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Why is “Air Serbia” looking for a strategic partner?

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It would be wise to find a partner who would invest capital in this airline because that would mean security for it, says aviation industry expert Petar Vojinović.

The Qatari airline “Qatar Airways” could become a strategic partner of “Air Serbia”, recently announced the President of the country, Aleksandar Vučić, during his stay in Doha.

The majority owner of our national carrier, the Government of Serbia, did not advertise on this occasion, nor did “Air Serbia”. So it is not known whether a possible strategic partnership would entail a financial investment and a corresponding ownership share of “Qatar Airways” or whether it would only be access to a large number of world destinations, i.e. a code-share arrangement, which “Air Serbia” and “Qatar Airways” they have already signed, which enables Serbian travelers to reach Australia, Singapore, Seychelles more easily…

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According to preliminary results, the joint company of the Government of Serbia and “Etihad” from the United Arab Emirates, “Air Serbia”, had a positive net and operational result in 2022 for the first time since the outbreak of the corona virus pandemic. 

The Serbian airline made a profit of 21 million euros in 2022, without state subsidies, the company announced recently. 

A good financial result was achieved thanks to efficient operations and business consolidation measures implemented during the pandemic, a large increase in the network of destinations and an increase in the volume of traffic of about 60 percent compared to the previous year, and in terms of the number of passengers it reached the pre-pandemic 2019.

Regarding the ownership structure, the Government of Serbia recapitalized “Air Serbia” with 100 million euros in 2020, and then with 15.5 million in 2022. In this way, the government increased its share in the company to 83.6 percent, and the share of “Etihad” was reduced to 16.4 percent.

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The editor of the “Tango six” portal and aviation industry expert Petar Vojinović says that after the reduction of the ownership share of “Etihad” in “Air Serbia”, especially after the corona virus pandemic, there was a need to ensure the reliable operation of the domestic airline. A strategic partnership between the two companies could lead to business cooperation.

Regardless of the fact that the company is profitable in one year, the business model of all airlines requires a capital reserve at all times. 

The airline business is based on state investment controls, which are overseen by the European Union, and our country and airline must participate in those rules regardless of the fact that Serbia are not a member of the European Union. 

This means that if the state helps the carrier, he must return the money within a certain period of time – explains Vojinović.

For the long-term business of “Air Serbia”, additional capital is needed to expand the network through a strategic partnership, which cannot exceed 49 percent co-ownership, due to the rules of the European Commission. The airline must always have a capital reserve due to unforeseen circumstances, such as the pandemic, and invest in network development in order to fight the competition, emphasizes our interlocutor.

According to him, “Air Serbia” has 80 destinations to which it flies, while JAT had 70 at its best.

– It would be wise to find a partner who would invest capital in Air Serbia. This would mean safety for our airline. If there is no capital, which is quite a long shot, the business cooperation between the two companies gives Air Serbia the opportunity to obtain more favorable conditions for flights to the East.

“Qatar Airways” is not needed by “Air Serbia” in order to acquire new skills or help in business management, which was a priority when the partnership with “Etihad” was established – says Vojinović.

“Air Serbia” and “Qatar Airways” signed a code-share agreement on February 1 of this year. This enabled passengers to travel more easily to more than 40 destinations within the networks of the Serbian and Qatari national airlines. 

As part of that cooperation, “Air Serbia” put its mark on the direct flights of “Qatar Airways” between Belgrade and Doha, as well as on flights to Baku, Brisbane, Melbourne, Seychelles, Singapore, Sydney… and many other cities. In translation, this means that “Air Serbia” can sell tickets on “Qatar Airways” flights, that is, passengers via “Air Serbia” can buy a ticket for Belgrade-Perth and travel via Doha. 

“Qatar Airways” can sell a ticket from Perth to Banja Luka, and passengers will make three flights with one ticket and arrive at their destination via Belgrade, which simplifies their journey.

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