Etihad takes on JAT

The four key middle Eastern carriers have developed very different expansion strategies:
1. Emiraes have largely gone it alone with only one major partnership: Qantas
2. Qatar are joining One World alliance
3. Turkish have used their bridge between Asia and Europe
4. Etihad are expanding via equity stakes in other airlines

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Now Etihad have taken on the Serbian airline JATAirways which will be renamed Air Serbia on October 1. Etihad have:

  • acquired 49 per cent of JAT-the Serbian government owns 51pc
  • matched a $US40 million cash injection by the government
  • agreed to put another $US60 million along with the government
  • been given a five year contract to manage the airline

JAT/Air Serbia is Etihad’s sixth equity partner after Virgin Australia, Air Berlin (29%), Air Seychelles (40%), Aer Lingus (2.97%) and Jet Airways (24% – awaiting official approval).

Based in Abu Dhabi, one of the United Arab Emirares, Etihad have expanded significantly since their founding ten years ago in 2003. Today their 79 planes fly to 86 destinations. Etihad through their partners’ hubs across Australia and New Zealand, London, Dublin, Mumbai, Brussels, Berlin and now Belgrade.

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As a kid, I thought JAT was a fascinating airline. Based in a communist country (albeit one of the most moderate ones), the airline’s logo popped up across the globe with flights to Karachi,Madrid, New York, Singapore and even Sydney, Australia. The airline even made money! JAT have had three incarnations starting as The Society for Air Transport (AEROPUT) on June 17th, 1927.

After World War Two, AEROPUT became Jugoslovenski Aerotransport (JAT) flying under that name from April 1st 1947. The airline became very successful carrying millions of passengers through Belgrade on a mainly jet fleet. It was the first airline in Europe to utilise 737s. It lost this position when the Balkan wars broke out in the 1990s. Sanctions and war crippled the carrier and it has never fully recovered.

JAT Yugoslav Aerotransport changed its name to Jat Airways on 8 August 2003. The government of Serbia unsuccessfully tried to privatise Jat Airways in 2008 and 2011 before approaching Etihad in March 2013.

JAT have five ATR turboprops, 13 737s and two leased Fokker F100s in their fleet. From October, the new rebranded carrier will begin to add 14 Airbus A319s. Air Serbia will maintain JAT’s existing routes. It will begin code sharing with Etihad and Air Berlin on flights before expanding to new destinations including Beirut, Bucharest, Cairo, Kiev, Ljubljana, Prague, Sofia, Varna and Warsaw.

Dane Kondic has been named as the new chief executive of Air Serbia and will take over in October. Sydney born, Kondic holds dual Australian and Serbian citizenship. He has twenty years experience in the travel industry including stints with Qantas and Malaysian.

So JAT has been saved -at the price of the JAT name. It will be interesting to see what the next five years will bring.

Some questions:
1. What will the reaction be to the name Air Serbia which many associate with one of the warring countries in the Balkan conflict?
2. What is the value to Etihad of a hub in Belgrade, Serbia?
3. What is the relationship between Air Serbia and Air Berlin ?

 

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  1. Air Serbia is an unimaginative title, but I think the idea is to promote the new Serbia – not a country at war, but as a place to visit that is known for its hospitality, amazing food, and a very vibrant city in Belgrade.

    Belgrade has an excellent position in Europe, an airport capable of handling 8 mil passengers per year (currently around 3-4), as well as a place to land very large aircraft (747s). All the major cities in Europe are within 2-3 hours, and the closest hub to AUH in Europe with the above abilities.

    JAT airways used to be quite a decent national carrier but has become incredibly unprofitable following the break up of the country. It is need of major restructuring that Etihad can spearhead and the deal with the government allows.

    So all in all, it could be very interesting, at best a new hub with excellent access to central and south eastern europe opens up, at worst, nothing changes and things remain status quo.

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