Face-to-face: Air Serbia CEO Dane Kondić
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Air Serbia CEO Dane Kondić discusses the airline’s expansion plans as it continues to capitalise on Etihad Airways’ investment in the carrier.
TDUK: What has been the impact of Etihad taking a 49% stake in Air Serbia?
DK: Etihad’s investment marked the beginning of a new phase in the life of Serbia’s national airline, one of the oldest airlines in continuous service, founded in 1927 as Aeroput, renamed as JAT after World War II. The agreement with Etihad is an example of how a public-private partnership can resuscitate a troubled airline. When we started the airline’s new journey and renamed it into Air Serbia, we had to refleet, rebrand, retrain, and reinvest. We introduced ten new generation Airbus aircraft, with eight A319 and two A320. As a result, the average age of the jet fleet has decreased from 25 to 10 years, delivering greater reliability and significantly lowering the costs of operation; we designed a brand, including a new name, livery, interior and uniforms. Close to 400 new people were brought in for key areas such as cabin crew, pilots, sales and commercial while administration shrank to 15 to 18 per cent of the workforce. Another important aspect of our turnaround plan, was to increase our aircraft utilisation from about five hours a day and point-to-point flying, to a mini-network carrier modus, so our aircraft utilization is now up to just under 13 hours a day. Etihad Airways connected Air Serbia to its network, but at the same time it provided passengers flows into Belgrade with its own service.
In a single year, the airline went form a EUR 73M loss in 2013 to a EUR 2.7M profit in 2014. The airline’s revenues rose by 87 per cent to EUR 262 million, marking the strongest results in the existence of the national carrier. Air Serbia’s network of direct routes grew to 40 destinations in 29 countries in Europe, the Middle East and Mediterranean, while an additional 37 global destinations are covered through our codeshare agreements with 12 airlines, including key capitals in the Middle East, Far East and Australia. With Etihad Airways, we currently codeshare on 16 routes.
These results are a great achievement validating the effectiveness of our strategy. We are proud to have been able to deliver on our mandate which was to achieve growth, to become the region’s leading carrier and, most importantly, to do so as a commercially viable and profitable enterprise, while becoming a key driver of economic growth in Serbia. The results we have delivered so far are, above all, a great sign for the future, as they lay a solid foundation going forward and are proof positive of what can be achieved when the right strategies and governance structures are put in place. We owe a debt of thanks to both our shareholders – the Government of the Republic of Serbia and Etihad Airways for their ongoing support.
What are the key benefits of this relationship for the airline and its customers?
The key benefits come from being a part of a broader group. As a member of Etihad Airways Partners, which today includes another seven partner airlines: airberlin, Alitalia, Air Seychelles, Jet Airways, Etihad Regional (operated by Darwin Airline), Etihad Airways and NIKI, guests will be able to benefit from more choice through improved networks and schedules and enhanced frequent flyer benefits. The potential for network alignment to maximise flight connectivity for passengers, together with a shared passion for superior service, are central to the ethos of the Etihad Airways Partner concept. On the other side, as other participating airlines, Air Serbia is able to take advantage of the synergies and efficiencies afforded by the group, which include access to economies of scale and operational synergies such as centres of excellence, joint procurement of services and supplies, and shared pilot and cabin crew training at the Etihad Airways facilities. In fact, we recently proudly inaugurated the first Etihad Airways Partners branded retail shop, the first of its kind in the world, right here in Belgrade.
How much say does Etihad have in how the airline is run/operated?
Air Serbia has two main governing bodies: the Executive Board, which is comprised by the top management of Air Serbia, and the Supervisory Board, which consists of representatives of both shareholders – five members are representatives of the Government of the Republic of Serbia and four members represent Etihad Airways.
What services do you offer out of Heathrow and what connection opportunities are there through Belgrade to other destinations?
Services between our hub in Belgrade and London Heathrow are among the most prestigious of routes in Air Serbia’s network and the only direct air link between London’s main Heathrow Airport and Belgrade. Air Serbia operates daily flights on weekdays and double-daily flights on Saturdays and Sundays between LHR and Air Serbia’s Belgrade hub at Nikola Tesla Airport. Flights are timed to maximise connections and drive traffic to Air Serbia’s destinations across the region and to endpoints in the Middle East, Asia, Africa and Australia, with the support of Air Serbia’s equity partner, Etihad Airways, and the members of the Etihad Airways Partners group. Other than these connections, Air Serbia enjoys codeshare partnerships with Aegean Airlines, Adria Airways, Aeroflot, Air China, Air France, Bulgaria Air, KLM and Tarom, serving a total of 37 additional global points, including key destinations in the Far East, such as Beijing, Seoul and Singapore, as well as four cities in Australia.
What are you doing to raise more UK travel trade awareness of Air Serbia’s offering?
The United Kingdom has traditionally been a very important market for our travel industry and we believe the potential for further development is tremendous. We are pleased to be a natural partner and, as the first contact with our country for many visitors, perfectly placed to support this process. In cooperation with the Tourism Organisation of Serbia and the British-Serbian Chamber of Commerce, we recently took part in a series of high profile events in London aimed at promoting the potential of travel and tourism between Serbia and the United Kingdom. During our visit, we had very productive meetings with senior UK government officials, executives of major corporations, UK tour operators and representatives of the Serbian diaspora.
To this end, Air Serbia also launched in October last year a ground-breaking multi-channel advertising campaign, with the tag-line “Air Serbia. The New Wings of Europe”, to boost awareness of the airline and position Belgrade as an attractive metropolis and a convenient European air transport hub, and Serbia as a tourist destination. The campaign is ongoing, including on board the aircraft of our partner airlines, and is attracting notable attention and proving highly effective in achieving its objectives.
What plans do you have to grow the business going forward and what role will Etihad’s investment play in this strategy?
We will continue with our effective strategy of network expansion through direct routes, codeshare partnerships and other forms of commercial cooperation with other airlines, offering our guests even more choice and flexibility in their travels. However, this year our main focus are on all aspects of the travel experience we offer to our guests by innovating our product and service, providing even more convenience, comfort and enjoyment. With these advances, which will be rolled out progressively throughout the year, we will provide our guests with industry-leading innovations and world-class amenities, some of which are rarely seen on short haul European services.
Our continued achievements will also depend on further investment in our workforce without which our success would not be possible.
Finally, as we have done thus far, we must continue to place great emphasis on strict financial discipline and focus on cost containment.
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