Montenegro seeks investigation into LCC subsidies


The Montenegrin Ministry for Capital Investments has requested for the country’s competition watchdog to investigate whether state subsidies provided to low cost carriers (LCCs) Ryanair, Wizz Air and easyJet between 2013 and 2020 distorted the market. It comes as the state continues its efforts to set up a new national carrier following the collapse of Montenegro Airlines last December. The Ministry has urged the Agency for the Protection of Competition to open an investigation into whether incentives in the form of subsidies provided to the three airlines by operator Airports of Montenegro, the National Tourism Organisation and the former Ministry for Sustainable Development and Tourism resulted in a lack of free and open competition on the market.

Low cost carriers entered the Montenegrin market in 2013 and have quickly established themselves as key players, with Ryanair becoming one of the largest airlines at Podgorica Airport. The budget carrier, along with its counterpart Wizz Air, maintain year-round operations to the Montenegrin capital, while easyJet runs seasonal services to Tivat. It is unknown how much the three received in subsidies and incentives over the seven-year period, however, the agency has begun preparatory work into the matter. Last year, Ryanair reported Montenegro Airlines to the European Commission for being the beneficiary of illegal state aid, which the government cited as one of the key reasons for its decision to shut down the former national carrier.

The state hopes to launch a new airline called ToMontenegro by the start of summer. However, the European Commission has requested for the Agency for the Protection of Competition to look into the government’s recent purchase of two Embraer E195 aircraft for the new national carrier and for it to investigate whether there were elements of illegal state aid in the acquisition. Meanwhile, ToMontenegro is hiring staff members for several positions as it aims to commence operations before June. “Our goal is to launch before the summer, which would be important for Montenegro’s entire economy. We know everything that needs to be done and we are working on achieving this goal. However, not everything is up to us. There are certain regulations that have to be met, both at home and abroad”, the company said.


Comments

  1. Anonymous09:01

    Oh oh

    ReplyDelete
    Replies
    1. Anonymous12:32

      Wow, what a comment, the evolution of the ouch.

      Delete
    2. Anonymous15:25

      Ouch

      Delete
  2. Anonymous09:02

    I fail to see the point in this. How many millions did Montenegro Airlines get distorting the competition?

    ReplyDelete
  3. Anonymous09:03

    I didn't realize these airlines were getting subsidies.

    ReplyDelete
    Replies
    1. Anonymous09:38

      These sort of airlines always do.

      Delete
    2. Anonymous09:39

      While accusing everyone else of getting aid...

      Delete
    3. Anonymous15:26

      That's the modus operandi of all major European LCCs.

      Delete
  4. Anonymous09:03

    I think the benefits far outweigh the investment, whatever it may be. These LCCs have secured year round connectivity for Montenegro and also brought hundreds of thousand of tourists.

    ReplyDelete
  5. Anonymous09:04

    Payback to Ryanair.

    ReplyDelete
    Replies
    1. Anonymous09:06

      Yeah, I'm sure they are shaking

      Delete
    2. Anonymous20:51

      They want taxes and other charges removed yet they are against governments helping their flag airlines.

      Delete
  6. Anonymous09:07

    What's the point of this exactly?

    ReplyDelete
    Replies
    1. Nemjee09:54

      This is about politics. The new government is trying to discredit DPS/Milo by uncovering corruption scandals that took place over the past 30 years. Elections in Podgorica are coming after summer and they are already preparing for that.

      Delete
    2. Anonymous10:01

      Never a smart idea to mix politics and aviation.

      Delete
    3. Nemjee10:06

      Depends on what kind of politics we are talking about here. You have airlines such as EK who were political projects that turned out well and then you have disastrous airlines such as YM ... among others... which eventually collapsed.

      Delete
  7. Anonymous09:07

    And the European Commission already asking investigation into state aid for To Montenegro lol.

    ReplyDelete
  8. Anonymous09:09

    And what if the agency find it did distort the market. What is the government going to do? Ask them to pay it back? Please

    ReplyDelete
    Replies
    1. Anonymous09:10

      For of intimidation maybe?

      Delete
    2. Anonymous09:10

      It's just a tactic to end their funding and possibly getting out of existing agreements if the agency rules their way.

      Delete
    3. Anonymous09:14

      Or preventing an LCC to open a base in Podgorica. Montenegro Airlines is gone and if there was not a pandemic I'm sure Ryan or Wizz would already be stationing a plane in TGD.

      Delete
    4. Anonymous09:15

      Sounds plausible.

      Delete
    5. Anonymous09:44

      @9.09 yes, in some cases Ryanair was ordered to pay back subsidies offered by airports which were concluded to be illegal or distorting.

      Delete
    6. Anonymous09:45

      In relation to that here is an article. They had to pay back almost 10 million euros.
      https://www.politico.eu/article/ryanair-ordered-to-pay-back-e9-5-million-in-illegal-state-aid/#:~:text=Marketing%20deals%20and%20other%20arrangements,according%20to%20the%20European%20Commission.

      Delete
  9. Anonymous09:11

    This won't end well.

    ReplyDelete
  10. Anonymous09:11

    Well didn't the government say To Montenegro would be an LCC?

    ReplyDelete
  11. Anonymous09:12

    It's amazing how quickly Ryanair has been growing from Podgorica.

    ReplyDelete
    Replies
    1. Anonymous09:24

      it has only 6 destinations (of which 2 seasonal)

      Delete
    2. Anonymous09:26

      They have been shrinking even faster. Stockholm-Skavsta, Stuttgart, Dublin, Bologna, Poznan are routes that are gone so far.

      Delete
    3. Anonymous09:27

      Yes, for an airport like Podgorica that is large. They were the second busiest airline at TGD before the crisis. They even overtook Air Serbia.

      Delete
    4. Anonymous09:28

      @9.26 we are in the middle of a pandemic. Those routes will evntually return.

      Delete
  12. Anonymous09:12

    LCCs benefited Montenegro a lot. They made travelling a much affordable option not only for the locals but for the tourists visiting them.

    ReplyDelete
  13. Anonymous09:13

    Is there any chance Ryanair will open a base in TGD? Maybe this is related to that.

    ReplyDelete
    Replies
    1. Anonymous09:14

      We never expected FR would launch flights to Podgorica in the first place so you never know.

      Delete
  14. Anonymous09:16

    Such a shame the government is adopting this sort of attitude towards low cost airlines.

    ReplyDelete
    Replies
    1. Anonymous09:16

      Let's just hope they don't chase them out.

      Delete
    2. Anonymous09:17

      They won't. Being responsible for chasing LCCs out wouldn't be a popular move with the electorate.

      Delete
    3. Anonymous09:19

      Why is it a shame? The government is right. LCCs should pay full airport fees. Ryanair even has the audacity to complain while receiving aid themselves.

      Delete
    4. Anonymous09:20

      ^ Typical FR

      Delete
  15. Anonymous09:17

    Didn't someone claim here how they have it on good auhtority that Montenegro will offer a similar model to LCCs like Macedonia did to Wizz in Skopje? These actions don't seem to be going in that direction.

    ReplyDelete
    Replies
    1. Anonymous09:19

      People can write whatever they want in the comments. Doesn't mean it's correct.

      Delete
    2. Anonymous09:19

      Well, in my opinion, that would have been more rational then this tomontenegro business.

      Delete
    3. Anonymous09:23

      I think that was indeed their first idea but then there must have been a lot of pressure from somewhere

      Delete
    4. Anonymous20:50

      Boohoo I'm so sad we can't have a Wizz monopoly :(

      Delete
  16. Anonymous09:18

    Montenegro was the last market in ex-Yu that started getting LCC flights, which is ironic for a tourist destination. The government should embrace them, not fight them.

    ReplyDelete
    Replies
    1. Anonymous09:22

      If Pobeda, Norwegian, Transavia can operate without subsides, than so can Easyjet, Ryanair and Wizz. Nobody is chasing them away.

      Delete
    2. Anonymous09:25

      Because FR and W6 have significantly bigger operations than the one you mentioned. They also fly year round.

      Delete
    3. Anonymous09:30

      Pobeda flies year round and carries 100k+ passengers. I am sure others would be willing to expand routes and frequencies should they get incentives like these three airlines.

      Delete
  17. Anonymous09:20

    as if a state own airline which isnt profitable doesnt distort the market

    ReplyDelete
    Replies
    1. Anonymous09:22

      Yes, especially one like Montenegro Airlines which has received millions and millions.

      Delete
    2. Anonymous09:36

      I understand what you are saying and agree. However, if YM had to pay ~24€ per passenger it would be very difficult to compete against FR and W6 which pay much less for airport fees. Besides, YM had a very incompetent management in recent years so that makes the situation a lot worse.

      Delete
  18. Anonymous09:22

    If Ryanair was complaining about MGX why didn't they open a base in Podgorica once they were shut down?

    ReplyDelete
    Replies
    1. Anonymous09:26

      because its not a year round destination?

      Delete
    2. Anonymous09:30

      Well they fly year round to TGD.

      Delete
    3. Anonymous09:32

      Guys you are all acting as if there is no Covid. Their response would have been much different if there was no pandemic. Don't forget that Montenegrins can't enter EU at the moment and Montenegro is on red list almost everywhere, meaning those with EU residency that go to Montenegro have to quarantine for days when they return.

      Delete
    4. Anonymous10:11

      @9.32 would be lovely if you used this argument too for the articles about other cities/countries

      Delete
    5. Anonymous10:14

      Who says I haven't? Other non-EU members in the region are in the same boat.

      Delete
  19. Anonymous09:24

    They should be VERY careful what they wish for ..... this could come back to bite them hard ! This will simply put those LCCs on notice and they will watch what this Govt does with ToMontenegro. Any smell of aid of any nature - over and above the intial capital invested to start this new airline and these guys will be all over them.

    Sometimes it is best to let sleeping dogs lie .....

    ReplyDelete
    Replies
    1. Anonymous09:25

      +1

      Delete
    2. Anonymous09:34

      Agree with this comment. They should tread very carefully.

      Delete
  20. Anonymous09:37

    I think this has more to do with the government looking at all the expenses and seeing a huge amount being spent on these LCCs. Now they are trying to get out of legally binding agreements and a judgment by the agency that the money distorted the market would probably be enough. The government is trying to reduce spending. The country was on the bring of bankruptcy at the end of last year. So I don't think this is particularly targeting these three airlines, it's just looking at reducing costs.

    ReplyDelete
    Replies
    1. Anonymous09:43

      All contacts with them expired in 2020. So Govt of Montenegro has no obligations towards low cost airlines.

      Delete
    2. Anonymous09:50

      So we might see them drop flights since subsidies are ending and it does not seem the government is willing to continue financing them?

      Delete
    3. Anonymous09:53

      Ryanair already dropped four routes, and I think easJet removed Milan flights. Wizz Air is yet to respond. So far they have kept their network unchanged.

      Delete
    4. Anonymous10:10

      Wizz have barely two flights a week this winter season. tells you alot about the market and its not about the pandemic because others in the region are in the same position

      Delete
    5. Anonymous10:12

      Wizz Air is not doing much better in other markets in the region either. Many flights are suspended from SKP where they get subsidies and are more or less the only dominant airline. Many routes suspended from TZL and BEG as well. So I don't think it's related to Montenegro.

      Delete
    6. Anonymous09:40

      they are doing much better.
      your SKP argument doesnt work anymore (and beside that that they are not receiving a penny since March last year) because the article above is exactly about Wizz receiving subsidies from Montenegro, secretly,

      Delete
  21. Anonymous09:43

    We will see what comes out of it

    ReplyDelete
    Replies
    1. Anonymous10:09

      I doubt anything will.

      Delete
    2. Anonymous10:27

      Nothing will happen. It will take the agency months to make a decision if not a year.

      Delete
  22. Anonymous10:02

    Somehow I think these LCCs really couldn't care less about the government's scare tactics.

    ReplyDelete
    Replies
    1. Anonymous10:10

      I don't see anything wrong in the government asking for an investigation. Isn't it better for the agency to determine if this was illegal state aid?

      Delete
  23. Anonymous10:03

    Out of all the airlines in the world why did Ryanair go after Montenegro Airlines by reporting it to the European Commission? I mean seriously, it's not as if Montenegro was a majorly important market for Ryanair for it to do something like this.

    ReplyDelete
    Replies
    1. Anonymous10:08

      It goes after everyone. No matter how big or small. It's part of their strategy.

      Delete
    2. Anonymous20:52

      Ryanair is constantly complaining about something.

      Delete
  24. Anonymous10:08

    Well done to the government of Montenegro! Smart decision.

    ReplyDelete
  25. Anonymous11:35

    How much money could it be?

    ReplyDelete
    Replies
    1. Anonymous11:36

      It would be interesting if they publish it. Then we would know the going rate in the region.

      Delete
    2. Anonymous15:46

      It would be interesting to know. At least Macedonia is transparent with the amount of money it gives to Wizz. I didn't even know Montenegro was giving money to LCCs.

      Delete
    3. Anonymous00:08

      Macedonia is NOT transparent as to why every single tender is won ONLY by Wizzair. They are tailor made only for Wizz so no other airline would even apply! Extreme transparency, of course!

      Delete
    4. Anonymous09:41

      @0.08 lol

      because ONLY Wizzair applies for it.

      Delete
    5. Anonymous17:23

      No, because they are custom made so ONLY Wizzair could apply.

      Delete
  26. Anonymous11:38

    This all reminds me so much of when the new government came to power in Serbia in 2012 and they arrested the CEO of Belgrade Airport for subsidies given to Wizz Air (they arrested him when Air Serbia was created). Of course he was let go afterwards since the accusations were baseless.

    ReplyDelete
    Replies
    1. Anonymous11:50

      Haha true. Forgot about that little episode.

      Delete
    2. Anonymous20:43

      It's a sad episode indeed.

      Delete
  27. Anonymous14:04

    Looks like EC did not complain about Montenegro subsidies to EU based LCCs but is now complaining about government starting a new airline. Is EC trying to prevent Montenegro from having a national airline and would prefer if they use EU LCCs instead?

    So much for "free market" in aviation in Europe.

    ReplyDelete
    Replies
    1. Anonymous15:40

      "Is EC trying to prevent Montenegro from having a national airline and would prefer if they use EU LCCs instead?"

      Most likely yes.

      Delete
    2. Anonymous20:42

      I really don't think a Montenegrin airline is something the European Commission is worried about.

      Delete
    3. Anonymous23:52

      Anonymous 20:42 Read the article before making a comment. It clearly says EC is worried, they are investigating Montenegro.

      Delete
  28. Anonymous15:41

    I really hope that this does not affect the operation of low cost airline in Montenegro.

    ReplyDelete
    Replies
    1. Anonymous15:46

      Some routes might be suspended because subsidy contracts with LCCs have expired.

      Delete
  29. Anonymous20:42

    Odd easyjet never started flights to Podgorica.

    ReplyDelete
    Replies
    1. Anonymous20:58

      Because they only wanted to fly seasonally.

      Delete
  30. Anonymous20:43

    Here we go a little touch from the Hogan! Pressure+ investigation+ win the case + set the new airline + still the money and move to the next victim...

    ReplyDelete
    Replies
    1. Anonymous20:57

      Did Hogan's company win the consultancy agreement?

      Delete
    2. Anonymous20:58

      The results of the tender have not been announced yet.

      Delete
    3. Anonymous22:27

      Stay in Abu Dhabi please

      Delete
  31. Anonymous20:45

    Sorry but I really don't understand what market distortion the government is talking about. Montenegro Airlines not only received subsidies from the government, it also didn't pay any fees at the airport (that's why it had huge debt), it didn't pay any taxes for the last four years. If anyone distorted the market it was Montenegro Airlines.

    ReplyDelete
    Replies
    1. Anonymous00:03

      Germany has a strong presence within EC. They can and do act to protect Lufthansa but will direct EC investigate and possibly punish tiny Montenegro.

      On the other hand, Montenegro does not have any rights to have presence and their say within EC but is forced to follow any decision EC will impose on them.

      How is that fair?!?!?! This is not a level playing field! Completely distorted "market" rules!

      Delete
  32. Anonymous20:50

    I am sad that we still live in socialisms when it comes to aviation. :(

    ReplyDelete
  33. Anonymous20:55

    What's with the hate towards lccs here by some? They pretty much opened the doors to travel in many ex-Yu countries. You should be grateful they are around.

    ReplyDelete
    Replies
    1. Anonymous20:58

      Love for overpriced national airlines offering same service standards is bigger.

      Delete
    2. Anonymous23:57

      LCCs are abusing local airports, threatening to leave if they have to pay any fees to the airport (or anything more than a few eur), they are not investing in building or expanding airports, they are taking all the profits away and not investing locally, they are not serving key airports, not even some of the key countries. They require subsidies and incentives, without any guarantees they won't pick up and leave at any moment. LCCs are aviation bullies.

      Delete
    3. Anonymous09:43

      so Air Serbia and Croatia are investing in building airports ok
      and they dont require "subsidies and incentives"? ok again

      Delete
    4. Anonymous17:22

      It is widely recognized that if it wasn't for Air Serbia early growth there wouldn't be a lucrative concession for BEG airport ,so yes - Air Serbia was crucial for investing in BEG infrastructure. Why don't you dare respond to other abusive LCC behaviors listed above?

      Delete
  34. Anonymous20:57

    Rightfully so.

    ReplyDelete
  35. Anonymous20:59

    Bravo Montenegro

    ReplyDelete

Post a comment

EX-YU Aviation News does not tolerate insults, excessive swearing, racist, homophobic or any other chauvinist remarks or provocative posts with the intention of creating further arguments. A full list of comment guidelines can be found here. Thank you for your cooperation.