Air Serbia to maintain hub and spoke model strategy

Air Serbia has said it will continue to develop its hub and spoke model, which involves transferring passengers between two points via Belgrade, despite the coronavirus pandemic strongly impacting demand for such flights. Speaking at the recent Uzakrota Online Travel Technology and Marketing Summit, Air Serbia’s General Manager for Commercial and Strategy, Jiri Marek, said, “Covid-19 completely changed the network planning approach. You no longer use really long-term planning. You still make the three-year and five-year plan but, in a way, it is an exercise which you will keep changing and adapting based on external input. The network was always driven by demand and demand is the one most affected by the pandemic. It is fluctuating both ways. It is restricted whenever you have new travel restrictions, while you have spikes in demand when something opens because people still want to travel. The question is how quickly you can adapt to these changes in demand especially with the network. What we observed through the whole pandemic is that the booking window is eight to ten days before departure where you get most of the bookings. The question is how you can make some mid- or long-term planning in such an environment”.

Mr Marek noted the airline has modified its internal practices in order to adapt to the fluctuating demand. “What we had to do is completely change the way we operate internally. We do network revenue every single day, sometimes twice per day, and monitor the bookings on a daily basis. Wherever we see some spikes in demand we adjust our capacities accordingly. What happens with the hub and spoke model is super difficult because you are not just going after point to point. However, we strongly believe we will stay with the hub and spoke model because it is one of the ways to address seasonality”, Mr Marek said. He added, “Seasonality in Serbia is high between summer and winter. In a hub and spoke model you can address and create decent loads also in the off season but for that you need to have decent connectivity and frequencies, which is a bit difficult in a pandemic. What we did is focus on some of the strong days like Monday, Friday and Sunday, where our operations are almost at the same levels as prior to the pandemic in order to provide that connectivity while significantly reducing the weaker days, which were always weak even before the pandemic, like Tuesday and Wednesday, by allocating maintenance work on those days and other matters in order to ensure that on the strong days you have full resources available to deliver your product”.

Commenting on the introduction of new routes, the company’s head of Commercial and Strategy said, “The reaction on the market is key. If you want to open a new destination, you no longer do it three or four months in advance with planning, calibration, different GDP inputs and so on. You basically see an opportunity and go after it. We proved that during the pandemic. We launched a couple of new destinations and some of them we launched in the course of two weeks. I think this flexible model will stay with us in the next five years, where you will still have to react very fast to all the changes coming. The biggest undiscovered truth of Covid is that change is possible and that the speed of change is incredible”.

Air Serbia has so far announced plans to increase frequencies on select routes such as Rome and Milan next summer, which will match pre-pandemic levels. The carrier is also believed to be negotiating potential operations to Yekaterinburg in Russia and is widely tipped to win a contract for ten routes of public interest from Niš and Kraljevo, which are to be introduced as early as next month.