The three remaining flag carriers from the former Yugoslavia - Croatia Airlines, Air Serbia and Montenegro Airlines - will all receive state funds next year, each exceeding twenty million euros.
Croatia Airlines will be the beneficiary of the second instalment of the government’s 33.7 million euro cash injection, aimed at stabilising the carrier prior to its privatisation, which is being targeted for June 2020. The airline will receive 20.2 million euros next year which will go towards aircraft maintenance, debt and loan repayments, as well as other essential investments. The flag carrier’s CEO, Jasmin Bajić, said last week, “In the third quarter we had a profit of 41 million kunas (5.5 million euros). That’s the reality for Croatia Airlines - in winter we lose money, while in the summer, when competition is at its peak, we are profitable. We need to find a solution for the winter months when we are practically the only carrier connecting Croatia to the world”. Next year, the company is also expected to benefit from greater funding for Public Service Obligation (PSO) flight contracts for the upkeep of its domestic network. It currently receives 10.3 million euros in compensation per year from the European Union. The figure is expected to be revised up from late March 2020 once a new four-year contract comes into force.
The Serbian government has approved a draft of the country’s state budget for 2020 which foresees subsidies for Air Serbia. Although the exact amount of funds has not been specified, the national carrier is one of 63 companies “of special importance“ which will share eighty million euros in subsidies among themselves. The airline was the beneficiary of 20.8 million euros "from premiums, subsidies, grants and donations" both in 2017 and 2018. In addition, Air Serbia will pocket five million euros for subsidised operations out of Niš and is widely tipped to launch operations from Kraljevo, which will be incentivised by the government to the tune of 2.7 million euros in 2020.
Late last week the Montenegrin government allocated 21 million euros for Montenegro Airlines in 2020. The Montenegrin Minister for Finance, Darko Radunović, said the funds would be used to help the company become sustainable in the future. “We have witnessed significant state protectionism in recent times and we should notify the public of it. In the region, we have the example of Croatia Airlines and in Germany the case of Thomas Cook. We simply have to recognise the importance of certain companies which serve the public interest and contribute to the state budget”.
Comments
We have reached the point where ex-Yu governments are using subsidies provided by other ex-Yu governments to justify their own state subsidies.
Kompanija se hvali kako je ona jedna od rijetkih koji lete tijekom zime i time omogućuje otvorenost zračnih luka i zimi. I protom „zaboravlja“ spomenuti da za isto dobiva preko 10 milijuna EUR PSO (Public Service Obligation) godišnje. Končano, nije istina da tijekom zime iz hrvatskih zračnih luka ne lete druge kompanije. Iz Hrvatske tijekom zime leti čak 20 kompanija, koje imaju skoro duplo više linija od Croatie. U svim hrvatskim zračnim lukama, osim Zadra i Pule, ostale kompanije imaju više linija od Croatie zimi. Ostale kompanije imaju i više letova tjedno nego Croatia (218 tjednih letova), te obave preko 230 tjednih letova zimi.
It can be very dangerous
It is a common misconception (by many Macedonians too), but MAT was not state owned. It was a private company that assumed the title of being a flag carrier. They didn’t receive money from the state budget.
Foreign airlines would fill the gaps somewhat. But I think in tourism reliant country especially like Croatia and Montenegro, these national airlines play a very important role in bringing in tourists.
Let's just keep on pouring millions each year under the pretense that is the only way countries around these parts could have any kind of connection to the world.
Why is ZAD giving money to FR if other airlines are adding flights without any form of support?
Without Air Serbia the market would be far less competitive. Also these subsidies are not hampering growth since so far for next year foreign airlines are leading growth at BEG.
Have you heard about dividends? How about ROI? How about public equity?
Forever stuck in Tito's Yugoslavia..
BEG-VIE-KVO-VIE-BEG,a ostalim danima bice rasporedjen na drugim linijama
Latvia and Poland were smart when they invested in their national carriers in stead of relying on these LCC thugs.
Croatia Airlines belongs to the group of Malev, Cyprus Airways, Estoanian Air etc.
Guess where they are now as they had to return financial help to their Governments...
And still JU opens so many new routes and OU makes copy / paste from previous winter season.
If that was true then JU would have launched BVA, EIN, BCN ... and not some random cities like FKB or NUE.
Maybe LO is launching BUD-BEG for the same reason?
BUD-BEG has nothing to do with INI-BUD.
Hehehe, sure.
And they are very insignificant
Ryanair was the biggest carrier in Poland in 2018 with 11.6m pax, LOT was second with 8.7m and Wizz Air third with 8.4m pax.
Having state-funded national carrier operates a lot of routes isn't competitive, as it just eliminates competition. Who is going to fly BEG-x now, if JU is happy to operate them at loss (not saying a specific route is loss making, except JFK, but more at the end of the year as a whole)?
But according to some it would be better to have 2 weekly on Wizz Air.
Yes, there are some historical similarities. But difference is the way how country has gone through transition from history to 21st century.
Now, if we talk about system, economical environment, business mentality...there is huge difference between Latvia/Baltics and Ex-YU. Now they are way ahead of this region.
Look what happened this year - plenty of new airlines and in some cases ridiculously low prices even for long haul connections from LJU.
But what is more true that it's most of the time easier to start a new airline from scratch to change the mentality of the people. Especially when you have very low workforce fluctuation and employ people for 30+ years, combined with nepotism and everything that goes along.
Huge difference
Бато сад ћу да те просветлим. Ево рецимо Туркиш и Стамбол. Критична маса је одавно пробијена па додавање било које нове линије гарантује да ће линија бити попуњена. Лете за Хавану и Каракас јер имају стотине дестинација које могу да доведу трансфер путнике. Поетским речником, као грудва која се захуктала низ брдо и свака нова пахуља снега је чини још већом.
There are nuances when there is some other competition at the airport but the economic-political rasoning behind it is the same.
Admin, maybe its time to ban comments on this blog altogether.