Air Serbia sees LCC competition as key challenge
Air Serbia has said that one of the principal issues it is facing is increased competition from low cost carriers (LCCs). It comes as Europe’s largest airline, Ryanair, accused the Serbian government of protectionism. Speaking at the AviaDev Aviation Development Conference recently, Air Serbia’s Head of Network, Alliances and Fleet Planning, And Salt, said, “One key issue for us is the amount of competition on the market. In the past you had the legacy airlines which built up their own market and brand identity. These days you can see that development in the industry changes so quickly. You can have a new competitor coming up and really revolutionising who is carrying your customers around Europe. The sheer quantity of competition is an issue. But also, the quality as well. There are a lot of good airlines out there. This means you have to innovate and differentiate as an airline in order to survive. Therefore, competition is one key thing”.
During the 2019 financial year (April 1, 2018 - March 31, 2019), Wizz Air held a 54.5% market share of the low cost sector in Serbia. It was followed by Ryanair with a 12.2% share and easyJet with an 8.4% market share. Once all carriers on the market are taken into account, Air Serbia’s share for the same period stood at 45.1%, followed by Wizz Air with 10.9% of the market and Lufthansa with a 5.2% market share. Despite the growing presence of budget carriers in the country, Mr Salt believes Air Serbia has a successful strategy in place to counter their impact. “Being surrounded by low cost airlines is our reality and pushes us to do better. If you have a closed market you don’t innovate, and you don’t improve. Competition for the market is great. For an individual operator it is scary, and it can be risky for the future. If you go head to head with a low cost carrier, trying to do the same thing as they do but on a smaller scale, with higher cost, with worst aircraft, how long is it going to last? It’s going to last a couple of years and then you will have to change and adapt”, Mr Salt said.
The airline executive noted, “What we have compared to some of our low cost competition in the region is better connectivity with our Belgrade hub. So, we are not only relying on our Belgrade to Paris customers. We are taking people from Tel Aviv, Beirut, Krasnodar - different places that maybe you are not considering that Belgrade could serve as a nice transfer hub for these sorts of markets. When you have these connecting markets, you can then sell 60% of seats on a point to point basis but you can fill the rest of the 40% with transfer passengers. However, low cost carriers are catching up to this too”.
Seven low cost airlines operate scheduled flights out of Air Serbia's hub. They include Wizz Air, which also calls Belgrade its home, easyJet, Transavia, Pegasus Airlines, Norwegian Air Shuttle and Flydubai, as well Vueling on a seasonal summer basis. They will be joined by Eurowings as of next May. Air Serbia competes directly against its low cost rivals on six routes - Amsterdam, Berlin, Barcelona, Malta, Larnaca and Stockholm Arlanda - although this number is significantly higher if secondary airports, to which budget carriers mostly operate to out of Belgrade, are taken into account. In addition, the low cost presence in Niš has been growing with the Serbian Civil Aviation Directorate recently refusing to issue Ryanair a permit to compete head to head against Air Serbia on flights between Hahn and the south-east Serbian city.
0 Response to "Air Serbia sees LCC competition as key challenge"
Post a Comment