What’s up with Jat? (Part 1)

Where does one begin to point out the flaws of an airline whose basic foundations and infrastructure are extremly outdated and flawed.

The airline in question is Jat Airways, the national airline of Serbia. Since the break-up of Yugoslavia the airline has been struggling. Its home market has shrunk from over 20 million potential customers (of  the former Yugoslavia) to just under 10 million after the break-up of the Republic: a figure that is equal to the population of  Serbia and Montenegro.

Shortly after international sanctions were  lifted the airline was able to resume operations.

Unfortunately by then the domestic market potential had been greatly reduced . Post-war Yugoslavia had little passenger demand due to the visa restrictions imposed on its citizens by the majority of European countries. Yugoslavia had a very weak economy at that time, without which there was very little demand for either carriage of cargo or business  class passengers (both being a very good source of income).

During the 1990s the airline’s core fleet consisted of B737-300s, DC-9s, B727-200Advs, Atr-72s and, importantly, one remaining DC-10.  With a fleet that exceeded its passenger demand the airline was forced to lease out certain planes. Jat’s planes flew all around the world, from South America to South-East Asia.

Its DC-10, once the pride of the Yugoslav flag carrier was forced to fly on short routes such as Zurich, in addition to occasional flights to Larnaca and Montenegro.

With the advent of the 21st century the airline continued to record multi-million euro losses and a constant change in leadership. The latter proved to be extremly detrimental to the airline as without a constant leadership it was extremly difficult to create a long-term strategy which would bring the airline into profit, or at least reduce its losses.

In 2004 the airline was forced to start retiring the most important airplane in its fleet, the DC-9. This aircraft was perfect for the airline as it had the precise capacity it needed, up to 100 seats. These planes could be flown on thinner routes where a Boeing 737-300 or Boeing 727 would be too big. DC-9s were already too old (the first DC-9 joined the fleet in 1969) and their fuel consumption made them too costly to remain in the fleet.

From 2005 the airline’s fleet consisted mostly of Boeing 737-300s operating on the Euro-Mediterranean routes and a fleet of Atr-72s for both domestic and regional routes (with the exception of routes such as Prague or Munich to which the Atrs were flying occasionally).

Jat Airways today is one of  numerous ailing European carriers and its owners, the Serbian government,  have no idea what to do with it. This claim is backed by the latest results recorded by the airline: the loss of market share at Belgrade Airport (which stands at around 40%) and enormous losses achieved with an archaic fleet whose average age is 23.4 years.

As the Serbian sky has been recently liberated, the competition is just going to add more nails to Jat’s coffin.

The new management is promising a fleet renewal by 2012. The only problem is that they are planning  purchase planes from Airbus (A319 with a capacity of about 130 seats) which are going to require new training, new spare parts… only to prove inadequate for the market served by Jat.

The management is blinded by their lack of  aviation knowledge  which prevents them understanding that Jat doesn’t need additional capacity on its routes, proven by their low loadfactor. What the airline needs instead  is additional frequencies in order to consolidate itself on the few routes where it does not face any competition; at least for the time being.

The airline has been suffering because it has never managed to replace the DC-9 fleet. That is why today, the management of Jat should concentrate on finding a replacement for this rather than for their B737-300 fleet, which at this point is partially overhauled with new interiors and new engines.

In my opinion, by acquiring the Airbus airplanes, Jat will be in the same position as Tarom of Romania with their Airbus A318.

With this move, not only will the airline suffer in the long run but so will the government, who will have to finance the introduction of a new plane model into the fleet.

The management has not specified whether they are planning on purchasing brand new Airbus planes or  simply leasing second hand aircraft.

The only thing that they did mention was that they intend to end the 12 year dispute with Airbus. I can only say that they may be shooting themselves in the foot.

It is to be expected that when a completely new plane model is introduced into the fleet (such as Jat Yugoslav’s introduction of the Atr-72, Croatia Airlines’ Dash-8, Emirates’ A380)  technical failures might occur. This is caused by the lack of operating familiarity with the new model.

The Serbian media will not miss an opportunity to report on these events and greatly exaggerate them for dramatic effect. An example of this is the widely reported story of the ‘missing screws’. With the bad publicity following Jat this could hurt them even more. With fierce competition in Belgrade their customers might switch to to other airlines which tend to be less expensive than Jat.

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