Air Serbia’s upcoming network strategy to rely on longer sector routes

Air Serbia will primarily focus on adding frequencies to its existing network in the coming period, while new destinations will mostly involve longer sectors, with the majority of routes with point-to-point demand from Belgrade having already been launched. Speaking at the Aviation Day South East Europe conference this week, Air Serbia’s CEO, Jiri Marek, said, “You have to grow. You cannot stop, because if you stop there is a free market and free competition and someone else will grow and take your market and your profitability will be jeopardised. We will continue to grow. We have now reached the critical mass of destinations, so the main focus will be on densification, that is, improving the connectivity, which we already foresaw for this summer”. He added, “Historically, we used to have 25% to 28% transfers but now we are reaching almost 40%. Therefore, any new destination will naturally get feed from the network”.

With over 100 destinations served from Belgrade Airport, few remain that could be successful by solely relying on passengers travelling between a city-pair. “There are almost no point-to-point destinations missing from Belgrade. Even Wizz Air’s latest expansion was mostly directed towards destinations already served and not opening new ones. That shows there is already a lack of point-to-point destinations. Any new destination will have to rely on the hub carrier which will provide connectivity in the network. For example, if you are opening something like Tbilisi, Baku or Yerevan, those destinations do not have enough point-to-point demand and they will have to rely on the feed from our network. Therefore, this is indicative that our next development strategy will be mostly on the longer sector routes, which will rely on regional connectivity”, Air Serbia’s CEO said.

Belgrade Airport destination network, summer 2023

Developing the long-haul network remains a priority. “During the summer we secured traffic rights for Guangzhou and Shanghai, and it is just a matter of time before we get a third and fourth wide-body that those destinations will be launched. However, the potential on China routes will be further increased, especially cargo operations, because of the Free Trade Agreement [signed between Serbia and China this week]. This agreement has a very positive impact to grow our potential which is already there”, Air Serbia’s CEO said.

Mr Marek noted the airline has significantly decreased seasonality and will further do so, which is illustrated by its upcoming 2023/24 winter timetable with a significant increase in frequencies on existing routes. “Addressing the seasonality was always part of our strategy. During the 2022/23 winter we were able to prove that putting a wider network portfolio into the winter built on connectivity made sense, because we were profitable every single month through the winter season. We were operating with an over 70% load factor, and, for us, 70% is more or less break even. Based on that, we are expanding even more this winter”. He added, “Historically, there was a big difference between summer and winter, around 50%. Now we are getting to the level of just 30% difference, and it will continue falling. Especially because we will continue developing long-haul flights. For example, China has flatter seasonality than North American routes, so all of this will go towards flattening seasonality. There will always be a summer peak because of charter demand, which is very strong. However, we are also addressing that. For the first time this year, some of the destinations that used to be charters were transformed into scheduled, and in that way, we also extended the season. All these destinations that we transferred into scheduled routes start in mid-May and some run until mid-October rather than from June 15 until September 15”.

EX-YU Aviation News

Share this post