Belgrade, a Yugoslav hub.

 

It is a common Balkan phenomenon for one to come across a speech by an airline or airport official stating that the institution they work for will become a regional leader.

However what these people tend not to do is specify which region we are talking about. Is it the region of that particular city? Is it the country itself? The Balkans? South-East Europe? The whole of Europe?

 

In today’s thread all the Balkan comparisons will exclude Athens and Istanbul as they are in a completely different league when compared to all other Balkan airports.

In the region of ex-Yugoslavia it is no secret that Belgrade has the greatest potential to become a regional leader. This is not my nationalism speaking, nor is it wishful thinking but it’s simple common sense backed by solid facts.

Naturally, the growing economy and the developing tourism industry are fuelling passenger demand. However, these are only contributing factors required to transform Belgrade into a regional leader.

For an airport to become a regional leader it needs to have a strong local carrier. In the case of Belgrade, the lack of a strong domestic carrier is standing between the airport and regional dominance. Jat Airways is a crippled, senile airline currently operating by default.

Jat’s so called regional network includes three cities (Skopje, Sarajevo and Podgorica) whose flights are timed to offer connections during early morning departures.

What Jat failed to think about is how passengers will arrive at their final destination without spending over 7 hours waiting at Belgrade airport. Recently the airline started offering afternoon flights between Belgrade and Skopje, but the only problem with this is that once in Belgrade passengers have nowhere to connect to besides Dubai (via Larnaca), a schedule which

operates only 4 times weekly.

The airline’s incompetence goes so far that they are unable to offer daily flights to major hubs around Europe. Recently both Dusseldorf and Athens have been upgraded to daily services. Dusseldorf is perfectly timed for connections via Belgrade, whereas Athens leaves roughly one hour before the arrival of the regional flights (that is if we exclude the random afternoon frequencies).

 

Loads to Dusseldorf are decent whereas Athens records catastrophic loads, usually below 50%. Maybe it’s time Jat understood that one of the main reasons for a regional network and feeder flights is not to make the route map pretty but rather to fill their outward flights with passengers from the region.

 

However, today I am not going to speak about the importance of feeder flights in general, but rather how they could play an important role in giving Belgrade a clear advantage over other cities in the region.

The key to Belgrade’s success is in the origin and destination (O&D) market. The O&D market is made up of passengers travelling between points A and B, that is they are not using Belgrade as a connecting airport.

 

With a regional network in place the newly launched flights departing Belgrade would be fed by the O & D market, thus guaranteeing satisfactory load factor

 

For example, when Malev introduced flights to the Yugoslav region, they had to invest a lot of money in advertising in order to secure decent loads and to attract connecting passengers to Budapest. Jat would not need such a large investment in this region as the brand is already known. What Jat needs is to reinstate services to Yugoslav cities. It was a good start when they reintroduced Dubrovnik as this was once one of the most important destinations for JAT (Yugoslav Air Transport).

There is another problem at this point. Since the dissolution of Yugoslavia, the younger generation has no sentimental link to the cities on the Adriatic coast. For a lot of young people Dubrovnik is just another city in Europe trying to attract Serbs to spend their money there. On the other hand, for the older generation, Dubrovnik is more than just a city, it is a reminder of better days way back when…..! The O&D market is shrinking every year and Jat should act before all is lost.

This is something Jat needs to understand when entering these markets. We are no longer living in the heyday of Yugoslavia. The market has both changed and shrunk since then.

The best example is this summer season; even if there are 2 weekly frequencies between Belgrade and Dubrovnik, the loads are still weak. This summer Greece and Turkey remain as top destinations for holidaymakers.

 

Yugoslav expansion should be carried out carefully and with thorough prior analysis; most importantly this expansion should concentrate on offering connections via Belgrade. Numerous tourist destinations have become cash cows for a lot of airlines, the best examples being Larnaca and Malta.

I believe that this new expansion should be undertaken by people who had no connection to the old JAT as emotions are something that have no place in this new business environment. Today these destinations are simply on a par with certain other coastal cities outside the Yugoslav region, Thessaloniki or Venice for example.

 

Recently Lufthansa announced that their European network is losing money and that they need to do something in order to bring it back to profitability.

Interestingly, airlines such as British Airways, Air France and KLM have never made similar statements. This is because all these airlines operate out of hubs that have considerable O&D markets. By relying on this O&D they can always expect a certain number of passengers on their flights, meaning that they do not need to drop their fares in order to attract passengers.

Some airlines that are facing similar problems to Lufthansa are those that developed their hubs in places with a small O&D market (relative to their operations). These artificially created hubs are dangerous places and need extra caution when planning future business steps. Another European airline that has tried to recreate Lufthansa’s success is Latvia’s national carrier, airBaltic. Currently the airline is battling debt and may face closure. This is because such airlines attract passengers with low fares that cannot sustain their route network.

Within the region Slovenia’s Adria tried to create its own its own hub without a substantial O & D market which resulted in the airline owing €100,000,000

That is why Jat Airways should feel blessed that it can still rely on its O&D market to sustain its regional and European expansion.

 

 

 

 

 

Advertisements

One Response to Belgrade, a Yugoslav hub.

  1. Yogi says:

    I landed in Belgrade Airport last month to explore the area and everything looks amazing. I love the fact that the people there are very accommodating. I will definitely visit the place next year! 🙂

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: