Why is oneworld unsuccessful in Belgrade?

 

 

The presence of oneworld in Belgrade is pathetic! Not only is their passenger share below 1% but they are present in the Serbian market simply through Malév’s 5 weekly frequencies from Budapest.

 

 

It is a very well known fact that one of the most lucrative markets from Belgrade is the North American one.

However, in that particular region oneworld’s presence is impressive. This is mostly achieved through American Airlines’ extensive  network in the US, and British Airways’ far-reaching network from London Heathrow.

 

American Airlines has numerous bases around the United States, two of them being very important for the Balkan passengers: New York and Chicago.

Star Alliance has mounted a very aggressive ongoing campaign in order to establish itself as the dominant carrier in the ex-Yugoslav/Balkan market.

In Belgrade alone they hold an impressive 22% of the market. In June Lufthansa recorded an average loadfactor to Belgrade of 89%. The airline operates the route twice daily with their Boeing B737-300.

 

For years now Lufthansa has targeted passengers flying from Belgrade to North America. Its subsidiaries, Swiss and Austrian, both offer convenient connections via their hubs. Swiss even introduced a second daily flight in order to offer faster connections. As a result its passenger numbers between Belgrade and Zurich have doubled.

 

British Airways, as the biggest oneworld member airline in Europe, was at a serious disadvantage due to British visa requirements for Serbian citizens.

This meant that Serbs travelling to North America needed a British transit visa even when connecting through Heathrow.

As British Airways’ O&D market was taken over by Jat Airways (higher frequencies than BA) and Wizz Air (cheap!) they had no option but to direct the aircraft to more profitable routes.

Until the British government decides to remove the visa requirement for Serbian citizens it is doubtful whether British Airways will consider returning to Belgrade.

However, the British government has stated its possible intention to remove the visa restriction in the foreseeable future. This liberalization would likely encourage British Airways’ return to Belgrade, thus posing a serious threat to the current airlines dominating this market.

Not only is a London transit the most direct way for Serbs to travel to the US but it is also the city that serves the greatest variety of US destinations, and with high frequencies.

 

Currently the only oneworld airline from the alliance in Belgrade is Malév which is struggling to survive.

To make things even worse, both Malév and American Airlines have neglected the Serbian market and the New York flight is not coordinated with the arrivals from Belgrade. This is a major mistake as the combination of Malév and American Airlines could have been the cheapest and most convenient of all thanks to the proximity of Belgrade and Budapest.

 

If these two airlines had serious intentions about serving Serbia then they should have known that by poaching some passengers from the competition and developing Budapest as a transit hub for Serbs they could have planned Chicago-Budapest in the future.

Without suitable timings between Belgrade and North American flights out of Budapest, Malév will keep on struggling in Serbia.

Serbs are no strangers to Budapest. During the 1990s when air travel was severely restricted out of Belgrade the vast majority of Serbs used Budapest as their departure point.

To make things even more convenient for them, Lot has announced that they will be discontinuing Belgrade services during the winter.

With Lot gone for the winter season Malév should have jumped in with a revised schedule in order to offer Belgrade-New York at affordable prices and with fast transit times.

One major mistake Malév is currently making is that they are trying to attract passengers to connect through Budapest en route  to other parts of Europe. The problem with this strategy is that the market they are trying to get into is highly competitive and far from profitable.

One of their major threats is from airBaltic which has a massive network within Scandinavia with multiple daily departures and cheap fares: both of which Malév lacks.

To make things even worse  airBaltic’s average load factor for June jumped from just over 50% to 74% year on year.

With these catastrophic results Malév should really reconsider their operations in Belgrade. Will they keep on struggling to attract passengers to connect via Budapest to the rest of Europe or will they change their strategy and coordinate their flights with American Airlines in order to fill their flight to JFK?

 

oneworld’s situation will remain as is and will not improve until Niki joins the alliance.

With Niki in the alliance oneworld passengers will have much greater flexibility when travelling. Currently the airline uses their E-190 aircraft between Vienna and Belgrade. From the winter season the airline will be adding 5 additional frequencies in order to offer better connections at its hub, Vienna.

 

Besides Malév and Niki the only possible airline we might see in Belgrade is British Airways. The rest have too little demand to succeed in Serbia.

 

 

oneworld’s true glory in Serbia cannot be achieved without the return of British Airways!

 

 

One hot summer

 

Belgrade airport is still reporting phenomenal results, a trend started with the lifting of Schengen visas for Serbian citizens in December 2009.

Last year the airport handled a total of 2,698,730 passengers which represents an increase of 13% when compared to the 2009 results.

 

As we approached 2011, many wondered if the airport would be able to maintain this amazing trend.

Since January the airport has been recording an average monthly growth of 20%! If this trend continues the airport will come extremely close to replacing Sofia as the third busiest airport in the region, behind Budapest and Bucharest.

With the summer season officially in place, the airport should be more than satisfied with the new frequencies announced by various airlines.

Additional frequencies will be available on routes to Istanbul’s main gateway, Ataturk airport. Turkish Airlines has requested an additional two frequencies which should complement their current daily flights. Once the flights receive government approval there will a total of 14 weekly frequencies between the two cities.

TK 1083 arr. BEG

1-3—- 18:20

TK 1084 dep. BEG

1-3—- 19:15

It will be interesting to follow the developments in the Serbian-Turkish market. In addition to Turkish Airlines, the Serbian national carrier operates this route 5 times per week.

Shortly before the crisis and the liberalization of the Serbian market, Turkish lowcost airline Pegasus was planning on opening up the Sabiha Gokcen-Belgrade route. The original plan was to operate the route twice per week using their B737-800 aircraft.

Currently Pegasus is expanding in the region with Bucharest being their newest destination. It remains to be seen what happens. There is always a possibility of higher frequencies from Turkish Airlines or Jat, or we could see Wizz Air inaugurating flights to Istanbul (probably Sabiha Gokcen airport) once they base their second aircraft in Belgrade. Who knows? Maybe we’ll see Pegasus back in Belgrade as they currently operate summer charter flights from Antalya.

Another recent announcement came from Belgrade’s northern neighbour. Malev has announced that from July 1st it will be adding an additional two frequencies to Belgrade.

In the first couple of months of operations in Belgrade, Malev recorded impressive results. Part of this success was due to the promotional campaign where passengers could purchase tickets for as little as €1! Very soon their Dash-8 aircraft became too small for their daily operations to Belgrade and their Boeing aircraft became a common sight at the airport.

This trend did not continue once the promotional campaign was over. There was a very sharp drop in passenger numbers and the airline was forced to reduce capacity from 68 seats to just over 30 per day. In time frequencies were reduced from daily to 4 times per week.

However, summer 2011 will see Malev operate daily flights until July 1st when the two additional flights will be added. These flights will spend the night in Belgrade with a very early departure in order to provide passengers with decent connections through Budapest.

MA 478 arr. BEG

-2–5– 00:40

MA 479 dep. BEG

-2–5– 04:55

With CSA’s possible withdrawal, Malev should be more than satisfied as passengers who previously used Prague as their transit airport can now connect via Budapest. It would be a great shame to see CSA leave the Serbian market since it has been present there since 1946.

One airline which has announced drastic changes to its Belgrade flights is the Austrian lowcost carrier Niki.

Until the start of the winter season (31.10) the airline will keep its current 6 flights per week. Since the inauguration of its flights Niki has aimed at the large Serbian diaspora living in Vienna. With its upcoming membership of the oneworld alliance the airline has revised its schedule in order to cater for the needs of business and connecting passengers.

VIE-BEG

arr. as HG 8026 at 07:15   12345–

arr. as HG 8028 at 20:00   12345-7

BEG-VIE

dep. as HG 8027 at 08:00  12345–

dep. as HG 8029 at 20:35  12345-7

Both Malev and Niki have remained as the only carriers from the oneworld alliance to offer direct flights to Belgrade from their hubs.

Several months ago British Airways axed Belgrade due to tough competition from Jat Airways and Wizz Air.

With the above mentioned changes Vienna will see up to 7 daily flights operated by three airlines. As of 31.10 departure times to Vienna from Belgrade will be as follows:

    05:15, 07:55, 08:00, 08:10, 15:15, 16:50, 20:35

This particular route is important for both Austrian Airlines and Niki. Vienna is one of the few destinations out of Belgrade where airlines have the opportunity to offer convenient connecting possibilities while relying on the considerable origin and destination market (Serbian diaspora).

While these two carriers fight it out with each other, Jat Airways maintains its double daily flight on the route. Jat mostly aims at the origin and destination market between the two countries. Even if their flights are perfectly timed to offer connections to several ex-Yugoslav cities my personal belief is that they will lose in the long run. Both Austrian Airlines and Niki have expressed strong interest in expanding in the ex-Yugoslav/Balkan market. Austrian Airlines is a very well established carrier in this region, whereas Niki has just begun its own expansion in the region. After launching Belgrade, Sofia and Bucharest the airline has recently announced plans to open direct links between Vienna and Skopje.

Jat’s failure to modernize will result in its demise. The more we see these Austrian carriers expand in the region the less passengers will opt to fly with Jat. Demand between Belgrade and other ex-Yugoslav cities (with the exception of Montenegro) is far from enough to sustain profitable flights. Jat’s daily frequency to the regional cities cannot compare with those offered by its neighbours such as Adria, Malev or even Croatia Airlines. If Jat is unable to compete with these airlines then how can they even think of fighting off airlines which are backed by Lufthansa and Air Berlin?

It’s a race against time for Jat and for it to preserve what is left of its past glory. It seems to me that recently they have adopted a different strategy, one that will see the airline concentrate on fighting off competition at its home base in Belgrade and therefore regain some of the lost O&D market. Some of the recent changes to their timetable include daily flights to Dusseldorf and Athens, a sixthweekly frequency to Istanbul (pending government approval) and an additional 4 frequencies will be added to Paris CDG.

Only time will tell if these changes will prove to be successful. We will have to wait until the end of summer season to know who is the real winner and who is the real loser in Belgrade.

Summer 2011 on Final Approach (Part 3)

 

The third part of the ‘Summer 2011 on Final Approach’ will look at the success of the oneworld airline alliance in Belgrade.

 

 

In December 2009 it seemed as if oneworld’s luck in was about to change. The Hungarian national carrier Malév had announced that they were returning to Belgrade after two decades of absence.

On the 14th of December 2009, Malév’s aircraft (Boeing B737-700) landed in Belgrade for the first time since the discontinuation of the service in 1992.

In order to promote the new route the airline had launched a new campaign where people could purchase tickets for only 1 Euro.By the time the airline launched the flights it had a total of 2.000 bookings for December alone, giving it an outstanding loadfactor of 70%.

With the campaign in place, the winter season of 2009 saw Malév operate a wide range of aircraft between the two cities, ranging from Dash-8 to Boeing B737-800.

True success in Serbia would only be shown during the following summer season, that is after the promotion had passed.

During the summer season in 2009, the airline recorded lower passengers numbers. Still, the route was still considered a success.

True blow to oneworld in Serbia came in late 2010 when British Airways announced its withdrawal from Belgrade. The airline was unable to cope with growing competition from both Wizz Air and Jat. Its presence in Belgrade has been reduced to a simple codeshare with Malév via Budapest.

After the initial success during the previous winter season, Malév started to face its own difficulties. They tried to keep the daily frequency by reducing capacity on the rout by replacing their Dash-8 (72 seats) with E120 Brasilia (30 seats). Eventually the airline was forced to downgrade Belgrade to 6 flights per week.

However, the airline is planning daily frequencies for the upcoming summer season hoping to reverse the current trend.

On the other hand, one can wonder if British Airways will be reintroducing flights to Belgrade this summer. There are numerous obstacles which might reduce the chances of their return. Most importantly Serbian citizens still need a visa to both enter and transit in the UK. Jat Airways and Wizz Air have added additional flights this summer in order to fill the void left by British Airways.

Passengers loyal to the oneworld airline alliance will have to travel on Malév this summer season. It would be surprising that any other member of the oneworld alliance would enter the Serbian market at this point.

However, no matter how unlikely it is that any other member of the alliance would place Belgrade on their route map, only Finnair and Iberia could possibly find interest in the Serbian market.

It’s worth mentioning that in case either airline decides to launch Belgrade, a large sum of money would be needed until the route would start making profit. The fact that Serbian market today is not a large one, or that it is far from a high yielding one might make it less interesting to these two airlines.

To make the return of Iberia even less likely, Spanair had been operating flights from Barcelona for almost a year now. During the last summer season, in addition to Barcelona the airline flew twice per week from Madrid to Belgrade.

This summer the airline is planning on keeping three weekly flights from Barcelona, whereas nothing was mentioned regarding the flights from Madrid.

On the other hand, Finnair would probably record enormous losses in Belgrade. This is mostly due to the large number of airlines flying to the two markets relevant to Finnair, northern Europe and Asia. Northern Europe is very well covered by airBaltic via Riga in addition to Jat Airways, Cimber Sterling, Wizz Air and Norwegian operating flights to numerous cities in that specific region.

On the other hand Asia is very well connected by Aeroflot via Moscow and Turkish Airlines via Istanbul. Aerosvit, a newcomer, is trying to steal some of the Serbia-Asia market and re-route it via Kiev.

My personal opinion is that oneworld’s presence in the Balkans (excluding Istanbul and Athens) is very much dependent on Malév and their vast coverage of the region.

As for Serbia, the only oneworld airline that could return to Belgrade is British Airways from London Heathrow.

 

However for the time being oneworld will continue to route its passengers via Budapest to the world.