State to subsidise select Adria routes


The Slovenian government has said it is seeking to modify the country’s aviation legislation which would enable it to subsidise a select number of routes currently operated by Adria Airways, in case of the latter's demise. The Slovenian Deputy Prime Minister and Minister for Infrastructure, Alenka Bratušek, noted last Friday, “The proposed new law on aviation would allow some forms of subsidies on certain routes. But it would be four or five destinations, not all of Adria’s flights”. The Slovenian government previously said it had developed contingency plans in case Adria Airways discontinued flying and could "no longer connect Ljubljana with European capitals”. It added, “This is all the government can do at the moment".

Adria is yet to submit its 2018 financial report to the Slovenian Civil Aviation Agency, which is in breach of European Union regulations. According to EU rules, airlines are required to submit their audited balance sheets to the local civil aviation regulator within six months of the end of the business year, or within the deadline outlined by national legislation, which in Slovenia’s case is on August 31. The Slovenian regulator has since extended the deadline exclusively for the airline. Adria’s CEO, Holger Kowarsch, previously said the loss would be significant and in the double digits but added that the company would be placed on "firm foundations". No comments have been made so far on this year's financial performance.

During talks between Adria’s management and Slovenia’s Prime Minister in May this year, the carrier requested funds and assistance from the state for the upkeep of certain routes. Although the company denied such reports, a leaked transcript of the meeting showed that such an appeal was made. Ms Bratušek previously said the government had no means to directly aid Adria until 2021, as the company was a recipient of state funds in 2011. Under EU regulation, the government is barred from providing further financial assistance to the airline until a ten-year deadline has passed. Earlier this year Mr Kowarch said, "Slovenia needs its airline, because it is very important for Slovenian society, tourism and economy that a national carrier operates from Ljubljana Airport". At the time, he added that the company would not file for bankruptcy, "contrary to what many wished for".



Comments

  1. Aha so they sue JU for some supposed illegal activities under EU law despite Serbia not being in the EU while they are getting the government to subsidize them once again?!

    Adria is such a leech and I hope someone sues the government and the EU blocks these subsidies.

    ReplyDelete
    Replies
    1. Hahaha, great point!

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    2. Article states funds could be offered to foreign airlines too. So not necessarily Adria.

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    3. Do you really believe anyone but Adria is going to get that money?

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    4. I think the subsidies are to be put in place if (ok, let's be realistic: when) Adria goes bust.

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    5. Well if I recall the exact phrasing of the ministry at that time (this news is rather old) the idea is such that a subsidy would be given out at a tender only if adria ceases operations. probably to cover the core routes such as BRU, FRA, MUC, VIE and ZRH

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  2. Maybe they should just call it quits.

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  3. Is it me or have they canceled ZRH this morning?

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    Replies
    1. They seem to have merged it with Vienna. Lubljana - Vienna - Zurich - Ljubljana.

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    2. Sarajevo/Skopje has also been merged today.

      Ljubljana-Sarajevo-Skopje-Ljubljana

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    3. It seems like an aircraft might have gone tech. Return flights from Paris has been cancelled and they already anticipate a lot of delays in the schedule today.

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    4. And this is what they want to subsidise?

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    5. The government is burning money. It's not like JU (or LO) which got money but actually used it to improve itself and become competitive. JP is using it but still failing to stabilize itself.

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    6. Crazy. I just keep thinking about the loads on these flights if they can operate them with one plane. And it's September. What will happen in winter??

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    7. Honestly I don't know who is crazy enough to buy a ticket with them anymore. They plan to increase winter flights but for who exactly.

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    8. I can only imagine the losses they will have on those new routes. Even in TIA it will become more difficult for them to compete with all the new airlines. Even JU is becoming more and more aggressive there.

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    9. @Anon 09:33. Adria's routes from TIA to Frankfurt and Munich have been positive throughout. I believe, they will fight to keep them. Also, now that Transavia will end its Amsterdam route (https://www.luchtvaartnieuws.nl/nieuws/categorie/2/airlines/transavia-meer-rotterdam-airport-minder-schiphol) might be a potential option for them to launch direct flight to Amsterdam but will see what happens.

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    10. Yes but JU also flies to both TIA and AMS and they seem to be doing quite well there as well. It will become increasingly difficult for them to fight JU which is even sending A319 in summer.

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    11. JU rocks in TIA!

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    12. Adria had more than 11.4k passengers from/to TIA in June while AS had only 4.4K. Just tells you that Adria will fight to stay in the market.

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    13. Unlike JP, JU is reliable and is slowly consolidating its position in TIA. Long-term prospects are much better for JU whose network keeps on growing out of BEG while JP can't sustain pretty much anything. I wouldn't be surprised if next summer JU has double daily flights to TIA.

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    14. @Anon 9:55: Transavia will really end route to LJU? Is it supposed to be replaced by Rotterdam or is the carrier leaving LJU?

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    15. Aha, you meant flights to TIA. It would be really strange to cut LJU since the planes are full to the last seat. False alarm, LJU is keeping Transavia.

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    16. Adria has more passengers as they do not fly from TIA only to LJU, but to the other airports as well.

      I am sure that the number of passengers on TIA-BEG route by JU is bigger than on TIA-LJU route by JP and that is the point here.

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    17. Adria had 28,826 in the 1st half of 2019 in/out of TIA to Lju while AS had 18,844 (http://www.tirana-airport.com/media/15675197266395ROUTE_REPORT_JAN-JUNE_2019.pdf); Adria continues to have dominance over AS at TIA, that's why they are going to fight to maintain their market share. Surprised to see Transavia abandoning their route to TIA from Amsterdam though.

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    18. Do you have the list for let's say June 2018? I am sure JU was much lower.

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    19. I don't have for June 2018 but have for 2018 as a whole (http://www.tirana-airport.com/media/15496402445858RouteReport2018.pdf) & (http://www.tirana-airport.com/media/15496402449413AirCarrierMarketShare2018.pdf).

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  4. WOW so they already burned the €4.5 million they got from the government? It means they will get probably twice as much. That's just crazy.

    I think they will have to have a public call for these subsidies, can JP wait that long?

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    Replies
    1. First the law has to be adopted, so I think it will be quite a wait.

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    2. I'm normally not Adria fan, but it is my understanding the BRU "subsidies" is actually just a deal that guarantees the government and its entities fixed prices for tickets, which are paid for each separate flight, i. e. government didn't fork out 4.5mio at once.

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    3. They didn't agree to pay whole amount at once you are right, but they agree to pay very high amount on average ticket, based on very high Adria'a fares....

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    4. That's the problem with subsidies in general. Subsidies = less competition = high prices.

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  5. Adria is a disaster to fly with. Planes are literally falling apart on the inside, and of my 5 flights in 2018, 2 were canceled while waiting at the airport. Had to wait for compensation for months.

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  6. Why are they hiding their financial report?

    ReplyDelete
    Replies
    1. Because the results must be fantastic.

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    2. Just as any other airline.

      Look at any decent airline, they publish the results within 3 months of the end of FY. And here we are 8 months later...

      Just a plot to keep suppliers happy for couple more weeks. The moment they and the CAA see the report, it's game over.

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  7. Seems like Adria is the only company in Slovenia that can shamelessly disobey the law and even get rewarded for it.

    ReplyDelete
    Replies
    1. Sorry, but by far not the only company.

      It's still very Balkan out there.

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  8. So they will subsidise a 100% privately owned company?

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    Replies
    1. They probably calculated that the loss of Adria going bust would be more costly then paying for a few routes.

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    2. Not only will taxpayers have to pay for a private company but a private company owned by Germans!

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  9. They need to let them die already. This is painful to watch.

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  10. Any guesses as to which these "4 or 5" routes may be?

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    Replies
    1. Probably ones that are "vital to the state and connectivity"- Brussels, Frankfurt, Munich, Zurich, Vienna.

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    2. So basically routes from which LH profits the most.

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    3. This is just my guess but those routes provide the most connections within Adria's network.

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    4. Yes, my guess is that those routes would receive support, especially if JP goes bust.

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    5. That would be racist. Why subsidize routes to German hubs and not BEG, IST, ATH, FCO, CPH...?

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    6. last anon: you don't seem to understand what the meaning of the word "rasist" actually means in reality :D

      and back to topic why would the subsidy be for any kind of connectivity and business realtions. regarding slovenian business connections and tourists your listed countries are not even 2nd tier, but 4th tier. BEG and IST already connected by foreign airlines and routes doing passenger wise and financially very well as far as i know. ATH for income tourism of slovenia and for business connections totally irrelevant - shown by the failure of the aegean route ath-lju. FCO: slovenia does business with the northern part of italy, not the south, and also tourists are generally from the northern area (almost all italian drive to slovenia for tourism, even when adria did fly to FCO). CPH: gateway to scandinavia, for further flights. you can simply switch planes in MUC for example. Not that many direct connections between slovenia and denmark in order to say that it is of vital importance.

      Let's not forget what is the vital importance of the country: routing politicians and state officials, business connection and incoming tourism (so you can justify the subsidy by future earning). outgoing tourism in not of state importance, as this basically says export of funds to another country, so subsidy cannot be justified.

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    7. "not of state importance, as this basically says export of funds to another country, so subsidy cannot be justified."

      Then that is the case of INI flights to BUD.

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  11. If JP plans to turn this around, even with state subsidies, they have to reduce their network so they can end with all the cancellations and delays which causes new compensation claims and more money lost. That news of them cancelling flight to Vienna because of 250 EUR compensation claim has received international coverage from Norway to the US. Even FOX in the US picked up on the story.

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    Replies
    1. I agree but they have gone and done exactly the opposite. They plan to operate a record number of winter flights.

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    2. Yes the coverage of the cancelled Vienna flight and the 250 EUR compensation has been huge. And everywhere it is mentioned "Slovenian company". Quite bad press for the airline.

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  12. Shameful Ms Bratusek. Instead of auditing the owners of JP you plan to provide them with subsidies.

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  13. Why does Adria have to publish their results anyway? Aren't they a private company? Why would the public have to get access to their results?

    ReplyDelete
    Replies
    1. It is required by EU law to submit its report to the CAA. It hasn't done that. But the CAA which is filled with former Adria employees doesn't give a toss.

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    2. It is also the law in Slovenia that all companies (including LTDs with 0 employees) have to publish financial results by certain date, which I think is today.

      Not that Adria cares or will actually publish the report.

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    3. Not today but 31.8 they have to be submitted to AJPES and then they are published within the next few weeks. The problem is that Adria hasn't even submitted its report.

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    4. Maybe they are tweaking reports, same way as Montenegro...

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  14. Replies
    1. But can it be saved or is it too late? :)

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  15. Slovenia needs no own airline, no need to waste taxpayers money for a company who can not sustain the market and its current environment. LX LH OS and others will do the job perfectly.
    4K needs JP for money laundry and their blowed up salaries

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  16. I wrote several times to LH and LX top mgt to start flights to LJU since conditions with JP are unacceptable for LH group passenger who rely on JP flts to VIE MUC ZRH FRA. Seems they dont care, replies came with the usual excuses etc
    So I made my decision to significantly reduce travelling to Slovenia

    ReplyDelete
    Replies
    1. Interesting. What did they write back?

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  17. It would be wiser to give that money to foreign airlines. At least they would maintain the schedule and not merge a bunch of flights like some bus line.

    ReplyDelete
    Replies
    1. They have increased subsidies for marketing for foreign airlines flying to Slovenia.

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    2. They must be working so well since Wizz Air left Slovenia.

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    3. Wizz air will be back for the summer season.

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  18. Where are concerned tax payers?

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    Replies
    1. They are only in Serbia

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    2. Do you mean Delta's bussiness?

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  19. I don't think it's worth saving anymore.

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  20. If they are going to do this then Adria should be renationalised. What is the point of funding some turn around magicians whose tricks have all failed?

    ReplyDelete
    Replies
    1. I think 4K would be the happiest with that scenario.

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  21. The article is a bit misleading. The minister never said that subsidies will go to Adria. Their purpose is exactly the opposite - to subsidize other carriers in case Adria goes bust.

    ReplyDelete
    Replies
    1. She actually said it would be Adria routes. last week.

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    2. Well the article does say it could be provided to foreign airlines too.

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    3. Can you post a link? Here's my link:

      https://www.vecer.com/adria-airways-piloti-in-vodstvo-se-se-pogajajo-za-zdaj-brez-uspeha-10062201

      Where it clearly says, they are talking about subsidising routes in case of JP's bankruptcy.

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    4. She was quoted in the wrong context in the slovenian media. What she actually said was that the government will have a law in place to subsidize 4 or 5 strategic connections that are currently operated by Adria. But they will offer the subsidy to any airline that will show the interest and only in case Adria ceases operations.

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    5. PLEASE HAVE VIE SO THAT LAUDA CAN APPLY :D :D :D

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  22. This is what you get when you do your business with the Germans

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  23. If government is barred from assisting Adria how come ministry let them win the tender for Brussels flights?

    ReplyDelete
    Replies
    1. The Brussels tender has been published every year for the past 10 years or so, even before Adria was privatized. The government wants to ensure 2 daily Brussels flights even if they don't make economic sense. So far Adria has always been the only airline applying to the tender, but in theory anyone could.

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    2. Other airlines have had the chance to apply for the tender, but obviously Brussels Airlines was the other option and they probably see no point in competing with JP.

      LH Group prefers cheap regional feeders feeding their hubs. Cheaper staff, lower costs.

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    3. 3 reasons:
      a) they were the only one who applied.
      b) the price for tickets can be deemed market price for that kind of arrangement,
      c) and no one other filed any complaints towards the tender requirements, nor the decision.

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  24. Why does the CEO think that anyone wishes for Adria to go bankrupt?

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    Replies
    1. lol just read the comments here.

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    2. I don't think he was referring to the general public commenting on their operations on internet forums and websites.

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    3. Well he probably meant certain politicians and certain competitor airlines.

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  25. My take is the government knows Adria is going bust.

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    Replies
    1. Everyone knows Adria is going bust.

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  26. Which companies could benefit from these subsidies the government is planning?

    ReplyDelete
    Replies
    1. LH group airlines. My guess is Eurowings will jump at the opportunity and cover routes like Vienna, Frankfurt, Munich, Brussels...

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    2. In a few years Eurowings will go bust. Wrong company.

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  27. The first reasion why (ZLet) the national law of aviation in Slovenia have be revised is due to the sale of LJU to Fraport. It's against the Chicago convention on Annex 10.
    According to my last information, the "subsidesed routes" story is at the level, that someone from ministry visted another slovenian operator once, they could eventualy operate two small aircrfats. Consider this is an acmi operator without and GDS (ticketing) system etc, ...
    Again again and again ... Slovenia is shallow yield airline market which nobody reasionable would go for it, particulary in the current state in Europe. You can see it by (not) interest of the budget airlines in the last decade etc ...

    ReplyDelete
  28. if someone has a subscription to Dnevnik:
    https://www.dnevnik.si/1042897542/posel/novice/adria-naj-bi-nasla-partnerja-iz-dublina-

    there seem to be some news regarding the continuation of this fairytale.

    could someone with access provide some resume of the article?

    ReplyDelete
    Replies
    1. They are probably referring to City Jet. But this is what City jet said a few weeks ago.
      https://www.exyuaviation.com/2019/08/cityjet-denies-adria-interest.html

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    2. that's why i'm wondering, cause only city jet is from dublin (if we are speaking of no hedge/financial institutions) and that news was kind of denied, but not going to buy subscription for one article :)

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    3. Probably just a spin, before they send their 2018 report to the CAA..

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    4. CityJet has publicly denied any involvment with Adria. I don't see why they would be even remotely interested anyway.

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  29. What do you people predict their loss will be in 2018? If they are hiding it the way they are.

    ReplyDelete
    Replies
    1. From 50mio euro and up of debt.. see how this translates to loss in creative accounting...

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  30. I'm not too optimistic about the government's plan. Especially with Wizz Air leaving this winter.

    ReplyDelete
    Replies
    1. @anon 13:48:
      it's better then nothing. at least they have a plan, which is kind of a surprise for politicians. but i suspect they don't have LCC's particularly in mind for the subsidies. they want connections to major airports not some LCC bases in the middle of nowhere (e.g. Charleloi, Hahn, Beauvais). the government wants connectivity also for transfers to other destinations - i.e. flight to major hubs, not only o&d traffic.

      like some other commentators have rightfully said regarding wizz and charleloi route: the load factor was good even in winter, but cheap-ass slovenian customers who fly lcc buy tickets only when they are dirt cheap, and with that kind of price, wizz cannot make that kind of mones/profit on this route, so it's better to shift the plane somewhere where they can earn more profit with this aircraft.

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  31. Wondering how much market share LH Group has lost in the past 2 years by counting on JP as its hub Feeder. JP market share in LJU went down, therefore LH Group must have lost on ground too. I think Profiteurs are KL/AF with almost 3 daily flights to LJU, similar as LO and TK with 3 daily flights which run at least for Star Alliance. Counting that SU is Skyteam too, they have 4 daily flights and I am sure they hurt LH Group. Otherwise Skyteam wouldn't have opened up two additional daily flights since 2018. Anyone has some figures? Maybe Admin?

    ReplyDelete
    Replies
    1. Don't forget JU as well which carriers a lot of transfers that were flying via VIE or MUC in the past.

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  32. Shut it down already. They are handicapping the market with their inefficiency.

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  33. Televisa presenta more and more...

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  34. Waste of Money ...

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  35. JP cancelled Copenhagen today.

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  36. I would better spend those money to make waiting time in medical centers shorter.

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  37. So I was flying on Aug 30 and they have had the flight MUC-LJU redirected to ZuIch first. Both flights were full, there were hardly 5 seats available at the end of the aircraft (I wanted to go to the end of the aircraft as usual). So at this point I do not know which option I would prefer - having Adria dead (and not being able to fly from LJU) or play a roulette each time I buy their tickets. But I do not believe that noone will pick adria's routes after its dead.

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  38. What I can not understand is that JP discontinued to fly to IST, SVO,BEG and didnt try regular LED and BCN? to get big markets.....

    ReplyDelete

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