Monday, 4 February 2019

Privatisation for Croatia Airlines, But is the Interest There?

As we reported recently, the enfeebled Croatian flag carrier, Croatia Airlines, will undergo privatisation, with the Minister of Maritime Affairs, Transport and Infrastructure, Oleg Butković, having confirmed that the process is ongoing.

As Suzana Varosanec/Poslovni Dnevnik writes on the 3rd of February, 2019, fairly soon, the Croatian Government will decide on the appointment of a required commission to deal with the finding of a strategic partner for the burdened domestic airline.

In response to Poslovni Dnevnik's question on the matter, the response from the competent ministry was that Croatia Airlines has a tender which is currently in its final phase dedicated to finding a financial advisor for the development of the company's needed recapitalisation and the finding of an equally needed strategic partner, but as the initiator of the entire process Croatia Airlines is currently undergoing, it isn't in a position to comment on the details until the end of the procedure.

By the force of a decision made by the Croatian Government back on the 4th of January 2018, Croatia Airlines was returned to the list of companies of strategic and special interest to the Republic of Croatia. On the 26th of April 2018, the Croatian Government adopted the national program of reforms for the year 2018, which suggests ensuring further development and the strengthening of competitive advantages and positions on the air transport market through a quality strategic partnership should be the main goal for Croatia Airlines.

As an indicator of the results, the expansion of the domestic airline's transport network has since been established, as has as the increase in its market share and its recapitalisation.

Back in September 2018, in order to conduct a tender, a limited two-stage procurement procedure was initiated for the "financial advisor service to develop Croatia Airlines' recapitalisation model and finding a strategic partner".

Unofficially speaking, there does appear to be some serious interest for Croatia Airlines, but we're yet to see how that will manifest.

Make sure to stay up to date by following our dedicated business page for much more.


Click here for the original article by Suzana Varosanec for Poslovni Dnevnik

Friday, 1 February 2019

Oleg Butković Reveals Fate of Croatia Airlines - Privatisation

Croatia's flag carrier hasn't had a particularly easy time of it of late. With the desperate search having been on for some time to finally locate a potential strategic partner, Croatia Airlines has been down on its luck and the enfeebled air company, despite having had a good tourist season last summer, is still struggling.

While privatisation isn't always a popular move for companies of such size, it may be the only way forward in some situations. It seems that the fate of Croatia Airlines is now not only heading in that very direction, but that it has already begun, with the process apparently ongoing.

As Poslovni Dnevnik writes on the 1st of February, 2019, after having visited Pelješac Bridge's construction site, on which work on the highly anticipated bridge is progressing faster than previously thought, Minister of Maritime Affairs, Transport and Infrastructure, Oleg Butković, spoke about the fate of Croatia Airlines. He announced that the only national airline company is now ready for privatisation.

Minister Oleg Butković told Dnevnik that when it comes to the road to Croatia Airlines' privatisation, ''the process is ongoing".

"At the next session of the Government, or at the one after that, a decision will be made on the commission [for the privatisation process], which will monitor the entire process of finding a strategic partner [for Croatia Airlines]"

"Croatia Airlines' management has begun the process of selecting a financial advisor, so all of the preparatory actions, more specifically concrete actions are ongoing, and after all these decisions are made then we'll see who is interested. There are interested people who have made themselves known, but I wouldn't say more about any specific names,'' added the minister.

Make sure to stay up to date with Croatia Airlines' ongoing situation and much more by following our dedicated news and business pages.

Monday, 28 January 2019

Croatia Airlines: No Plans for Expansion in 2019, Will Expand Under New Owner

In an interview with Ex-Yu Aviation on January 28, 2019, Croatia Airlines revealed that they would only expand their network of flights under a new owner. 

"For any further growth and the opening of new routes, Croatia Airlines will require additional aircraft. The expansion of our fleet and network is foreseen through the company's recapitalization under the Croatian government's National Reform Programme," the airline said. 

Recall, Croatia Airlines has expanded for the last three years but announced that they would not do the same for 2019, and no new routes would be added to their network this year. The national carrier increased their operations with twelve new lines over the past three years, most of which worked in the summer season. The airline had to lease two additional aircraft over the summer months to manage this growth. 

"Through a decision passed by the Government of the Republic of Croatia on January 4, 2018, Croatia Airlines was put back on the list of companies of strategic and special interest to the Republic of Croatia, and on April 26, 2018, the government passed the National Reform Programme. The goal of this is to ensure the company’s further development and to strengthen the competitive advantages and position of Croatia Airlines on the air traffic market via a quality strategic partnership. This would include an expansion of the company’s flight network, an increase in Croatia Airlines' market share, and recapitalization to facilitate the future development of Croatia Airlines,” the airline added for Ex-Yu Aviation

"Croatia Airlines will continue to focus on managing all business risks, and on ensuring the best possible conditions for regular business operations. Jet fuel prices are expected to continue being the most significant risk, and the company will, in that regard, try to reduce its negative effects on the company’s overall business operations. The further improvement of the quality of service and network business model is also the company’s goals, as well as further investment in the fleet to maintain the highest level of flight safety,” Croatia Airlines concluded in response to their goals for this year. 

To read more about travel in Croatia, follow TCN's dedicated page

Sunday, 27 January 2019

Flights to Croatia: Air Serbia Now Flying to Six Croatian Cities in 2019

The latest news from around Croatia’s airports, for new flights to Croatia with updates from Air Serbia. 

Thursday, 24 January 2019

Flights to Croatia: ČSA and Croatia Airlines Reduce Seasonal Traffic

January 24, 2019 - The latest news from around Croatia’s airports, for new flights to Croatia with updates from Zagreb and Split. 

Flights to Croatia: ČSA Czech Airlines reduces traffic to Zagreb 

Czech national airline ČSA Czech Airlines, a member of the air alliance SkyTeam, will reduce traffic on its seasonal Zagreb-Prague route. In the summer of 2019, they will operate with one flight less than last year, AvioRadar reports. 

In April, May, June, September, and October, the airline will run four flights per week. The arrivals from Prague to Zagreb will be in the evening hours on Mondays, Wednesdays, Fridays, and Sundays, and from Zagreb to Prague in the mornings on Mondays, Tuesdays, Thursdays, and Saturdays, which is the same as last year. In July and August, this line will no longer operate every day. 

It will, however, be strengthened in July and August with arrivals in Zagreb on Thursday and Saturday evenings, with a return to Prague on Friday and Sunday. The line from Prague to Zagreb on Tuesdays with a return from Zagreb to Prague on Wednesdays has been removed. This route will operate from March 31 to October 26, 2019, on the ATR-72 aircraft. 

Flights to Croatia: Croatia Airlines reduces traffic on seasonal lines to Split and Zagreb

Croatia’s national carrier Croatia Airlines, a Star Alliance member, reduced the traffic on two seasonal lines for the 2019 summer. Namely, the Split-Belgrade route and the Zagreb-Saint Petersburg route will cut one flight per week, reports AvioRadar.

The Split-Belgrade line will remain in traffic twice a week, Mondays and Fridays, from May 13 to September 23, 2019, using the Bombardier Q400 aircraft. The Zagreb-Saint Petersburg line, which was boosted last year from two to three flights per week, is returning to traffic just two times a week this summer. This line will, therefore, operate on Thursdays and Sundays from April 21 to October 6, 2019, using the Airbus 319 aircraft. 

Traffic has been reduced on the Zagreb-Saint Petersburg line to boost operations on the Zagreb-Dublin line. 

In other news, British Airways will operate their new Airbus A320Neo aircraft and Airbus A321Neo aircraft on selected flights to Croatia this summer. Namely, the new aircraft will be used for the routes between Zagreb-London and Split-London.

To read more about travel in Croatia, follow TCN’s dedicated page

Thursday, 10 January 2019

Croatia Airlines Achieves Record Number of Passengers in 2018

While we may not know what’s going on with Croatia Airlines and their strategic partners, which we reported about earlier this week, we do know one thing for sure - Croatia Airlines achieved a record 2018. 

Namely, in 2018, the Croatian national carrier and Star Alliance member transported a total of 2,168,863 passengers, which is a record in the company’s history and a 2 percent increase on 2017, reports AvioRadar on January 9, 2019. 

Last year, Croatia Airlines recorded 1,642,285 passengers on international flights, which is 3 percent more than a year earlier, while passenger traffic on domestic flights remained at the same level as in 2017 (526,578 passengers total).

Record passenger traffic was also recorded in May 2018, during which more than 200,000 passengers were registered, which happened for the first time since the first domestic flight set off in 1992. Almost 214,000 passengers were transported, which is the most significant number of passengers in May in the company's history.

Due to the positive travel trend, the company welcomed the Jubilee two-millionth passenger in 2018 16 days before it was achieved in 2017.

Croatia Airlines recently began flying to two new destinations, Mostar throughout the year and Dublin during the summer season, and new seasonal lines were also launched for Dubrovnik - Munich, and Split - Copenhagen.

Croatia Airlines was founded in August 1989 as ‘Zagal’, before it changed its name in 1990. The Croatia Airlines headquarters are located in Buzin, near the capital city of Zagreb, where you can also find its central hub at Franjo Tudjman Airport. The airline has also been a member of Star Alliance since 2004. 

The airline has many codeshare agreements with some of the world’s top airlines, including Air France, Lufthansa, and United Airlines, and they even became the official carrier of the Croatia national football team after they became World Cup finalists in France this summer. 

To read more about travel in Croatia, follow TCN’s dedicated page

Tuesday, 8 January 2019

Croatia Airlines and Strategic Partners, What's Really Going On?

As Josip Bohutinski/VL/Poslovni Dnevnik writes on the 8th of January, 2019, the Croatian Government is set to propose an increase in the amount of PSO contracts Croatia Airlines receives for domestic flights to the European Commission (EC). Croatia's national airline Croatia Airlines (CA) should select a financial advisor to develop a recapitalisation model and find a strategic partner by the end of this month.

The two-time bidding was announced last September, and as has since come to be known, reputable world companies such as Deloitte, AT Kearney, PwC, the Boston Consulting Group and DBV, which are part of a consortium with Croatia's PBZ, have come to be involved.

From Croatia Airlines themselves, they stated that last year, the Croatian Government put the company back on the list of companies of strategic and special interest of the Republic of Croatia, and that in the national reform program, it was stated that the goal in respect to Croatia Airlines is to ensure the further development and strengthening of competitive advantages and positions in the air transport market through quality strategic partnership. That strategic partner, which is obviously yet to be found, should expand Croatia Airlines' transport network and increase market share, as well as successfully recapitalise the air company.

Just how much money is actually needed?

When asked about this, Croatia Airlines responds the bid is still in process and therefore the company isn't in a position to comment on its details at the moment. The selected advisor should assess the amount of money really needed for the recapitalisation of the airline. Croatia Airlines' provisional director, Jasmin Bajić, has already estimated that it stands at about 250 million kuna.

In the past year, the Polish national airline LOT and the 4K German investment fund, which has already taken over Slovenia's Adria Airways, have both been interested in entering Croatia Airlines. As is already known, some Chinese air carriers have recently shown a somewhat general interest, but air carriers outside the European Union can only have up to a 49 percent share in an airline from within the European Union at most. As potential buyers, the Chinese have also mentioned the previous sales attempts by Croatia Airlines, all of which have failed.

Nobody made any serious offers or even showed a great deal of potential interest back in the 2013 recapitalisation bid, although Indonesia's Garuda and China's Hainan Airlines were mentioned as potential buyers. Of course, nothing came of it.

The then government started looking for a strategic partner for Croatia Airlines once again back in 2015, they hired IFC, a World Bank fund that verified the interest of European and world air carriers for the Croatian national airline. At that time, Korean Air and Taiwanese Eva Air were mentioned as the most prominent companies. IFC was supposed to propose a proper privatisation model for Croatia Airlines, after which a public tender was to be launched. But yet again, nothing came of it, because parliamentary elections were held at the end of the year, and the powers that be were subsequently changed.

While the new advisor elaborates the model of privatisation of Croatia Airlines again, the government will, along with the European Commission, try to find a way and hopefully agree on how the state could further assist the still struggling Croatia Airlines.

The Croatian proposal will be to increase the amount of public service obligation (PSO) contracts that Croatia Airlines gets for domestic flights, currently amounting to 75 million kuna. In addition, this year the Croatian National Tourist Board will receive 7.5 million kuna for joint advertising.

Make sure to stay up to date with the Croatia Airlines saga and much more by following our dedicated business, politics and lifestyle pages.


Click here for the original article by Josip Bohutinski/VL on Poslovni Dnevnik

Monday, 31 December 2018

Croatia Airlines Turning Zagreb-Dublin to Year-Round Service

December 31, 2018 - Great news for Irish tourists and the ever larger Croatian diaspora in Ireland, as Croatia Airlines will operate its Zagreb to Dublin service all year.

Some nice end of year news for those looking to travel between Croatia and Ireland. 

Flight portal Avioradar is reporting that Croatia Airlines will increase the frequency of its service from Zagreb to Dublin in 2019, making it a year-round connection between the Irish and Croatian capitals. 

Next year's flights will begin on April 9, with three weekly flights. The route will then continue through the winter from October 27, with two flights a week. For the full schedule, check out the original Avioradar report

With the all-year route will be welcome for Irish tourists, it is arguably much more useful for the growing number of young Croatian diaspora, who have moved to Ireland in recent years. 

With EU entry in July 2013, many European labour markets opened up to Croatians. While the UK has some initial restrictions, Ireland did not, and it was the only English-speaking country in the EU where Croatians could legally work. More than 10,000 have made the move so far. 

To keep in touch with the latest flight news to Croatia for 2019, follow the dedicated TCN flights page


Wednesday, 21 November 2018

Croatia Airlines Celebrates 2 Millionth Passenger in 2018

Olinka Gašparović, who flew from Munich to Split on Tuesday, is the two-millionth passenger for Croatia Airlines in 2018.  

Wednesday, 14 November 2018

Lessons from Budapest Airport: CEO Jost Lammers on Life After Malév

November 14, 2018 - It is nearly 7 years since Hungarian national airline Malév ceased operations. With Croatia Airlines clearly in trouble, TCN interviewed Budapest Airport CEO Jost Lammers on life after the loss of a national carrier, to learn how Budapest Airport is coping. It turns out it is coping rather well. 

At a recent medical tourism conference in Zagreb, I got talking to a Latvian living in London whose small business helped people on NHS waiting lists in the UK get free treatment quicker abroad. It was a really interesting discussion, which you can read here, but one of the other things it got me thinking about was accessibility to Zagreb.  He told me about how dental tourism in Budapest was flying, and one of the factors in that was the sheer wealth of choice of budget flights to Budapest, where he was facing a six-hour commute home via Brussels from Zagreb to London. Croatia was losing out a lot on the possibility of tapping into this lucrative dental business, to name but one sector, due to poor connectivity. The potential of the Croatian medical tourism industry to compete was confirmed by Keith Pollard, Editor in Chief of International Medical Tourism Journal, whose article on my recent interview with Keith was headlined - Croatia Could Take 25% of Hungarian Dental Market, says IMTJ.

Why was Zagreb so badly served by budget airlines, making it that much harder for people to come for a short break or medical treatment, when comparing the costs and travel time of somewhere in the region, such as Budapest? Part of the reason, it was explained to me, was that Croatia Airlines has Zagreb as its main base and it is protected from too much competition, as the airline is already in trouble, and welcoming lots of low-cost carriers might mean the end of the national carrier. 

I thought of Budapest once more. It is almost seven years since Hungarian national airline Malév went bankrupt, and yet Budapest Airport seemed to be doing exceptionally well in just a short time after such a devastating blow. So well in fact, that Budapest is on course to double its passenger numbers since the Malév era, and Budapest handled more passengers last year than ALL Croatian airports combined. I decided to contact Budapest Airport to see if I could learn more, and I am very grateful to Budapest Airport CEO Jost Lammers for not only agreeing to the interview, but for providing such comprehensive answers within 48 hours. Thank you, Sir!

BUD one year before Malév bankruptcy.jpg

(Budapest Airport one year before Malév collapsed)

1. It is almost 7 years since Hungarian national carrier Malév ceased operations, which must have been a disaster for Budapest Airport at the time. Tell us a little about that. What were the main consequences, and how much time did you have for a contingency plan?

The grounding of Malév Hungarian Airlines was a very negative surprise indeed, though in a way it had been in the air for years before the cessation of operations and liquidation of the company. We at Budapest Airport of course closely monitored what was happening with our main business partner of those years, and we had enough time to prepare for this contingency. With the grounding of Malév we lost approx. 40 % of our passenger traffic and about 50 % of our revenue, I do not have to emphasize that this would be an almost lethal blow to any business. However, we had no time to lament over what had happened.

The very day of the Malév bankruptcy my colleagues from the aviation marketing team started calling their business partners in airline offices around Europe and the world. Of course in a very short period of time we had to re-organize the whole operation of Budapest Airport to contingency mode, we had to (temporarily) freeze our ambitious airport development projects and cut all unnecessary expenses. We also laid off some of our staff, which was emotionally the hardest thing we had to do.

BUD one year after Malév bankruptcy.jpg

(Budapest Airport one year after the collapse of Malév)

2. Ryanair was quick to enter the market once Malév ceased operations. How long were those discussions ongoing? What is the LCC market share at Budapest Airport today compared to early 2012?

In fact not only Ryanair but all major airlines reacted very quickly to the new situation. With hindsight I may say that February 2012 clearly demonstrated to us that fierce competition is going on in the world of aviation, and there is no room for market vacuum at all. Even large legacy carriers reacted in less than 24 hours to the bankruptcy of Malév and made quick business decisions to fill in the missing routes. Some arrived with their first flights in Budapest within 72 hours. Of course the winter low season also helped, there was some free capacity at hand for all major airlines to start a new route to Budapest. Discount carriers were of course the quickest to react. Their market share used to be around 25 % when Malév was still around, and it quickly rose to 50-52 % where it stabilized. 

Ryanair B737-800 taking off in BUD.jpg

The only area where it was very difficult to fill the gap was the Balkan routes, Malév used to run a very successful operation flying from Budapest to Zagreb, Sarajevo, Belgrade, Podgorica, Tirana, and Skopje. 

3. A quick look at passenger numbers shows not only that Budapest managed to survive the fall of Malév, but prosper! 8,489,739 passengers in 2011, the last full year of Malév, 12,727,322 in 2017, six years later. Indeed, you were net positive only three years after Malév in terms of passenger numbers. How did you do it?

Let me correct this a little bit: it was 13.1 million passengers in 2017, and this year I am sure we will finish around the threshold of 15 million passengers. The secret of this outcome is very simple: while we needed to cut OPEX and most of our CAPEX after the Malév bankruptcy, we actually put extra effort into route development. All my colleagues from airline development did their best to visit new airlines at their HQ and international route conferences and they presented Budapest and Hungary to them as an excellent destination. This is an area where our strategy started to pay off: step by step we carried on, and quite a number of new airlines chose Budapest.

Qatar Airway A320 in BUD.JPG

We now have Qatar Airways, Emirates, Air Canada Rouge, American Airlines, LOT with two trans-Atlantic direct destinations, Air China, Iberia, FlyBe, Pegasus Airlines among the newcomers of the last five years, just to mention a few. 

4. There must have been a change in the business model on several levels, including the loss of an entire aspect of passenger activity - the Malév transit passenger. How did you adjust?

Indeed, we used to have 1.5 million transfer passengers in Budapest, those were the people on early-morning Malév flights who carried on flying to their destination after an hour spent at the airport. This number of transfer passengers has fallen sharply to a dozen people or so a day. Logically we had to adapt to this new development and cut back our transfer product. However, we soon discovered the advantages of O&D passengers who target Hungary and Budapest when travelling. This is also a huge benefit for Hungarian tourism and also for the commercial income of the airport since these people use most of our services from parking to the duty-free shop.

BUD Terminal 2 with new Pier B.jpg

(Budapest Airport Terminal 2 with new Pier B)

5. Look into your crystal ball. How would Budapest Airport look today if Malév had continued to be propped up by the State?

I am sorry, but this is a very-very hypothetical question. Neither history nor aviation industry likes ”What if?”-type questions. What is safe to say is that there are two former subsidiaries of Malév which carried on operating and gathered strength in the past few years, namely MGH or Malév Ground Handling with a very decent market share, and also Aeroplex, the MRO company.

Brand new logistics base for DHL and TNT Express in BUD.jpg

(Brand new logisitics base for DHL and TNT Express at Budapest Airport)

6. How important has Wizz Air been in the development of Budapest Airport?

They are our strongest airline partner in terms of passenger numbers. Their commitment to introduce an additional aircraft per year to their fleet in Budapest helped us to look with more confidence to the future. We built a line-maintenance hangar for them here at the airport, they have been operating a crew center in Budapest, so we do have multiple ties with Wizz Air. They like to call themselves the de-facto national airline of Hungary and there is a fair amount of truth in that. They are developing according to their long-term strategy and have become the leading discount carrier of Central and Eastern Europe.

LUfthansa Technik, Wizz Air and Aeroplex MRO base in BUD.jpg

(Lufthansa Technik, Wizz Air and Aeroplex and MRO base at Budapest Airport)


7. You have managed to create a schedule with a great mixture of national carriers and low-cost airlines, offering a lot of choice to consumers and allowing, for example, the Budapest dental tourism industry to flourish. Tell us a little about your strategy. 

It is not only “dental tourism” that has shown strong development. We have close ties with river cruise operators. More than 250 000 people start their holidays on the Danube cruise-ships here in Budapest. These people are flying in through our airport from all over the world, from the US through China to Japan. All in all, I think Budapest has become a remarkable tourism destination offering a very wide variety of entertainment to all customer segments: the traditional Sziget Festival brings in tens of thousands of young people in the summer with backpacks; then Red Bull Air Race and Formula-1 are two major and fabulous technical sport events with lots of spectators. Budapest also has a lot to offer in cultural tourism. For instance, we cooperate closely with the Winter Festival which targets mostly opera and classical music fans.

BUD Terminal 2 with brand new Pier B and LOT 787.jpg

(Budapest Airport Terminal 2 with brand new Pier B and LOT 787)

8. We obviously write about Croatia. What is your opinion of the way the aviation market is developing in Croatia, and why are there so few low-cost carriers flying to Zagreb when there is so much choice in Budapest?

It is difficult to judge from outside, but I am sure that the biggest tourist magnet in Croatia is the Adriatic coast, the world-famous Jadransko more where Split, Dubrovnik and Rijeka on Krk Island have their own strong airports, and I guess very few people would fly to Zagreb and then travel for hours to the sea when there are other, direct means of transport. I myself drove down to Croatia from Budapest as tens of thousands of Hungarians do every summer for a great family holiday.


(Jost Lammers, CEO of Budapest Airport)

9. Hungary clearly survived the demise of Malév. Do you think national carriers in the region have a future or should they consider joining forces?

There are different strategies for survival in the aviation business, but I am sure the strong consolidation process in the coming years will continue – just look at what happened to Air Berlin. This is a business where size really matters. Smaller national airlines may have a choice of joining and amalgamating into larger airline groups for strength and network advantages. At the same time, the strong division between legacy carriers and the low-cost model is slowly disappearing, more and more hybrid models are being set up. If you look at the three major airline groups, most of them have launched their own low-cost or hybrid daughter airline, be it Eurowings for the Lufthansa-group or Transavia and now Joon for the Air France-KLM group.

Thus within Europe where you have maximum two-hour or three-hour flights, I see stronger development prospects for the low-cost model where the customer has a wide choice and pays only for services what he or she really needs. About 80 % of the passenger growth across Europe in recent years has been delivered by them.

The next step forward will be the answer to the demand of services of self-connecting passengers who fly into a certain airport with one airline and continue their journey with a completely different one. Airports must continue to find solutions for the needs of these passengers too in the very near future. Digitalization of air travel makes this demand very real for us too.

To learn more about Budapest Airport, visit the official website.

For the latest news about flights to Croatia, visit our dedicated TCN page


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