Croatia Airlines is expected to begin phasing out its Dash 8 turboprop fleet in 2024 as it prepares to become a single-type operator of the Airbus A220 jet. The carrier has ordered six of the A220-300s and has also concluded an agreement to lease up to nine of the aircraft, which are expected to include the -100 version as well. Croatia Airlines’ existing six-member turboprop fleet is under an operational lease. The agreement was concluded in 2007 for a period of ten years. The lease was then extended for two aircraft until 2024 and for the rest until 2025. Once the leases expire, the airline does not plan to renew them in order to make way for the new A220s, which will begin entering the fleet in 2024, with deliveries to be made until 2026.
The 76-seat Dash fleet has been a workhorse for the airline over the past two years, when demand for travel plummeted as a result of the coronavirus pandemic. Last year, the turboprops were deployed on a total of 10.885 flights compared to the Airbus jet fleet which was utilised on 5.662 flights. Furthermore, the Dash aircraft spent more time in the air than the Airbuses, with an average of seven hours and twenty minutes of flying per day. Croatia Airlines owns a total of five aircraft, including four A319s and one A320. Three of those aircraft (two A319s and one A320) act as collateral for bank loans.
The incoming A220-300s are expected seat roughly 145 passengers per unit. As a result, they will have almost double the capacity of a single Dash aircraft. However, the CEO of airBaltic, Martin Gauss, recently said his airline was successful in transitioning from the Dash turboprops to the A220s. “We had a Q400 operation - twelve of them. We decided to no longer use them because, for us, the business case to fly the A220 instead of the turboprop was positive. People ask us, how can you use a 76-seat turboprop and replace it with a 150-seat jet, but we are proof that it can be done. We had a positive business case on all the routes we fly”, Mr Gauss, who has promoted the A220 across the world, including Croatia, said. Commenting on the A220 order by the Croatian carrier, the airBaltic CEO said yesterday, “Croatia - another small country in Europe – has decided to introduce the most modern A220 aircraft. I wish Croatia Airlines the same success we have in Latvia with our fleet”.
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It is not going to easy to fill planes on Dash routes which have double the capacity. Wish them good luck in any case.
ReplyDeleteOh God
DeleteNice, so they managed to pull of a 64% LF this year when markets have recovered but now they think it will be a good idea to remove the smallest plane and replace it with a 145 seat one?
ReplyDeleteOk.
Barring any additional outbreak of covid that would require international lockdown I can't see why A220 300 can't be a success. Croatia airlines will most likely retain 5Airbus aircraft when 6 A220s join during summer seasons, until all 15 A220s join the fleet. Croatian tourism almost fully recovered, currently @90% of 2019 level. Croats are travelling more than ever before, and Slovenian market might as well be considered part of Croatian air travel market, so there'll be demand, especially when Slovenian Railways start scheduled Ljubljana - Zagreb rail service with their new Flirt Kiss trains, expected in late 2023 or early 2024.
DeleteBy 2025, I expect 25 million foreign visitors to Croatia, up from 17.5 million in 2022, that surge alone should be sufficient reason why A220 is a right choice, not sure if 15 A220s are needed early on, perhaps by 2030 there might be a demand for 15 A220, but 6A220s in 2025/2026 will do. Potentially Croatian airlines with 15 A220 could handle 3 million passengers, that is a thought.
What you forget is that there is no real correlation between the growth of the Croatian air travel market and OU because OU have shown themselves as spectacularly incompetent to capture inbound demand.
Delete@10,34
DeleteCroatian tourism may be close to recovery, the same cannot be said for OU. Their last proper year of operations (2019) saw them with the lowest market share ever on the Croatian market and I wont be surprised if that trend has continued in 2022. That alone shows their growing irrelevance to Croatian tourism.
OU has had alot of advantages that would work in their favour for the past several years, which it has failed to use. Since you mentioned Slovenia and LJU, they failed to react to JP's bankruptcy. The rail link you mentioned would more likely bring passengers to Ryan Air rather than OU as OU practically flies to destinations already served from LJU by other carriers at similar prices. JAT used to connect LJU with the Croatian coast for example, with DC9's and B727's. When was the last time OU flew from Croatia to LJU with scheduled flights? Could OU not have flown routes like SPU-LJU-FCO?
Lets also not forget that OU hasn't for years operated with a profit. Their last recorded profit was thanks to selling company assets. With what money are they going to finance new aircraft?
Not to mention that a couple of PSO routes on which they operate have questionable viability on the Dash let alone on an aircraft with double the capacity and much higher operating costs.
Unfortunately, the A220's would be a financial disaster for OU at its current state rather than a positive development. OU needs a massive internal shake up and not new aircraft.
Surprising that they won't take ownership of the Dash planes after 15 years of financial leasing.
ReplyDeleteWhy would they? It is an expensive aircraft to maintain and run that is being fazed out of service globally.
DeletePersonally I agree with Anon 09.04. Given their precarious financial situation, sticking to the Q400 which you own makes more sense than getting a much larger plane whose lease is going to be anything but cheap.
DeleteAt this rate and given their overall performance so far, it makes more sense to stick to a plane with less than 100 seats than switching to the A220.
Pollution taxes in EU.
DeleteBravo Hrvatska!
ReplyDeleteWhere is Pozdrav when you need him.…
DeleteSorry for being late notLH 😃
DeleteKDZ /CTN bot got here first, probably just got to work, drank his/her (first of many) cofee, and started “working” lol.
DeleteIt would be nice if the CEO of Air Baltic told us how they managed to fill their A220s after moving from the Dashes.
ReplyDeleteWhat matters is that they did. Better route planning, fewer frequencies or whatever other strategy they followed proved correct.
DeleteLet's hope that Croatia Airlines can follow the same strategy.
DeleteIt also helped that they were leasing them out like crazy while not being cheap. Also they seem to be expanding around something I don't see OU doing anything soon.
DeleteIf they were to copy BT then they would be opening bases in places like SJJ, TGD, SKP... an idea they had some years ago but never materialized.
Also, BT is a commercially run business, something OU isn't.
Anonymous 09:08
Delete+1
Did BT tell them that 8 aircrafts are parked because of no engines available???
DeleteThey did not fill... There are still a lot of flights with 40 or less pax on board :D
DeleteI'm glad the Dashes are going. They have been problematic from the start. Let's not forget the major incident when the landing gear didn't come down and the plane landed without its front gear. Also just a few months ago a part of the fuselage came off when landing in Sarajevo. Good riddance.
ReplyDelete+1
DeleteCouldn't agree more!
DeleteUgly and useless aircraft. Good riddance!!
DeleteSome other airlines doing this same. LOT is also phasing out Q400 from domestic and short intra-European routes and replace with E-jet family. E-jets are now common sight on many domestic routes.
DeleteAnd so do SAS and Aegean.
DeleteNot everyone is crazy.
If you can't maintain them properly it's your problem. Those that take extra care have reliable Q400 fleet. If you have other issues like fuel consumption, switch to ATR.
DeleteIf you don't like props, I have bad news for you. Embraer will have new prop plane. Plus every new electric design and many hydrogen ones are based on props.Sooner or later props will be back.
The Q400 is a reliable aircraft if maintained probably , I'm an Engineer at Qantas and we get great usage out of ours with NO plans to replace them.
DeleteAir baltic ceo forgot to mention that they are using fokkers for their network and leasing out a220s to keep their business model floating, but hey that's just a minor detail
ReplyDeleteThe Baltic states unlike Croatia and the Mediterranean countries still face huge declines in air traffic compared to 2019.
DeleteThe minor detail is also they were profitable before and have losses after switching to A220
Deletepozdrav iz RijekeI am sure their losses during Covid and the Russian invasion are because of the A220.
DeleteAnd are continuing to receive even more aircraft because they are crazy.
Pozdrav knows everything, who are we to counter that guy?!
DeleteAir Tanzania entire A220 fleet grounded. Air Baltic 8 planes grounded. Why is pozdrav saying it loudly and publicly when we bots are in so good mood for supporting spending several hundred more millions of tax payers money for buying Plenkovic chair in Brussels?
DeleteI think quota for that was filled with Rafale order already
DeleteIt's combined. This is the seal on the deal.
DeleteI think there will be lots of sale and leasebacks with these planes. Find it hard to believe Croatia Airlines can find the cash to finance this rather large order for an airline of its size.
ReplyDeleteThat's a common practice. Highly likely in this case as you say.
Delete"Anonymous09:09
DeleteI think there will be lots of sale and leasebacks with these planes. Find it hard to believe Croatia Airlines can find the cash to finance this rather large order for an airline of its size."
Very likely Government will step in, re-capitalize Croatian airlines with injection of €150 million, 6 A220 300 will cost Croatian Airlines around €300 million and once lease for remaining 9 aircraft is agreed further 40 million per year. Financially OU would need to maintain aove 70% load factor, ideally 85% and generate revenue of 2,1 billion kuna, roughly €300 million. In 2019 Croatian Airlines generated 1.78 billion kuna revenue, so not far off in terms of revenue.
Ideal solution short to medium term is, retain 5 A319 till 2028 at least for summer season traffic, use A220 300 year round. Lease additional 6 A220 on 10 year deal from 2028 to 2038, and hope for the best. Croatian government will maintain its national airline due to nature of Croatian circumstance, i.e tourism. Ryan Air and others will play increasingly important role in Croatian aviation market as is the case across the EU, but with state subsidies OU is not really there to compete with likes of Ryan Air, it is there to provide essential services.
Essential services like nine daily to FRA and MUC to feed LH, with losses?
Delete@10,55
DeleteThe "essential" services OU provides is becoming increasingly expensive to maintain and getting closer towards just subsidising foreign carriers to do the job being cheaper, as is the case with LJU. Numbers show that OU is increasingly becoming irrelevant to Croatian tourism. In 2019, OU's marketshare in Croatia was around 16%, a record low for OU, meaning that it's foreign carriers providing the growth on the Croatian market. Cash injections in the past have done very little to change that. Cash isn't exactly the problem, its how the management have spent that cash that is the problem. OU have alot of things that could work to their advantage yet isn't going after them. New aircraft and more cash injections wont change that.
Problem is with ingrained belief that "Croatian government will maintain its national airline due to nature of Croatian circumstance, i.e tourism". That's not true. Greece and Spain are also large tourist economies by they don't need government airline to support it. Italy is moving away from government involvement. Once subsidies for OU start to skyrocket, that will be true for Croatia as well.
DeletePerfect! Can't wait for the first A220s to arrive.
ReplyDeleteBravo OU!
ReplyDeleteOk they have ordered the A220s. Now its time for their network planning, commercial and marketing departments to work very very hard on creating a suitable network to be able to fill these planes. It won't be as easy as doing it with the turboprops.
ReplyDeleteA big ask from a team that has done little in the past few years.
DeleteTrue. Would be nice if we saw changes to management with the arrival of the new planes.
DeleteLOL!!!
DeleteLove it. Wonder when the A3210/A320s will start being retired. Will it be at the beginning or later.
ReplyDeleteBy "at the beginning" I meant when the A220s start arriving.
DeleteI'm sorry I still think it's ludicrous to select this aircraft with its capacity over Embraers which were much better suited in this case. Of course I do hope that they are successful and that this order works out the best for them.
ReplyDeleteEmbraers aren't EU based, A220 are assembled in the EU and Canada, they have full service support in the EU, and EU funding. Why would OU go pay for
DeleteEmbraers, when A220s are literally free ???? Buying Brazilian aircraft doesn’t help EU, buying A220 helps EU.
Buying A220 helps only Plenkovic to get his Brussels armchair.
DeleteYes sure. He should have secured a job in Brazil instead.
DeleteAnon 11:01 A220s are literally free? Can you explain?
DeleteI like the Dashes. It saved Croatia Airlines a lot of money in the last 2 years.
ReplyDeleteYes. But I find the q400 uncomfortable, loud, too wobbly in bad weather, a bit claustophobic, with a size of 1.90 cm it is very cramped, especially by the window
DeleteThe purchase of these planes will either make them or break them. If they get professional management they can turn things around and become the next Air Baltic. However, if old faces stay, they really might go bankrupt if they keep making losses on top of high monthly payments to Airbus for these expensive planes. I hope they are aware of this.
ReplyDeleteThe current management was confirmed by the Croatian government for a 4 years term just earlier this year so I doubt there will be any changes. They will oversee the arrival and entry into service of the A220 and I agree that with the current politically appointed management it is a recipe for disaster.
DeleteSo they want to go from a carrier that's losing money with old planes to a carrier that is losing money with brand new planes?
ReplyDeleteYes, the state covers the loses. Just like it happens for every other Balkan airline.
DeleteI just feel bad for Croatian taxpayers that will see hundreds more millions spent on this airline after the hundreds of millions spent already with little visible effect.
DeleteI'm interested to see how it will work for them doubling capacity on most routes. But if air Baltic made it work maybe OU can too.
ReplyDeleteOU need to seriously review their pricing structure and become more competitive with the other airlines. Right now they are way too expensive v all competitors high for an inferior product. On many occasions I considered flying OU but chose another full cost carrier because of the ticket price. They should look at other potential profit centres to bring in revenue, but keep flight prices competitive enough to get people flying on their aircraft like most other airlines do. Just my observations the last 10 years!
DeleteThey should base some of them in Ljubljana.
ReplyDeleteThis would be great. At least two of them. Or even better: 2 A220. And I am not joking.
DeleteSure, we should buy the planes so that Slovene can fly them, very logical!
Delete@14,37
DeleteIf OU was properly managed, it could of taken on ex JP crew which had licenses to operate the A319/A320. Practically little investment needed there and no need for relocating crew. Slovenia as an EU member means that JP staff could work for OU. Language barriers practically non existant. JP aircraft instead of ending up at JU would probably have ended up at OU. OU was also leasing CRJ's for additional summer capacity, another type JP crew is licensed to operate. A small base in LJU could of helped boost utilisation of capacity they have in Croatia, especially in the winter months. ZAG and DBV used as OU core transfer hubs (DBV more of a summer seasonal hub) while SPU and LJU focusing on O&D demand and some transfers to European Star Alliance partner hubs.
LJU could of been connected with both SPU and DBV, with DBV not only ideal for O&D demand but also for OU connecting pax onto UA's seasonal EWR-DBV flights. Some additional capacity not needed in DBV and SPU could of been sent to LJU for winter charters. Soo much more could be said to further why a LJU base would have been great for OU.
Looks like they have an ambitious plan to transform.
ReplyDeleteWhere do you see a plan? I just see new aircraft.
DeleteBefore focusing on the fleet, they should have focused on their management and network.
ReplyDeleteI'm sure they will build their new route network around these planes.
ReplyDeleteAgree. New planes need a new network
DeleteAnd I am sure there will be no new route network and they will use new super expensive aircraft only for better quality of feeding the Cartel
Delete@09,44 and 09,52
DeleteYou build a profitable network first and then invest in new aircraft, not the other way around.
I think these planes will be a limitation. Both in summer and winter. In summer they will need more capacity than 145 on many routes while in winter even the Dashes are too big on many routes.
ReplyDeleteYeah, which routes exactly?
DeleteI wonder if they will try some longer routes with the A220. Like for example Dubai.
ReplyDeleteThey can fly those routes with their current A319/A320.
DeleteDubai would possibly make sense if EK doesn't relaunch ZAG.
DeleteI know but the A220 will bring certain cost benefits on such long routes.
DeleteAnonymous 09:58
DeleteI think TLV, ATH, CAI, possibly LCA would make more sense than DXB. EK has the advantage of massive transfer traffic. It does not depend on UAE O&D demand.
^ Hope so. Those would be good additions.
Delete@Anonymous09:57
Delete"Dubai would possibly make sense if EK doesn't relaunch ZAG"
EK will re-launch, that is certain as night follows days. When is the question? 2024?
Without their dashes they can’t be profitable only with the A220’s there are some routes that need smaller aircraft.
ReplyDeleteThose routes are subsidized.
DeleteWith new fleet and a new network Croatia Airlines could become easy takeover target for a major European airline.
ReplyDeleteThat would be the best outcome.
DeleteThey will have hundreds of millions of debt by that point. Hardly an attractive investment opportunity.
DeleteAnonymous 10:00
DeleteNot if they lease the aircraft instead of buying them.
Not gonna happen, OU is a Croatian brand.
Delete@Anonymous09:56
Delete"With new fleet and a new network Croatia Airlines could become easy takeover target for a major European airline."
No chance, Government of Croatia owns the airline, you can become a strategic investor and minority holder, 45-49% stake in the airline, but this is as far Croatian state will go.
"Not if they lease the aircraft instead of buying them."
DeleteA leasing agreement is still a liability.
A leasing agreement is something tat you can get out off much more easily than a bank loan.
DeleteA220s are perfect for OU but I would not retire the Q400s.
ReplyDeleteI would not retire Q400 as well. They could be stationed in OSI, PUY, RJK and DBV and used to PSO connect Istria and Dalmatia, Slavonia and Istria, Slavonia and Dalmatia, morning and evening, and connect to midday waves in ZAG and/or some regional international flights. A220 is not perfect for OU, they are too big and too expensive. Instead buying 6 A220, A320 neo order should have been converted to A321XLR, and A330 leased for NYC and ORD services until A321 delivered. Embraer, much cheaper, and much better fit for own network feed should have been leased, not 9, but at least 15 units, seating 90 - 120, regional ex-yu and Balkans network significantly increased, and feed to MUC and FRA reduced. Even 319/320, paid off, well maintained and still in decent shape, should have remained in the fleet for at least few more years, and used from the coast in summer season
DeleteGood. An end to turboprops at OU after 30 years.
ReplyDeleteAs soon as they receive the new planes one of the bigger airlines will acquire them.
ReplyDeleteI don't think the existing fleet age is the reason bigger airlines aren't rushing to buy them.
DeleteNo way! OU is not for sale obviously, given this development.
Delete15 planes for 13 international destinations in winter?
ReplyDeleteThe economics of A220s compared to the A320CEOs could make it possible to keep a lot more routes off season.
DeleteAnon 10:33 +1
DeleteGlad they are getting rid of those Canadian coffins. Will not be missed.
ReplyDeleteHow will they finance these planes?
ReplyDeleteWe are talking here about 1 billion EUR and OU does not have even 20-30 for current business activities.
Leasing and government subsidies.
Delete@Anonymous10:49
Delete"How will they finance these planes?
We are talking here about 1 billion EUR "
6 A220 300 = €300 million, remaning 9 to be leased = €40 million per year. Hardly €1bn.
Who is talking about EUR 1 billion? You only.
DeleteIs EU/EC going to allow 300 million subsidy just because planes are ordered from EU manufacturer? Is LH going to be okay with Croatia government subsidies as long as their hubs are being fed by Croatia Airlines?
DeleteLeasing 15 A320's at US$200,000 a month (which is at the higher end of its lease price) gives a total of US$36 million. OU which isn't able to make a profit unless it sells assets will spend €40 million for 9 aircraft.
DeleteFor €40 million they could lease 9 A332's per year (estimating USD$350,000 per aircraft per month) and still have change.
I'm sure in five years they'll return these planes and go to a fleet of all A330's. This airline is a joke.
ReplyDeleteGood one.
ReplyDeleteThe next step after A220 should be A330 neo
ReplyDeleteNext step after a220 is bankruptcy
DeleteWith a little more quantitative easing by the ECB Croatia could even buy more and bigger aircraft .
ReplyDeleteMoney nowadays is not a problem, just fully activate the printer !
OU has so much potential with Croatia being such a hot destination and the large numbers of Croatians living abroad and returning back to visit. My observations last 10 years is that their ticket pricing has been so overly uncompetitive that it actively discouraged (me) to fly them. If this airline is to make a change top priority needs to be given to how they compete with other airlines on the bigger routes, offer shuttles between popular towns on the Croatian coast during summer (eg split - Dubrovnik, pula- Dubrovnik) and seriously focus on other profit centres once they attract customers into their planes (partnering with banks, insurance companies etc to offer discounted products to their customers). Finding use for the planes in the winter season will finally make this business case work. I hope they get some management who can see this and drive change. Here’s hoping!!!!
ReplyDelete