Montenegro seeks investigation into LCC subsidies
The Montenegrin Ministry for Capital Investments has requested for the country’s competition watchdog to investigate whether state subsidies provided to low cost carriers (LCCs) Ryanair, Wizz Air and easyJet between 2013 and 2020 distorted the market. It comes as the state continues its efforts to set up a new national carrier following the collapse of Montenegro Airlines last December. The Ministry has urged the Agency for the Protection of Competition to open an investigation into whether incentives in the form of subsidies provided to the three airlines by operator Airports of Montenegro, the National Tourism Organisation and the former Ministry for Sustainable Development and Tourism resulted in a lack of free and open competition on the market.
Low cost carriers entered the Montenegrin market in 2013 and have quickly established themselves as key players, with Ryanair becoming one of the largest airlines at Podgorica Airport. The budget carrier, along with its counterpart Wizz Air, maintain year-round operations to the Montenegrin capital, while easyJet runs seasonal services to Tivat. It is unknown how much the three received in subsidies and incentives over the seven-year period, however, the agency has begun preparatory work into the matter. Last year, Ryanair reported Montenegro Airlines to the European Commission for being the beneficiary of illegal state aid, which the government cited as one of the key reasons for its decision to shut down the former national carrier.
The state hopes to launch a new airline called ToMontenegro by the start of summer. However, the European Commission has requested for the Agency for the Protection of Competition to look into the government’s recent purchase of two Embraer E195 aircraft for the new national carrier and for it to investigate whether there were elements of illegal state aid in the acquisition. Meanwhile, ToMontenegro is hiring staff members for several positions as it aims to commence operations before June. “Our goal is to launch before the summer, which would be important for Montenegro’s entire economy. We know everything that needs to be done and we are working on achieving this goal. However, not everything is up to us. There are certain regulations that have to be met, both at home and abroad”, the company said.
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