more than by protecting this loss-making state dinosaur.

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    5. That's hardly a dinosaur.

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    6. You are right, they are not a dinosaur, they are a leech.

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    7. This is anti-competitive behavior. An airport should not be having "special" customers!

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    8. Vlad, thank you. Her it seems that everybody flies business and first on legacy carriers, while "the poor" use LCC.
      And yes, LCC tourists bring money too, there are families flying LCCs and they are not drunk youngsters. So stop generalizing, please.

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    9. Frankly, the difference between LCC and full fare airlines on continental routes is so minimal now a days that I can't understand this argument.

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  2. 'This gives Croatia Airlines a fairly comfortable operating environment at its home airport as it attempts to reduce its losses and keep a lid on costs.'

    Yet OU's losses have increased even with no LCC presence in Zagreb.

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  3. To use Wizz Air's term - "Wannabe monopolist"

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  4. I am surprised that even after concession Zagreb is refusing to accept LCC? Why are they protecting national airline? Is there some internal agreement between the airport operator and the Government?

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    1. They are not refusing to accept LCCs but OU pays its services in full at full price and is the main customer at ZAG. Their share is something like 60%. So what can they do.

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    2. They can do what LJU and BEG did, not put their eggs in one basket like SKP and ZAG did. Even TGD is reducing its reliance on YM.

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    3. Yes but neither has to pay off a new terminal.

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    4. Neither will modest growth, July numbers should be a wake up call. OU is dead and the upcoming winter season should worry the airport.

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    5. The thing is that the airport and Croatia Airlines need each other to remain profitable.

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    6. Yet but they don't have to lose money from LCCs. After all, look at BEG, Wizz Air has two aircraft based there and they still pay what others pay as well. So no need for preferential treatment.

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  5. Megalomanic terminal that serves 8 air bridges and a fee remote positions - difficult to comprehend. Investing in the old terminal would be even more insane.

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    1. What do you mean by megalomanic? The whole project was downsized and now we know why, OU is dictating who can fly and who can't.

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    2. With all due respect they are not "dictating" who can fly. Anyone can fly. They just lobbied for a whole new terminal not to be opened just for an LCC to open a base.

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    3. They are indirectly dictating by encouraging the airport to keep high charges for airlines. They probably get discounts since they are the biggest. Thanks to high charges EW did not expand and neither did Lauda. Lauda could have even launched VIE or STR flights.

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  6. This is hilarious. So passengers have to pay more expensive tickets because OU management is incompetent?

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  7. "Of course, if low cost carriers find some other ways to subsidise their arrival into Zagreb, we are fully prepared to cooperate" smells like tender

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  8. Interesting. Perhaps this is why in the EW decided to go and open a base in PRN.

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  9. No surprise. They did exactly the same thing some 10 years ago except back then a different airline was involved which has packed up and left ZAG.

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  10. Well I agree. How can you open a new terminal just for a certain group of airlines? For example why wouldn't Croatia Airlines be able to use that terminal if it wishes, with all the lower prices.

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    1. Because they don't want to? Many airport have a dedicated LCC terminal so it wouldn't be anything strange.

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    2. But then you are not offering the same conditions for all airlines.

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    3. I am sure OU doesn't get the same conditions like the rest.

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  11. BNX likes this.

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    1. This reminds me, it's been ages since we've heard anything of BNX.

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  12. ZAG needs to do more to attract LCCs.

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  13. LCCs in ZAG would kill OU.

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    1. LCCs coexist with national airlines at other airports in ex-yu too - Ljubljana, Belgrade, Podgorica.

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    2. OU management is already killing OU, LCC would just speed up the process.

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    3. @9.22
      LCC presence in Ljubljana is very small while the national airlines in Belgrade and Podgorica are supported by the state.

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    4. Then take Warsaw as an example, or Riga or Athens or Sofia if you don't like ex-YU examples. Should I remind you that ZAG is the only European capital without an LCC link to London? Why? So that OU can fly four times per week to LHR?

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    5. It is also the only EU capital along with Ljubljana with no flights to Stockholm throughout the year.

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    6. Yes, Norwegian used to fly ARN year round from ZAG but they stopped last year and now its seasonal only.

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    7. Also don't forget that ZAG doesn't have non stop flights to Rome either. I can't imagine they can't make 2 weekly flights work.

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  14. LCC or Croatia Airlines? That's the question.

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  15. They should rebrand Rijeka Airport into Zagreb West and get an airline to open a base there. Problem solved.

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    1. Ljubljana South you mean :)

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    2. Actually RJK did have talks with Eurowings about basing aircraft there as RJK has EW flights to Stuttgart, Düsseldorf, Cologne, Berlin, Hannover and Hamburg. They probably preferred ZAG as capital city, bigger market and an alliance member mini hub. If they were in better situation, I am sure RJK base would have been done deal after ZAG failure. But considering their current situation, I wouldn't bet on it

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  16. 90% legacy? That's just crazy.

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    1. ZAG has considerably small LCC presence comparing the other European capitals. Hope this gets sorted out.

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  17. Traffic would boom if they got an LCC to base a plane.

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    Replies
    1. They would probably be able to add around 200,000 passengers per year if an LCC based one plane.

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  18. I'm all for LCCs coming to Zagreb BUT government should first offload Croatia Airlines.

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    1. And what if they don't manage to offload Croatia Airlines, which is the most likely scenario. How many years will we be hostage to their privilege behavior?

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    2. +1 last anon

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  19. And here I was told that ZAG does not need ultra LCCs and that the general travel public will never fly these airlines from Zagreb

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    Replies
    1. Who told you so here?

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    2. Many posters who claimed fancy airlines are enough. Lol

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  20. What I find unfortunate is that several major LCCs used to fly to Zagreb but not anymore. Hope they come back.

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    1. Yes Wizz and Ryanair both used to fly.

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    2. Anonymus 10.12, not Ryan, Easy.

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    3. Ryanair newer had flights to Zagreb. EasyJet and Wizz air did. Much before Belgrade and other airports in region.

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    4. Yes but today they fly to Belgrade and other airport in region but not to Zagrab.

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  21. They are protecting OU like hell.

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    Replies
    1. They probably get the most money from OU so it's logical you are not going to expose it to too much risk.

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  22. No surprise. Nextchanxce will be summer 2020. We will see.

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    Replies
    1. That should be *next chance.

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  23. So why don't they go to Rijeka then... I am sure their costs are lower.

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  24. Eurowings has really stagnated this year in Croatia.

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    Replies
    1. They expanded quite quickly on the Croatian market these last couple of years.

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  25. Good news for Croatia Airlines.

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    1. And bad news for the rest of us passengers.

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    2. +1000 anonymous 10:10 they are extremely expensive even in low season.

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    3. That is not true. Out of season you can fly with them for less than 200 EUR return flight out of region. And in top season for less than 300, even in some routes 250 EUR. That is not expensive at all. But, problem is they fly to so few destinations, especially during winter. So, most of passengers use Lufthansa/Austrian/Swiss/Brussels/Eurowings, Air France/KLM, LOT, ČSA, Aegean, Turkish, British/Iberia/Vueling, Aeroflot, Norwegian, Emirates, Qatar, Air Canada, Air Transat and Korean connections.

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    4. Did you really have to list all airlines? You could just write competition. lol

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    5. Sorry PURGER but would it bother you if you could fly with LCC to London or to some destinations in Germany with 70 Euros return tickets?

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    6. Or even less than 70 outside the summer season! I am sure Zagreb-Memmingen could go for as long as 40 Euros! But won't happen because fat cats will keep on getting fat.

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    7. Purger, what "Air Canada, Air Transat and Korean connections" have to do with LCCs Ryan, Easy and Wizz that operate within Europe/Mediterranean (with few ME exceptions)? And you listed them as a solution for low number of destinations in winter, when two of those don't even fly in the winter.

      "250 EUR. That is not expensive at all" - yes it is, compared to what LCCs could offer.

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    8. It depends. With Ryanair or Wizz Air I would never fly for 70 EUR, and would rather pay 200 for Croatia. In case of easyJet or Norwegian is a different story. But very, very rarely I find Ryaniar for 70 EUR, usually it is near to 100 EUR or even more.

      But for sure one can not say that 200 EUR for legacy is extremely expensive.

      I just said what is main problem for Croatia Airlines, that they fly to so few destinations, especially during winter. So, most of passengers use other airlines to make connections. Inside or outside Europe.

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    9. The only thing legacy about OU is their fleet age (A319/320) :)

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    10. I would say free meals, free check in, free seat selection etc makes them a legacy carrier. You would actually have to fly with them to know.

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    11. "With Ryanair or Wizz Air I would never fly for 70 EUR, and would rather pay 200 for Croatia."

      I've flown 18 times on Wizz Air in the past two years, never a single issue. And I've saved myself some 2.500 EUR in the process.

      Delete
  26. Does anyone know what the current state is of the old terminal building in ZAG? Is it being used for something else at the moment?

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    Replies
    1. I think it is just being used for office space at the moment.

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  27. What a bunch of wimps! I include OU and the airport in that statement.

    If OU was at least doing something to expand operations or maybe set up a dedicated LCC themselves than ok, I would understand this. But to think any would be investor would not see that eventually LCC will come to Zagreb and are not taking that into account just shows how unfortunately dumb OUs management actually is!!

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    Replies
    1. Interesting idea about OU setting up a dedicated LCC. Could it work? Perhaps they cold make some cooperation with Trade Air or something. It would be an exciting prospect.

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    2. Imagine if OU actually considered creating an LCC, unions would strike until they kill the idea. It wouldn't work anyway because of the mindset. I think OU's biggest mistake is not expanding slowly in winter. I am sure Prague or Milan could work twice a week in winter.

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    3. OU could adapt to a half low cost carrier approach. Advertise cheap tickets on the routes where aircraft are half full to fill empty seats and help encourage people in the region to fly instead of taking busses,

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    4. I think OU's main problem is that it has way too many employees they can't get rid of. One way around it is to increase their revenue but they would have to fly more, something they are not keen on doing.

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    5. @Q400
      You must be joking with OU starting its own LCC. They are so uninterested in what they do to change for example A319 ZAG-SPU-FCO-SPU-ZAG with Q400 ZAG-FCO-SPU-FCO-ZAG, have spare capacity on bigger plane for longer northern flights from the coast and have nonstop links to FCO from both ZAG and SPU. Or they don't care about unserved markets within ex-yu which could feed the network from ZAG which has really sad LF. It's shame that INI would get MLA flights and they discontinued MLA, one of their first charters. Actually, speaking of charters, with HR tourism, they should have done much more. Long-haul as missed opportunity with the entire Balkans, Greece included, "behind". All these should have been done long ago, before starting LCC, and if they were not capable of doing all these, why do you think they could start their LCC? And just one more thing : 7-8 years ago, croatian LCC airline was supposed to start. The contract was signed with company from Bulgaria for dry lease of the first A320, the contract was signed for the space were HQ were supposed to be, AOC request was filed to CCAA, vacancies posted for various jobs, and TICKETS PUT ON SALE on company web page for destinations to include Düsseldorf, Hamburg, Stockholm, Milano, Prague, Geneve, Sofia Larnaca. Everything HAD TO BE STOPPED literally overnight, after the phone call the CEO received. He left HR for good, and is in London now. What was the content of the phone call, I leave to you to conclude, as well as who ordered such phone call to be made.That's, unfortunately the way how they function, not business-wise, Mafia-wise.

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  28. True. From what I heard OU also complained to Lufthansa about Eurowings. Because Eurowings held direct talks with the government about opening a base in Zagreb. OU was very angry,

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  29. A great loss for Croatia.

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  30. Nothing would surprise me from our airline anymore.

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  31. It's necessary the privatization of Croatia Airlines.

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  32. I believe that major airports like ZAG should (although not necessarily by all means) support their national airlines e.g. OU and give them more favorable terms and conditions than to foreign/low cost carriers.

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    Replies
    1. When OU decided to sell LHR slots, ZAG should have immediately approached Wizz Air to launch daily LTN-ZAG flights. When they decided not to extend ARN into winter, ZAG should have offered incentives for NYO-ZAG. When OU decided not to make FCO nonstop, ZAG should have contacted VY to step in.

      ZAG needs to push OU to become more proactive like LJU is pushing JP and BEG is pushing JU. Like this ZAG is enabling OU to become even worse than they were in the past. Why not blackmail them into extending some flights into winter? Why didn't they bring Tarom to ZAG?

      I blame for ZAG and OU here. They seem to be the perfect match of incompetence.

      Delete
  33. LCCs are a fact of life now in every part of the world, and their contribution cannot be underestimated. OU needs to lift its game to compete rather than hide behind protectionist absurdities!

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  34. Zagreb is the only EU capital city with no LCC connection to London. I understand OU want to help save themselves and all the people it employs, but they are sadly fighting a losing battle. LCC are not only for poor people, just look at Denmark, Switzerland, Sweden, London and all the wealthiest places within the EU with the highest salaries - they all have thriving LCC networks. Croatia with much lower salaries than the likes of Scandinavia etc restricts LCC and thus restricts the travel opportunities for its citizens. In the long run, these kind of anti-LCC moves restrict investment and economic growth opportunities. A real shame for such a wonderful country.

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  35. This winter we should be lucky if there is any growth.

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  36. You reap what you sow. Easyjet left Zagreb in 2014 when ZAG's management (ie the French) significantly increased charges. So it is the French that chased out LCCs. They shouldn't be surprised now that when they need them they are facing opposition. Wrong business plan from the start.

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    Replies
    1. what routes did easyJet operate? Also when did FR fly to Zagreb?

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    2. I think Paris and Dortmund. Maybe. FR never ever flew from Zag.

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    3. EasyJet was flying from ZAG to Dortmund, Paris and London

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    4. Wow Impressive presence. Only goes to show how big the potential is.

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    5. Impressive?

      Have you seen Basel, Berlin or London? How many flights do they have with easyJet? Well, that is impressive and 3 destinations only is actually very low result.

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  37. The funny thing here is that the likes of Ryan Air and EasyJet would be good for both Zagreb Airport and Croatia Airlines. These two would develop routes instead of taking pax away from OU. They would create thir own market and in effect grow OU's as well as low cost carriers have done in so many parts of the world.

    ReplyDelete
    Replies
    1. Yes but here Eurowings and Laudamotion were interested which would probably directly compete with OU. They fly to main airports, Eurowings is a sister company of Lufthansa, so it would take away connecting pax

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    2. Agree with @anon 12.00. What is great about low cost carriers is that they introduce the flying option to so many people who just would not have considered flying because the feel they can not afford it.

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  38. OU has (through incompetence, lack of leadership and vision, and political wranglings) limped along in recent times, and suddenly the threat of real competition scares them. OU needs to pay its debts, run more flights (especially from the Adriatic coast given Croatia's tourism economy) and at greater profitability.

    ReplyDelete
    Replies
    1. +1
      The airline with the most wasted potential in the whole exYU, they could be doing so much more with a more inventive and innovative approach!

      Delete
  39. Obviously the Government (as the primary stakeholder in OU) still believe it is a valuable asset to protect.

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  40. Absolutely disgusting behavior from Croatian Airlines. If you want preferential treatment buy the airport and do what you want with it. Threatening and blackmailing the airport authorities is no way to do respectable business. It's not exactly like Croatian Airlines is some behemoth in the market. If you want a monopoly increase flights, drop prices, you can't keep better airlines out of the market forever.

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  41. When privatisation of OU will be over and OU will be sold.. LCC will come in ZAG.. It is only relevant conclusion..

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    Replies
    1. There has been at least a dozen mentions of OU privatization over the last ten years. There were reports of Garuda, Turkish, Hainan, Malaysia etc interest over the years but nothing happened. Privatization is just an ongoing excuse to keep LCCs away.

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    2. Or better to say when OU goes belly up...

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  42. I am sad OSI failed, they could be a nice little alternative to ZAG.

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  43. No surprise. Split and Dubrovnik will soon surpass Zagreb

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    Replies
    1. So what? What negative effect would it have on ZAG? None. This obsession with numbers is beyond comprehension.

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    2. Where was it said the numbers by themself would have a negative effect on Zagreb? It was just an observation, with the implication that it is Zagreb's own fault that they refuse to participate in the boom of Croatian tourism to the full extent. The only reason it has its current performance is because it is the biggest city in Croatia and its capital.

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    3. ZAG has so much potential that will come to flourish in the years to come. Speaking of the numbers the airports at the coast have more or less already reached their plateau. What we need is that ZAG builds on the quality of the connections to major destinations and not to have flights to each village around the globe.

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  44. Laudamotion/Ryanair could complain to EC regarding this obstruction and uncompetitive behavior.

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    Replies
    1. That won't work - its the airport's decision whether or not they want to re-open the old terminal to serve LCCs. They are not obliged to do so no matter how you interpret the rules. Unless they've caught ZAG and OU management colluding somehow, then they would have no hope of winning. OU will drag ZAG further and further behind, and ultimately hurt the entire regional economy for the sake of the dinosaurs who are employed by OU itself.

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  45. The new ZAG terminal is just about empty, imagine the old ZAG terminal bldh being busier with LCC. What a slap in the face that would be.

    ReplyDelete

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