Skip to comments.Serbia's air carrier JAT faces reforms or demise
Posted on 12/02/2009 3:57:26 AM PST by Ravnagora
* JAT facing increasing competition from outside airlines
* EU visa ruling eases travel from Belgrade
* Sharp increase in passenger traffic seen next year
BELGRADE, Dec 1 (Reuters) - Serbia's state airline JAT must become competitive or fade away, officials said this week, after the European Union relaxed travel between Belgrade and the bloc, prompting rivals to step up penetration of its home market.
After years of bolstering by the government and protection against outside competitors, the stakes have increased dramatically for JAT following the EU's decision on Monday allowing Serbs, Macedonians and Montenegrins to travel visa free to the EU.
Budget and traditional airlines are quickly adding flights to Belgrade, and industry experts see a sharp increase in passenger traffic next year.
"My task is to see whether the company can survive," JAT Director Srdjan Radosavljevic was quoted as saying in the Tuesday edition of the Vecernje Novosti newspaper. "If it cannot, then it should be shut down."
Established half a century ago by communist Yugoslavia, JAT has 209 million euros ($270 million) of debt and privatisation has failed amid a lack of interest. Analysts estimate the value of its assets, including its fleet and real estate, at about $150 million.
"There is something wrong with JAT itself," Niki Lauda, owner of the Austria's budget Niki Air told Reuters. "The problem is JAT themselves which needs to be restructured and needs to be set up with new feet in order to be able to compete."
Lauda could be play a role in JAT's demise or salvation. His airline starts flying to Belgrade in February, and his bargain fares have already set off a series of low fare offers from JAT and other rivals.
"Any airline can be fixed," the former racing car champion said during a visit to Belgrade on Monday. "If you open the market, you will generate more traffic and an airline that wants to be competitive has to reorganise itself."
Velimir Radosavljevic, the director of Belgrade's airport, said the removal of visa requirements would lead to a 25 or 30 percent increase in passenger traffic next year at the country's main airport.
"It happened in Budapest eight or nine years ago, as well as in Sofia and Bucharest," he said.
Hungary's Malev and Romania's Tarom will start flights next month. Slovenian and Croatian state-run Adria and Croatian Airlines have also applied to begin operations, the airport director said.
In 2010 JAT could also face pressure from other carriers including Ryanair, Easyjet and Wizz Air, all of which were invited to enter the local market, said Katarina Andric Milosavljevic, a Serbian Civil Aviation spokeswoman.
"We also invited Fly Dubai. This may be challenging for JAT and it will be good for passengers as ticket prices will go down," she said. "JAT is in difficult situation but those who fail to adjust will disappear."
About 30 companies are already flying from Belgrade including Austrian Airlines, Lufthansa, Air France and British Airways.
JAT foresees 2010 revenues of about 150 million euros, ferrying 1.5 million passengers from airports in Belgrade, Macedonia's capital Skopje and the Bosnian city of Banja Luka. It also wants to sell an office building and borrow 40 million euros to renew its fleet with two Boeing 737-700 and overhaul 14 engines.
An investor could also come to JAT's rescue. Serbian media has reported interest from Turkish Airlines, Russia's Aeroflot and Greece's Marfin Investment Group. (Additional reporting by Addam Tanner in Belgrade, Marja Novak-Vogric in Ljubljana, Maja Zuvela in Sarajevo and Igor Ilic in Zagreb; Editing by Jon Loades-Carter)
Does JAT still stand for Just Any Time?????
From what I recall it stands for "jamais a temps", never on time. :-)