Turkish eyes Serbian MRO subsidiary in potential Air Serbia deal

Turkish Airlines is considering opening an MRO (Maintenance, Repair and Overhaul) subsidiary in Serbia, the carrier’s Chairman, Ahmet Bolat, has said. It comes amid growing ties between Turkish Airlines and Air Serbia, as well as strained relations between the Serbian carrier and its main MRO provider Jat Tehnika. Speaking to “Aviation Daily”, Mr Bolat said, “We are working on that [MRO subsidiary] with investors, for example in Belgrade, Serbia. We will make a decision accordingly. We are always open to opportunities and evaluate future prospects. That’s the important thing”. The Chairman added that labour costs are decreasing in some parts of Southeastern Europe, which is why he thinks it is a good area to invest in.

Air Serbia has had tense relations with its main MRO provider, Jat Tehnika, in recent months. As of January, the airline began sending some of its aircraft for maintenance to Turkish Technic, Turkish Airlines’ MRO provider, in Istanbul. In February, Air Serbia’s CEO, Jiri Marek, said, “We currently have our difficulties with maintenance. We are working on much closer cooperation with Turkish Airlines, especially with supply chain issues. If you are doing maintenance in Belgrade and some part is missing and you have to wait a couple of weeks or months to get it, a lot of these parts are being produced by Turkish Technic themselves and they also have certification in place. It was an easy decision to do most of the base maintenance with Turkish Technic”.

The potential set-up of a Turkish Airlines MRO subsidiary in Serbia would likely be tied with Air Serbia having its aircraft maintained by the company. Mr Bolat said that a possible MRO joint venture would not include aircraft engine maintenance. “That will be not a part of it. It requires a network [in terms of spare parts]. You cannot build an engine shop for only the engine you operate. You have to be backed up by other carriers [third-party customers] that have the same engines”. Mr Bolat added that Turkish Airlines itself does not require additional maintenance capacity and that all of its needs are being met in Istanbul.

Air Serbia and Turkish Airlines signed a Memorandum of Understanding to further expand their cooperation last year, starting with a wide-ranging codeshare agreement, which has since been strengthened on several occasions. The two have also introduced reciprocal new routes, with Air Serbia and Turkish Airlines’ lower cost AnadoluJet commencing operations between Belgrade, Izmir and Ankara. Furthermore, Air Serbia has introduced services from both Niš and Kraljevo to Turkey’s largest city, while its Turkish counterpart added a third daily flight to the Serbian capital. Air Serbia is also exploring the potential adoption of Turkish Airlines’ Miles & Smiles frequent flyer program.

Air Serbia and Turkish Airlines have said they are exploring the possibility of establishing a Joint Venture. A Joint Venture is an agreement between airlines to share revenues on a route. It also involves coordinating route planning and scheduling. These are typically large undertakings, that involve significant negotiations. They also often require government approval due to the potential removal of competition. The two said the Joint Venture “would enable the two companies to offer more competitive and more affordable flights between Turkey and Serbia, improve the quality of service currently offered, as well as expand their offer and benefits for all passengers”.