All of the former Yugoslav republics want to join the European Union, but so far only Slovenia has managed it. Croatia looks set to start talks in 2007, but the others know the path towards accession will be not be smooth.
If and when these countries do become EU members, their flag carriers will lose government protection and they face competition from other carriers. This will come both from major airlines and low-fares airlines starting in the region.
Croatia Airlines is the Balkan success story, joining Adria Airways in becoming a regional member of the Star Alliance. Croatia Airlines has increased its passenger numbers every year since it began operations in 1991, to last year's figure of 1.47 million, up 11% over 2002. Last year saw the airline record its first profit, and president and chief executive Ivan Misetic forecasts total revenues of €182 million ($221 million) and a net profit of €5 million for 2004.
Misetic says his airline has chosen "to co-operate rather than compete". The Zagreb-based carrier initially "dreamed about transatlantic flights" when it started 15 years ago, but "there was no economic justification," says Misetic. Instead, it opted to provide connections with major airlines."
Croatia Airlines has been implementing a strategy of turning mostly to EU markets for the past five years, he says. Additionally, the airline is trying to persuade residents of the new central European EU members, traditional tourists to Croatia, to ditch road for air travel.
The Star Alliance membership also figures large in the carrier's future plans. "We will focus on strengthening connections from Croatian airports towards Star Alliance hubs, enabling customers to take one-stop flights to a variety of destinations, rather that having to travel via Zagreb," he says.
Although he says the carrier could introduce regional jets of up to 70 seats capacity at some point, Misetic says there will be no major fleet acquisitions in the near future. Croatia Airlines currently operates eight A319/A320s and three ATR 42s, serving 26 destinations.
But there are potential clouds on the horizon, with several low fares carriers entering the country. Germanwings began flying to Zagreb and Split from its Cologne hub in June, and is adding flights. Marc-Kristian Gerdes, international sales manager says in July on the Cologne-Zagreb route, Germanwings achieved a load factor of 92% and in August a whopping 97%. Winter timetables will see four weekly flights to the Croatian capital from Cologne and three from Stuttgart.
While happy with results - 25% of passengers so far have been business travellers - Gerdes says the airline is working to increase the number of reservations made from Croatia - currently 87% of bookings are made outside the country. It is clearly targeting passengers traditionally loyal to Croatia Airlines.
Fast-growing SkyEurope also has a presence in Croatia, linking its bases in Bratislava, Slovakia and Budapest with three coastal resorts. The carrier may also establish a hub in Croatia "as soon as the legal framework allows", with prospective flights from Dubrovnik or Split to London, Paris, Rome and Milan.
However Misetic does not see no-frills operators posing a big threat to its scheduled traffic but rather as "more a rival to road and train transport".
In contrast to Croatia Airlines' philosophy, Serbian flag carrier JAT Airways hopes to reintroduce scheduled intercontinental destinations and feed them through its own regional network, competing directly with major airlines as well as regional operators feeding their hubs. Novica Vulic, JAT's executive marketing and sales director says: "In the first year, JAT is to focus on North America and later on Asia and Australia."
JAT sees potential customers not only in Serbia & Montenegro, but also in neighbouring Albania, Macedonia, Bosnia & Herzegovina, Bulgaria and perhaps Croatia and Slovenia. JAT also has a regional strategy. "We will increase the frequency of flights to daily or even twice-daily on regional destinations, namely to Tirana and Sarajevo, and introduce flights to Bulgaria," says Vulic.
Last year JAT announced the formation of regional subsidiary Inter Air Link and acquired two ATR 72s, but now seems to have abandoned the idea.
The issue of a long-haul fleet, as well as a medium-range one, remains open. JAT has a single McDonnell Douglas DC-10 and is in talks with Airbus and Boeing about fleet renewal. Boeing has offered a 7E7/767 package with Next Generation 737s, but the Serbian government has the problem: an existing order for eight A319s signed in 1996.
The former Yugoslavian states are grappling with how to integrate their shattered economies with that of the EU. In parallel, their flag carriers have chosen very different routes towards growth. Time will tell which strategy is most effective.
IGOR SALINGER / BELGRADE& ZAGREB
Source: Flight International
