Heavenly
Serbia
Miša
Brkić | 03/02/2014
Regulatory
authorities of the United States of America refused the request of the Serbian
airline Air Serbia to fly from Belgrade to USA via Abu Dhabi (where passengers
would be transferred to Etihad planes) and to land on Chicago, Washington and
New York airports.
This
news, published one week late (from the day of reception to public announcement
it set in the Directorate of civil aviation of the Republic of Serbia), was a
new slap in the face of Serbian national pride – strategic partnership between
Serbia and Etihad (which created Air Serbia) and, because of that, went almost
unnoticed in the national media.
So, Air
Serbia asked the American aviation authorities to allow it to land on these
three airports through code-share contracts with Etihad airways and Air Berlin
last year, even before it was formally established. Airline company Delta
Airlines filed a complaint to that request, which was granted by American
aviation authorities after careful consideration.
This
decision caused disappointment and odium of
freshly-arrived-after-one-month-vacation Dane Kondic, general manager of Air
Serbia. “We feel that the decision to prohibit the suggested code-share
arrangement is against global trends of aviation liberalization”, said Kondic
in the official statement. He especially stressed (which particularly annoyed
the Americans) that “Serbia has a crucial position in future development of
South-Eastern Europe and Balkan markets”. He went on to announce that “Air
Serbia is considering addressing a formal response to the US Ministry of
transport”.
Kondic’s
attempted manipulation forces us to revisit the accusation of Air Serbia’s
manager that the decision of American authorities is “against the global trends
of aviation liberalization”. Such accusation is almost comical coming from the
manager of the airline which was accused (and proved) by Delta Airlines of
non-transparent ownership, receiving government subsidies and that its
strategic partner Etihad uses direct infusion of state capital through tax exemptions,
fuel and airport fares subsidies and that the government invested in the
company’s infrastructure. “These subsidies distort the market and are against
international and American aviation policies”, said Delta Airlines in a
complaint against Air Serbia, quoting the former head of Association of
European airlines, Ulrich Schulte-Strathaus, who said that “Etihad and other
Emirates airlines are owned by their government and function as instruments of
national strategy…to vertically integrate trade, tourism and foreign policy”.
The fact
that the ownership of Air Serbia is still unclear and un-transparent even after
six months of operation, worked in favor of Delta Airlines in the dispute
before the American authorities.
For
example, on January 24th, 2014, the Business Register Agency (BRA) website
doesn’t say who members/co-owners of the joint-stock company Air Serbia are,
and what is their nationality. It only says that the capital of RSD
16,864,350,000 was subscribed and paid and that on December 19th, 2013 non-cash
capital of RSD 606,805,000 was subscribed and recorded. Cash capital (RSD
16,864,350,000) is the money invested in Air Serbia by the Republic of Serbia.
The
website of Central securities depository on January 27th, 2014 also says that
the only share holder with 100% ownership is the Republic of Serbia (its share
value is RSD 17,471,155,000).
When the
agreement between the Government of Serbia and Etihad was signed last summer,
it was clearly said and broadcasted by literally every media outlet that
“Etihad will secure a credit line of 40 million dollars for the Serbian
national airline, which will become core capital of the company on January 1st,
2014, based on the appropriate formal approvals”. The BRA shows that this
hasn’t happened. It also remains unclear how a “credit line” can be anyone’s
share in core capital of any company.
But, this
is only one of the curveballs in Air Serbia’s founding contract, which could be
further explained by (for example) the now former minister of economy Sasa
Radulovic.
The
reaction to the decision of the American aviation authorities was only one of
fist-poundings of Air Serbia’s general manager Dane Kondic. It was followed by
another which established Kondic as a Serbian “diplomatic spearhead”. After
lecturing the Americans, Kondic moved on to – Turkey. Kondic became very
popular in both heavenly (airline Air Serbia) and earthly (state) Serbia by
saying that “the Turks had screwed us for 500 years, now it is time to screw them
back”. Translated from diplomatic to business language, Dane Kondic suggested
that Serbia should cancel inter-state air-traffic agreement with Turkey.
What made
the benevolent Australian Serb start “doing business the Serbian way” after
only six months in his homeland?
Briefly,
the story (according to several independent sources) goes like this: Kondic,
intoxicated with sudden fame of being the first “heavenly Serb”, probably
forgot (or overlooked) to plan and include charter traffic for this year in Air
Serbia’s business plan. However, that didn’t stop Serbian tourist agencies from
arranging summer holidays for 2014 and from hiring Turkish airlines to
transport Serbian tourist and paying them in advance. During the previous
years, Turkey was one of the favorite summer destinations of Serbian
vacationers who spent millions of euros in Antalya, Bodrum, Alanya, Cushadasi
and Marmaris. Even the deceased JAT managed to make a profit out of charter
flights to these tourist destinations until last year.
In the
ecstasy of grand ambitions Kondic forgot this little thing – charter flights,
losing a significant amount of money which could “patch” this year’s planned
loss of Air Serbia of 56 million euros!!!
Since he
couldn’t blame himself for this failure, he decided to punish the Turks and
asked the government to cancel the inter-state agreement on air-traffic with
Turkey.
Turkey
took Kondic’s threat seriously and sent a state delegation to Belgrade to
negotiate. On the meeting held the other day, the Government and Directorate of
civil aviation managed to soothe the radical Dane Kondic and “the ball was
landed softly”, although no agreement was reached, so it was decided that the
talks should continue. The problem is that Air Serbia doesn’t have a charter traffic
program and there is room for “a deal” since the interest of Turkish Airlines
is to fly from Istanbul to Belgrade twice a day (they are even interested in 3
flights on some days).
However,
the Istanbul delegation brought another trump to negotiations in Belgrade. A
serious threat was also part of the Turkish negotiation package. And that
threat could significantly influence the position of Serbia on the European
sky.
Right
around the time when Kondic diplomatically let loose and prepared to impose sanctions
on Turkey, that state turned out to be an unavoidable business factor on the
Serbian sky.
This is
the part of the story when we introduce a third heavenly player, alongside the
national airline (Air Serbia) and the air traffic regulator (Directorate of
civil aviation) – Air traffic control of Serbia and Montenegro (ATCSM): those
are the ones thrown out of the office by the first vice-president of the
Government when they came to ask for 13th salary just before the New Year (this
affair was thoroughly described in the Serbian media in late December).
Anyway,
new policies are created in the European air traffic control agency
(Eurocontrol – in charge of safe, efficient and eco friendly traffic in
Europe), so the newest policy divided the European sky into blocks – the
English are in charge of the entrance from North America, the
Spanish–Portuguese “hold” Central and South America, the Italians “hold” the
Mediterranean and North Africa, the Germans and the French have Central Europe,
and Austria is in charge of South-Eastern Europe and the entrance from the Near
East.
Where
does this leave Serbia?
Before
the previous management was replaced (last spring) ATCSM managed to become a
strong and reputable factor-controller of the sky (thanks to the efforts of the
previous management), so they didn’t have to “keep their head down” and enter
the Austrian block or defer to Rumania-Bulgaria coalition. The management of
Air traffic control replaced in March 2013, managed to develop an idea of 3,000
miles long “heavenly” Corridor 10 (air-route) from the Bosporus to Frankfurt
and Munich airports, based on the fact that Turkish airlines make 35% of
flights over Serbia. And to convince Turkey and its aviation authorities that
ATCSM managed to reduce the delays in its airspace to – zero and that this
makes it a desirable business partner.
That
heavenly corridor, according to the idea of former management, should secure 10
years of peaceful business for Air traffic control of Serbia and Montenegro,
under the condition that an agreement with Turkey (as a growing tourist
destination) is reached that all take-offs from Istanbul to Europe don’t go
north (Bulgaria, Rumania, Hungary), but south and via the shortest route
(partly) over Bulgaria and then over Serbia. That corridor was “officially
opened” in May 2013 (after the “green light” from Germany), but not in its full
capacity, because several important details were yet to be agreed with Turkey.
However, those details were not agreed. And this is why ATCSM had a 7 percent
increase in flights in the last year when it could have had an increase of 14%
or 15%. By the way, the standard
increase of annual traffic on the Serbian sky during the previous years was
10-15%, while that increase in Europe was 4-6%.
In the
spring of 2013, the management of ATCSM was filled with party human resources
who knew little about air-traffic and air-traffic control and didn’t understand
that Eurocontrol is a serious competition of 39 states that all fight for
greater profits from their airspace. For example, there is a group RNDSG (Route
Network Development Sub-Group) within Eurocontrol, which deals with network of
air-routes. Its current manager is a Rumanian who actively advocates that
Turkey directs its air traffic to Central Europe (Frankfurt and Munich
airports) not over Serbia, but over Bulgaria, Rumania and Hungary. “ATCSM now
doesn’t have managers who could cover three or four crucial meetings in
Eurocontrol when you should fight for your position. We lost out advantage
there”, says one well-informed source from Air traffic control.
“It is of
crucial importance for Serbia not to upset Turkey and to reach an agreement
with it that flights from Istanbul’s Ataturk International Airport to Central
Europe fly partly over Bulgaria and over Serbia and flights from the future
airport that is currently being built in North Turkey fly over Bulgaria,
Rumania and Hungary. This means that ATCSM management should go to Turkey
together with colleagues from Bulgaria and agree the details of flights within
Turkey, i.e. before the planes reach the border with Bulgaria. I don’t
understand how anyone could even think of “tempering” with inter-state
agreement with Turkey and ask for its cancelation”, says an expert close to
Serbian aviation authorities.
The
income of Air traffic control of Serbia and Montenegro was about 33 million
euro in 2002 and 100 million euro in 2012. Turkish airlines account for very
high percentage of this income (35%) and any direction of flights of those
airlines to the corridor over Bulgaria, Rumania and Hungary (by, for example,
cancelation of an inter-state agreement between Serbia and Turkey) will
significantly decrease the income of Air traffic control, but also of Serbia
and Montenegro.
Translated
by Marijana Simic
Peščanik.net,
03.02.2014.
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