Four EX-YU markets plan airline subsidies in 2022


The central governments in Slovenia, Macedonia, Serbia and Croatia will be offering subsidies to airlines for the launch of new routes or the upkeep of existing services from 2022 onwards. The Slovenian government plans to extend incentives for airlines serving the country. The Head of the Slovenian Chamber of Tourism and Hospitality, Fedja Pobegajlo, noted, "We have taken the initiative for carriers to continue to be subsidised. We think this is very important if we want airlines to continue to return to Ljubljana Airport and foreign markets to be reconnected. We need to compete with nearby airports such as Venice and Zagreb”. Lufthansa, Air France, Turkish Airlines, Air Serbia, Wizz Air, LOT Polish Airlines and Swiss have all so far benefited from the financial incentives.

The Macedonian government has allocated 1.1 million euros in its 2022 budget to subsidise airlines for the introduction of new routes. It will mark the fourth consecutive time the state has offered subsidies for the launch of new destinations, with all three previous tenders won by Wizz Air, which was the sole carrier to apply for the financial assistance. The current subsidy contract, which runs until next year, had to be halted in 2020 after Wizz Air was unable to deliver on the agreement as a result of the coronavirus pandemic. Based on pre-pandemic data from 2019, Skopje Airport’s busiest unserved routes were New York, followed by Brussels, Amsterdam, Melbourne, Paris, Chicago, Dusseldorf and Ankara. Although Wizz Air serves a number of European destinations from the Macedonian capital, the majority are to secondary airports.

The Serbian government has begun tender procedures for ten routes of public interest which are to be launched from January 1, 2022 and run until December 31, 2023, including seven from Niš Constantine the Great Airport and three from Kraljevo’s Morava Airport. Interested airlines will be able to operate all ten routes or a selection of destinations which have been divided into four separate groups. Group one includes flights from Niš to destinations in the European Union - Hahn, Cologne, Ljubljana and Athens - as well as from Kraljevo to Thessaloniki. Group two encompasses flights from Niš and Kraljevo to Istanbul, group three comprises of operations from the two to Tivat, and group four involves domestic flights between Belgrade and Niš. All routes will be maintained twice per week, with exception to the Belgrade - Niš service which will have four weekly rotations. Four of the ten routes will be maintained on a seasonal summer basis between June and September, including those from Niš and Kraljevo to Tivat, from Niš to Athens and from Kraljevo to Thessaloniki. The contract for all ten routes is valued at around 23.8 million euros over the two-year period. Flights to destinations in the EU will be covered to the tune of 13.1 million euros, to Istanbul amounting to 6.7 million euros, to Tivat 971.000 euros and the domestic service will be subsidised with three million euros over two years.

The Croatian government has issued a much-delayed tender call for twelve Public Service Obligation (PSO) flight contracts for a period of four years, which will come into effect on May 1, 2022 and run until March 28, 2026. PSOs make European funds available for unprofitable, primarily domestic routes which are considered vital for the economic development of the region they serve. The previous four-year contracts expired back in March of last year but have been extended ever since due to the coronavirus pandemic. No further terms and conditions have been outlined in the latest tender call, which runs until December 24, 2021. The previous contracts were awarded to Croatia Airlines and Trade Air. The routes which will be compensated and maintained as PSO are: Dubrovnik - Zagreb – Dubrovnik, Split - Zagreb - Split, Zagreb - Zadar - Pula - Zadar - Zagreb, Zagreb - Brač - Zagreb, Osijek - Dubrovnik - Osijek, Osijek - Split - Osijek, Osijek - Zagreb - Osijek, Rijeka - Split - Dubrovnik - Split - Rijeka, Osijek - Pula - Split - Pula - Osijek, Rijeka - Zadar - Rijeka and Osijek - Zadar - Osijek. The value of the new PSO contracts has not been disclosed. Under the previous deal, Croatia Airlines received roughly 11.4 million euros in annual compensation for the domestic services, while Trade Air was the beneficiary of 2.5 million euros per year.



Comments

  1. Anonymous09:02

    Slovenia must be the only country that gives subsidies retroactively That's why they haven't worked so well.

    ReplyDelete
    Replies
    1. Anonymous09:10

      And on top of that they gave money to an airline that operated no flights and carried no passengers to Slovenia while disqualifying an airline that actually flew and actually carried passengers.

      Delete
    2. Anonymous09:10

      In breach of their own rules, to add.

      Delete
    3. Anonymous09:12

      I think it did work as all airlines that flew to Ljubljana before the pandemic are again flying to Ljubljana.

      Delete
    4. Anonymous09:24

      I doubt it had anything to do with those subsidies as only a few airlines have actually received money.

      Delete
    5. Anonymous09:26

      So JU is complaining about subsidies? LOL!

      Delete
    6. Anonymous09:29

      Who said JU is complaining about subsidies? What are you talking about?

      Delete
    7. Anonymous09:54

      I still don't understand what on earth you are talking about since you are making absolutely no sense. You are commenting that JU is complaining about subsidies Slovenia has given to airlines, including JU? You might want to read the article again or be aware what you are writing.

      Delete
  2. Anonymous09:03

    Seems like the Serbian subsidies are most expensive.

    ReplyDelete
    Replies
    1. Anonymous09:13

      Well if you calculate, government is giving OU over 40 million euros in their four year contract for domestic routes.

      Delete
    2. Anonymous09:27

      Flights from Serbia are much longer than any flight in Croatia. For example INI-HHN is double longer than ZAG-DBV.
      It seems nobody sees it.

      Delete
    3. Anonymous09:29

      Anon 09:13 the Serbian Government is giving 23.8 mil. Euros for 2 years while the Croats 40 for 4 years.
      So yes, our Government is giving a bit more per year. Specifically 11.9 mil. per year.

      Delete
    4. Anonymous09:31

      It is more than 40 million per year as Trade Air is also getting state funds, not just OU.

      Delete
    5. Anonymous09:32

      Flights from BEG to TGD are a lot shorter than CDG or ATH yet the ticket prices to Montenegro are far higher.

      Delete
    6. Anonymous09:36

      How is the price of ticket BEG-TGD anyhow related to this topic?

      Delete
    7. Anonymous09:49

      Anon 09:36
      If subsidies should be given according to the flight distance because flying longer is more expensive then shorter flights (like BEG-TGD) should be cheaper. No?
      So a BEG-CDG flight should be more expensive than it is or the BEG-TGD flight is more expensive than it should. I think it is the latter.

      Delete
    8. Anonymous10:24

      @anon 09:49

      Due to geographical distance, airport taxes, bigger fuel consume etc. BEG-CDG will be always more expensive than BEG-TGD. By using the same logic the level of subsidies can't be compared for INI-HHN and ZAG-SPU.

      Now, from some other reasons airline might have extra profit on certain destinations where they estimate that higher price won't jeopardize LF and where they do not have strong competition. The best example is the price of the flight ZAG-DBV especially during the summer months where distance is not that long but OU keeps poisonly expensive tickets no matter they receive PSO for this route.

      The route BEG-TGD is no subsidizied at all.

      Delete
  3. Anonymous09:04

    Let's hope it pays off.

    ReplyDelete
  4. Anonymous09:04

    I'm hoping someone other than Wizz Air will apply for the Macedonian subsidies. But not getting my hopes up.

    ReplyDelete
    Replies
    1. Anonymous09:07

      With easyjet now flying to SKP, maybe they apply for the next tender.

      Delete
    2. Anonymous09:11

      The usual terms and conditions of the tender make it difficult for anyone to compete against a Wizz offer.

      Delete
    3. Anonymous09:11

      Slovenia should have adopted this policy too.

      Delete
    4. Anonymous14:02

      and Montenegro

      Delete
    5. Anonymous18:35

      Why montenegro? They did their own carrier faster than anyone in ex-yu. And for slovenia we don't want lcc base. Yes but we clearly don't want air dolomiti either :(

      So sad and stupid

      Delete
    6. Anonymous21:13

      Slovenia actually wants LCC or Air Dolomiti. Fraport and Govt are the ones who do not want anything.

      Delete
  5. Anonymous09:05

    Whatever happened to having a free market?

    ReplyDelete
    Replies
    1. Anonymous09:19

      This is former Yugoslavia we are talking about...

      Delete
    2. Anonymous09:30

      ^^^
      Exactly!

      Delete
    3. Anonymous15:08

      relax everybody is giving subsidies

      Delete
    4. Anonymous13:02

      EU Member states are pouring millions to their airlines. Lufthansa has secured subsidies in direct talks with the Belgian Government for Brussels Airlines amounting to 290 million Euros. Yeah, some of it are loans, but still with heavily subsidised interest etc. So it's not just ex YU, it's everywhere.

      Delete
  6. Anonymous09:08

    It's nice support for airlines that fly to Ljubljana. I'm not sure it will attract new ones though.

    ReplyDelete
  7. Anonymous09:10

    A lot of support will be needed for air traffic to recover.

    ReplyDelete
    Replies
    1. Anonymous09:51

      Winter is coming!

      Delete
  8. Anonymous09:13

    What a surprise...

    ReplyDelete
  9. Anonymous09:14

    It would be nice to see new carriers on these routes.
    Although in Nis and Kraljevo the winner is clear.

    ReplyDelete
  10. Anonymous09:15

    So with the Macedonian subsidies money is given to a foreign airline, while with the Serbian and Croatian ones at least money stays in the country and goes to a local airline.

    ReplyDelete
    Replies
    1. Anonymous09:18

      Don't speak to soon :D you don't know who will the Serbian and Croatian tenders.

      Delete
    2. Anonymous09:19

      Yes it's really uncertain...

      Delete
    3. Anonymous09:20

      National airline will always be better for connections

      Delete
    4. Anonymous09:53

      Anonymous 09:15
      It costs the MK government a lot less per passenger than it does t the Serbian and Croatian governments.

      Delete
    5. Anonymous12:18

      Also worth mentioning/reminding everybody, managing of SKP involved lot of pioneering work in the region (ex-yu), as
      a: It was the first airport to be operated under concession and
      b: It was the first airport supported by the government by giving subsidies to carriers (for which it was heavily critized by posters from other countries in the region, where now these same countries do exactly the same).

      Delete
    6. JATBEGMEL13:33

      @09,53

      Macedonian government should be paying less because it's a LCC which:
      - doesn't always connect MK with hubs.
      - doesn't offer connections.
      - doesn't interline with other airlines.

      While Wizz has a decent network out of MK, overall connectivity of MK is amongst the worst in Europe.

      Delete
  11. Anonymous09:15

    This is a moment for Ryanair in Skopje.

    ReplyDelete
    Replies
    1. Anonymous09:18

      Also to enter Croatian domestic market.

      Delete
  12. Anonymous09:20

    Judging by that list, seems there is still a lot of demand for main European airports from Skopje, despite Wizz Air's presence.

    ReplyDelete
    Replies
    1. Anonymous09:22

      I hope TAV does more to attract legacy airlines from these markets. Brussels Airlines from Brussels or KLM from Amsterdam for example. Wizz Air really dominates the market in every respect.

      Delete
    2. Anonymous09:23

      Exactly. More regular airlines with flights to actual hubs please.

      Delete
    3. Anonymous09:46

      It would be interesting to see the top unserved routes from Nis and if they match the ones in SKP.

      Delete
    4. Anonymous11:56

      you can see that once JU starts connecting flights through Belgrade. As for now there arent any unserved routes simply because they are not connected into some network.

      Delete
    5. Anonymous12:36

      We could see based on Swiss connecting flights this summer :)

      Delete
  13. Anonymous09:21

    Disappointing

    ReplyDelete
  14. Anonymous09:23

    When you look at it, the Macedonian subsidies are very small and they will probably get the most in return in terms of new routes and the number of new passengers.

    ReplyDelete
    Replies
    1. Anonymous09:54

      Exactly.

      Delete
    2. JATBEGMEL13:38

      But minus the connectivity, which is why it's cheaper.

      Delete
    3. Anonymous13:47

      hahahaa its cheaper because minus the connectivity??????

      svasta procitas

      Delete
    4. JATBEGMEL14:46

      @13,47

      Was there anything untrue about my comment?

      Croatia followed by Serbia are the best connected countries of the former Yugoslavia, North Macedonia the worst. This is a fact.

      Delete
    5. Anonymous15:12

      and what has that to do with the amount of subsidies?

      Delete
    6. JATBEGMEL19:49

      Because your getting a cheaper product. You dont pay top dollar for a fake bag, same with LCC's.

      LCC carriers are cheap as they usually take you to smaller, regional airports and not hubs.

      LCC have simplified operations. Even if you could technically connect via one of their bases, connections are not sold, meaning multiple tickets need to be purchased rather than 1 on a legacy carrier.

      LCC's do not interline with other carriers. Want to fly to Australia, Canada, India, Portugal etc? not possible through Wizz.

      Need to go on business for the day to SKP? 2-3 flights per week with Wizz don't work.

      Why do you think North Macedonia is amongst Europe's worst connected countries even after Wizz and expansions. They have an airline flying a bunch of destinations, just without connectivity. Not worth paying top dollar for that.

      Delete
    7. Anonymous21:28

      While I agree that LCCs are not the same as legacy carriers, in a regional context, neither JU nor OU managed to offer signifficantly better connections out of SKP (and if you take a look of their networks, neither out of their home bases).
      Furthermore the product LCCs use is much better than turpoprops or 30 year old planes these regional legacies offer.
      Last but not least, many W6 connections out of SKP are to secondary airports, but many are not: MXP, BUD, HAM, FCO, BCN, CPH, BER, CGN.
      So in summary i do think SKP got a good/better deal with subsidies than others in the region.

      Delete
    8. JATBEGMEL10:25

      Your not really getting the point. JU and OU don't have to offer more in terms of destinations via their hubs, but they offer more frequencies under a single itinerary especially when including their partners. For example, someone from SKP going to AMS for the day could in theory fly out in the morning on OU and come back in the evening with OS on a single ticket. Thats the part you don't or refuse to understand. With Wizz, thats not possible. And these kinds of trips are very normal. Wizz is great for the diaspora and people flexible with travel, but for business travelers not so much.

      Besides, the Wizz frequencies are also a reason not to pay premium. You really need to be lucky or flexible to travel on their schedules. Pre pandemic, the schedule was:

      MXP 2 pw
      BUD 2 pw
      HAM 3 pw
      FCO 2 pw
      BCN 2pw
      CPH 3 pw
      BER 3 pw
      CGN 4 pw

      JU on the other hand will be getting alot of subsidies, perhaps more than really necessary, however KVO and INI will be getting better connectivity. If the tender is executed properly, pax should be able to, on a single ticket, fly JFK-KVO for example via IST through partner TK. It's this type of connectivity lacking with Wizz.

      Mentioning aircraft age as an argument in favour of LCC's shows very basic understanding of aviation. Age of aircraft has nothing to do with having an inferior or superior product. Brand new B737 MAX were grounded for 2 years due to safety issues, brand new B787's were also grounded due to defects, brand new A380's were grounded due to manufacturing defects. The important thing is that the aircraft are clean and airworthy. JU's ATR's are the only 30 yo aircraft, the Airbus fleet is mostly around 10 years old, which is not old for an aircraft.

      Subsidising Wizz isn't entirely a bad thing, but them holding 70% of the market is not good either.

      Delete
    9. Anonymous10:39

      totally agree with @21.28. Its funny how JATBEGMEL smashes the 1.1 mil subs at SKP as cheap because of the "product" and defends the 20+mil subs for even worse connected regionial airports for p2p routes. double standards

      Delete
  15. Anonymous09:26

    I wonder what would happen with Skopje if the Government cut subs to Wizz? Would Wizz be gone with the wind within months?

    ReplyDelete
    Replies
    1. Anonymous09:30

      Nothing. Government only subsidizes launch of new routes for 3 years. The remainder is not subsidized.

      Delete
    2. Anonymous09:33

      Correct. Over 75% of Wizz routes out of SKP are not subsidized at any given moment..

      Delete
    3. Anonymous11:47

      none are subs. at the moment. even Turku is flying without subs

      Delete
    4. Anonymous12:02

      Most routes are not subsidized. It think 2 or 3. Wizz air flights to Skopje are not cheap espessically from Netherlands and Germany. In the summer season its much cheaper to flght from Amsterdam to Skopje with Austrian than with Wizzair from Eindhoven to Skopje. Off season wizzair has good prices and arround christmas the prices are comparable with other wizzair flights in europe.

      Delete
  16. Anonymous09:28

    Don't see anything wrong with it.

    ReplyDelete
  17. Anonymous09:32

    Airlines like OU and JU going bankrupt would cost these small local economies much more than these subsidies.

    ReplyDelete
    Replies
    1. Anonymous09:34

      Macedonia did just fine without MAT.

      Delete
    2. Anonymous09:36

      Really? It has the worst connectivity in Europe with no flights to any major hub on the continent. Also almost all non-EU destinations can only be served by airlines from the other country as Macedonia does not have it own. So you have to wait for over a decade for flights to Russia and so on.

      Delete
    3. Anonymous09:42

      @9.34
      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.

      Delete
    4. Anonymous12:31

      Macedonia does not have the worst connectivity in Europe-if you still insist on this speculation then post a link to prove it.
      Another, well, stupid thing you wrote is that there are no flights to majot hubs on the continent, whereas I remind you that there are direct flights to VIE and IST.

      Nothing wrong that non-Eu (or EU destinations) are served by foreign carriers, as it is the case in many if not most of other countries in Europe and around the globe. It is something known as market economy and open market. One consequence of this ist e.g. planes these foreign companies use on their flights are newer and not some 30+ y old fossils like in some regional companies.
      There was no "waiting" to open flights to Russia, as whoever wanted to fly there could fly with 1 stop.
      And so on.

      Delete
    5. Anonymous12:33

      You think flights to two European hubs for a European capital city is sufficient. Ok.

      Delete
    6. Anonymous12:34

      "There was no "waiting" to open flights to Russia, as whoever wanted to fly there could fly with 1 stop."

      I was talking of nonstop flights which are much more convenient than connecting flights, and you ae aware of that. So yes, we waited 20 years for some random airline to start those flights because there was no one else.

      Delete
    7. Anonymous12:35

      And yes, Macedonia has among the worst connectivity in Europe according to Airports Council International.

      https://www.exyuaviation.com/2019/07/ex-yu-airports-lagging-in-connectivity.html

      Delete
    8. Anonymous21:47

      You wrote that Macedonia has the worst connectivity and after I asked for a proof you correct yourself by posting it has among the worst connectivity. So, which is it?
      Then, you wrote there weren't any flights to major hubs, and after I corrected this as well, then you reply, it's only two. (fyi there are more than "just two")

      You should really focus when trying to make a point.

      Delete
    9. Anonymous21:51

      Apologies, it doesn't have the worst connectivity. It is ranked at an outstanding 41 position out of 43.

      Delete
  18. Anonymous09:35

    There were massive Ryanair route announcements those days and their recent based Madeira base and some routes outta Luton and Mallorca.
    I think only Zadar benefited from their recent expansion.

    ReplyDelete
    Replies
    1. Anonymous09:56

      ZAG will have almost 40 FR destinations next summer.

      Delete
  19. Anonymous09:43

    Will ETF maybe apply for the Croatian PSO routes? They could stand a chance against OU and C3.

    ReplyDelete
    Replies
    1. Anonymous09:51

      Which PSO routes would they operate with B737? Rijeka-Zadar? Doubt they will apply.

      Delete
    2. Anonymous10:02

      They could lease a small plane like Trade Air did.

      Delete
    3. Anonymous10:19

      Agree with last anon. Leasing a small turboprop paid of big time as they get quite a lot of money from these PSOs.

      Delete
  20. Anonymous09:44

    Tender for Croatian PSO routes takes 6 months. Tender for Serbia PSO routes takes a month :D

    ReplyDelete
    Replies
    1. Anonymous09:45

      Because the first one has to do it under EU procedures. The other has already chosen the winner long ago.

      Delete
    2. Vlad13:44

      LOL @ thinking the winner of the Croatian PSO tender hasn't already been chosen as well.

      Delete
  21. Anonymous09:44

    I am surprised that CDG, BRU, AMS or MXP is not one of the routes from Nis. It seems that they chose the destinations at random, for example, let's choose the closest cities ... Athens, Istanbul ... they will burn less fuel :) It is more than clear the tender is made for Air Serbia as always!

    ReplyDelete
    Replies
    1. Anonymous09:45

      They just chose what fit Air Serbia's schedule and fleet planning the best.

      Delete
    2. Anonymous09:58

      +1000

      Delete
    3. Anonymous10:07

      I don't think the selection of ATH and IST out of Nis is random. Both these routes are gonna work each one for a different reason .

      Delete
  22. Anonymous09:50

    Frankly, I'm quite shocked at the ridiculous amount of PSO money OU gets every year.

    ReplyDelete
    Replies
    1. Anonymous09:59

      Are you also shocked by the ridiculous amount of subsidies JU gets every year?

      Delete
    2. Anonymous10:02

      I'm not because they get money left and right for different things while this is just for PSO for profitable routes like Zagreb-Dubrovnik and Zagreb-Split.

      Delete
    3. Anonymous10:05

      Of course you wouldn't be shocked about the ridiculous amount of subsidies JU gets every year since its creation! :D

      Delete
    4. Anonymous10:20

      Until these two airlines are fully privatized they will receive subsidies.

      Delete
    5. Anonymous10:33

      The issue is that they will never be fully privatized.

      Delete
    6. Anonymous10:42

      European governments once believed they could rely on the market to ensure their links to the outside world. But many are starting to become more protective of their national airlines. In many ways, it is a return to the past.

      Delete
  23. Anonymous10:42

    Which all shows how insignificant these markets are in Europe if they rely on government handouts to stimulate interest.

    ReplyDelete
    Replies
    1. Anonymous10:55

      Sad but true

      Delete
    2. Anonymous10:58

      The airline business is a business of big numbers. All these small markets cannot sustain the competition and their reach is limited. Sustainable and significant business is possible only for Belgrade and Croatian coast - all as it was for the last 50 years.

      Delete
    3. Anonymous11:30

      +100

      Delete
    4. Anonymous15:21

      thatswhy PRN and SKP are booming

      Delete
  24. Anonymous11:30

    I think it is a smart policy as airlines and markets recover from corona.

    ReplyDelete
  25. Anonymous11:51

    Macedonian subsidies look suddenly like peanuts, yet it was the most cried about on here :D

    Hillarious

    ReplyDelete
  26. Anonymous12:03

    Hold on. Are you trying to tell me that LJU is only giving money for existing routes and not for new unserved ones?

    ReplyDelete
    Replies
    1. Anonymous12:06

      Yes, exactly

      Delete
    2. Anonymous12:32

      avangarda

      Delete
  27. Anonymous14:10

    6,7 milions for two Istanbul routes of only two weekly flights??

    not sure why nobody is commenting on this. Its bizarre to sound diplomatic

    ReplyDelete
    Replies
    1. JATBEGMEL14:58

      It's expensive but an improvement.

      YM received 200€ per seat for TGD-INI-TGD. Over 1 million euros was paid for Forli-Nis that lasted a season if I remember right.

      JU will be receiving around 150€ per seat. KVO-IST-KVO would include ferrying the aircraft and crew to KVO from BEG

      Delete
    2. Anonymous15:19

      this is a state aid get over it. they didnt put it in the eu routes so to not attract foreign airlines from EU but for the Turkey part where Air Serbia will get it

      150€ per seat? Alter Schwede!

      Delete
    3. Anonymous19:39

      OSI-ZAG preko 600 eur subvencije, to ti ne smeta?

      Delete
    4. Anonymous10:27

      @19.39 ocigledno ne razumes nemacki.

      Delete
    5. notLufthansa16:02

      Slovenia was no willing to help Adria (you know, throwing money through the window), and now they are paying foreign carriers to maintain that bare minimum of connectivity with outside world. Using Jansa's linguistic logic, situation can roughly be translated as "the looney fu...s the confused...."

      Delete

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