Yugoslav airline sees room to expand, consolidate in growing Balkan niche
Thu Oct 16, 4:27 AM ET
BELGRADE (AFP) – Yugoslav carrier JAT Airways has plans to create a regional carrier for the Balkans by 2004 in the latest shift toward consolidation in the European aviation industry, executives say.
The former Yugoslav Airlines, a minnow compared to its Western rivals, sees a niche opportunity for growth through greater cooperation between carriers in the Balkans, director general Predrag Vujovic told AFP.
He said the countries of the former Yugoslavia — Bosnia, Croatia, Macedonia, Montenegro, Serbia and Slovenia — plus neighbours Albania, Bulgaria, Hungary and Romania represented “the only and the best opportunity for growth” for the national carriers of southeastern Europe.
“We have a potential market of more than 50 million people, and their transport links today are catastrophic… Very few flight routes actually exist between the countries of the Balkans,” Vujovic said.
Explaining what every traveller in southeastern Europe already knows only too well, Vujovic described flight links between regional centres as “crazy”.
Giving just one example, Vujovic said a trip from the Bosnian capital Sarajevo to the Bulgarian coastal town of Varna, a direct flight of about one hour, currently required two connections in Belgrade and Sofia.
“Nobody is moving toward the creation of a regional network … yet growth can only come from regional lines,” not by penetrating the western European market, he said.
JAT has recently opened several direct flights linking Belgrade with regional centres such as Tirana, Ljubljana and Sarajevo, and intends to add Zagreb and Dubrovnik to its schedules next year, he said.
It has also reopened, after a gap of 12 years, direct flights between Belgrade and New York which were cut during the Balkan wars of the 1990s.
Vujovic said his next step was to create a regional airline by the first half of next year which initially would be 100 percent owned by JAT, but which would be open to partnerships with other carriers.
Negotiations were already underway with national airlines in Bulgaria, Macedonia, Albania and Bosnia-Hercegovina, he said.
JAT had also organised a round-table discussion next month with European airline executives and representatives from the European Union (news – web sites).
The new company would be able to piggy-back on the long-term growth prospects for the region, where economies were generally expected to expand in line with ongoing legislative reform and European integration.
“According to our forecasts for the next two years, political tensions will continue to diminish in the region, the visa system will be liberalised, and the conditions will be perfect for the creation of open skies in the Balkans,” Vujovic said.
Belgrade was the “logical” base for such a project, but Vujovic insisted that the new company should have a cosmopolitan outlook.
“The regional company will not have an ethnic identity — the language will be English. Our goal is to be able to employ people without problems, a pilot from Bulgaria, a Croat mechanic, a Serb flight stewardess.”
JAT has come on hard times since its heyday in the 1980s, when it had a fleet of more than 40 planes, carried more than five million passengers a year and monopolised a market of 23 million in the former Yugoslavia.
But the Balkan wars, international sanctions against the ousted Yugoslav regime of Slobodan Milosevic (news – web sites) and the NATO (news – web sites) bombing of Yugoslavia in 1999 took a heavy toll on the airline.
For the past two years it has been restructuring in line with the government’s plans to privatise it in the near term. It now has 22 planes and employs 3,800 people.
Its revenues rose 26 percent in the first nine months of the year, a record that most airlines would envy.
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October 16, 2003 at 5:23 pm