Air Serbia’s Longhaul Future — Could They Start Flying To Toronto?

In June 2016, Air Serbia began flying between Belgrade and New York. I’ve had the chance to fly this route from both Belgrade to New York and New York to Belgrade, and immensely enjoyed both of my flights. This route was only possible thanks to the support of Etihad Airways, given that Air Serbia is an Etihad Airways Partner.

This was a huge move for the airline, given that they previously only operated regional routes. Air Serbia took over a single A330 from Jet Airways, which was another Etihad Airways Partner. This was all at a time where the Etihad Airways Partner concept was going strong, or perhaps more accurately, at a time when Etihad had bottomless pockets.

General trouble with Etihad Airways Partners

The Etihad Airways Partner concept has been crumbling the past couple of years. Perhaps more accurately, the government in Abu Dhabi isn’t willing to throw away money to the same extent anymore. As we’ve seen over the past couple of years:

This concept is just such a horrible mess. While Emirates was focused on investing money in their own operations in a way that made the airline successful, and Qatar Airways invested money in airlines that actually make money, Etihad was busy investing in money losing airlines. Smart, eh?

What does this mean for Air Serbia’s flight to New York?

For a long time I’ve been wondering about the fate of Air Serbia’s flight between Belgrade and New York. My assumptions are as follows (I don’t have data to back this up, since there’s not public info in that regard, but I feel pretty comfortable about this):

  • The airline is losing money on the route, because based on looking at tickets for sale and seatmaps, the flights are consistently quite empty, including in business class
  • It’s possible that this route is part of a larger agreement between the governments of the UAE and Serbia, because I can’t imagine this route was ever operated with the plan of making money, but rather as a route intended to build up Belgrade

The interesting development is how bad the aircraft utilization has become on this route as well. When the route was first launched, it operated 5x weekly. Demand on transatlantic routes is highly seasonal, and there won’t be as much demand in winter. But this coming winter the route is going down to 2x weekly flights. That means that the plane just sits on the ground in Belgrade for five days a week.

While I expect seasonal adjustments, it’s pretty telling that Air Serbia chooses to park the plane rather than fly it somewhere else. Most airlines would choose to find a different destination to fly to if the plane were otherwise parked, so it tells us a lot about Air Serbia that they’re not doing this. It’s expensive to park a plane that you’re presumably paying something for (planes can only make money in the air), but it’s even more expensive to operate a route at a huge loss.

What’s the future of Air Serbia’s longhaul service?

With the airline operating the route just 2x weekly this winter, what’s the future of the route? You’d think that something’s gotta give. My assumption is generally that this route will eventually have to be cut, though it looks like Air Serbia might be going the other direction, and expanding longhaul service.

Earlier this week a new Air Transport Agreement was signed between Canada and Serbia, which opens up the possibility of flights between the two countries. This opens up the possibility of Air Canada or Air Serbia operating flights between the two countries (Canada has quite protectionist policies, and this agreement is limited to those two airlines, so an airline like Air Transat couldn’t operate these flights).

On that front, exyuaviation.com notes that a Toronto Pearson Airport spokesperson confirmed earlier this year that advanced talks were being held with Air Serbia over the resumption of flights between Belgrade and Toronto. While no announcement has been made yet, it does seem like talks are serious, and this week the approval that they needed came through.

Bottom line

I’ll be curious to see how this plays out. All indicators suggest that Air Serbia is losing money on their flight to New York. The thing is, we don’t know the full agreement between the UAE and Serbia, as I suspect the UAE’s support of Air Serbia is part of a much larger agreement, or else Air Serbia’s fate would be the same as the other Etihad Airways Partners.

With that in mind, I do wonder what the future holds for Air Serbia — will they keep operating limited service to New York and just park their plane a good portion of the time, will they add service to another city (possibly Toronto), or will the A330 eventually be returned?

What do you think Air Serbia’s longhaul future holds?

Comments

  1. I can’t believe they managed to lose money on the only route that makes sense for them… although, in all fairness, there is not enough ex-YU population to fill in 5 x weekly. And other population will shy away from anything named “Serbia”, sadly.

    YYZ might actually work out better – but up until now, AC saw no potential in flying the route (certainly no premium fares to be collected there), so consequently, the government was not interested in opening up flight rights for JU – regardless of JU constantly (incessantly, fruitlessly) knocking on the door. Limited connections to ex-YU (the political/national ill-will is still in full force there) are not going to help either, I hope JU cleans up that part quickly. But they are still losing money everywhere, only propped up by government 0-interest loans in perpetuity.

  2. Maybe a 5th freedom tag between New York and Toronto similar to LAN/TAM’s old service? Additional passengers to boost up a marginal service?

  3. Another one of Etihad’s cost cutting measures they have pulled out on the naming rights of Etihad stadium in Melbourne which is mainly used for AFL matches it is to be renamed Marvel Stadium

  4. If Air Serbia actually offered competitive business class pricing I would consider them for flights I take to VIE several times a year. Every time I have checked since they started the JFK flight, the flights have been more expensive than most of my choices. If the loads are as light as you indicate then I would lower some of the fares and fill up all the classes.

  5. @ Christian — You’re 100% correct. Can’t wrap my head around their premium cain pricing.

  6. Air Canada could probably initially launch flights with cheap subsidiary AC Rouge as they’ve done on many markets only to switch them to mainline if successful. But with 2 airlines operating, you have to wonder how viable the route would be with both airlines not having codeshare partners on the other end.

    Can’t Air Serbia though found another seasonal route where they can ply the A330? It’ll be interesting to see how this folds out.

  7. @ Christian – yes, they planes are empty – barely handful of seats taken in biz for July/August. It seems that mark-to-market pricing is still beyond the grasp of communist-era beancounters that are left in the place, waiting for retirement. Even if Y is only 50% full for most days in “high” season, the flights are still priced $300-$500 more. Local population might appreciate the convenience of no connection, but certainly not to fork out 30%-50% more for it.

    And just to add to the incredulity of it all… they just signed an agreement to start flights to Azerbaijan, of all places? It seems the airline is there for a show, not for profit.

  8. So here is prime example for dates I need to fly in September that I just checked. All business class fares: (all fares with 1 stop)
    Air Serbia = $7100
    LH = $4700
    TK = $3400
    TAP = $2700
    And this is representative for what I have seen for as long as I have checked them for various trips.

  9. Air Serbia has kind of weird pricing around Europe as well. For example, I took it from Moscow to Athens, to Amsterdam (twice), because the seats in economy were incredibly cheap (think 120 USD from Moscow to Amsterdam return with luggage and during high season). But sometimes the same flights sell for 600 USD in the same fare class. With lots of seats available.
    And the flights from Moscow are usually jam-packed, so I guess not all their flights are empty.
    It’s also worth noting that they turned into a low-costish airline, because there is no longer any free service (not even water) in economy.

  10. I’m actually pretty surprised that Air Serbia chose JFK as their first TATL route to begin with. Belgrade doesn’t make sense as a hub for anyone outside the former Yugoslavia, and the greater New York metropolitan area’s former-Yugoslav diasporas aren’t from pro-Serbian populations. Basically it was a prestige route with zero business sense.

    Toronto, Chicago, and even Detroit make much more sense simply because the customer base there is more likely to fly Air Serbia, and will do so regularly given linguistic/cultural similarities. A North American-based airline to codeshare with would probably help with passenger feed, though their connections with Etihad probably preclude this. Tying up with oneworld would be great, since the collapse of Malev and Air Berlin has left a gaping hole in their European route network.

  11. Why can’t they fly the plane to Bangkok during the winter…catch some of those western European tourists heading for the sun; not super high yield but better than parking the plane.

  12. Managed to see this bird while plane-spotting out of the JFK T1 KAL Lounge last night. Was pleased to catch this rare Air Serbia widebody! Reminded me of when MALEV was down to just one (or was it 2?) long haul routes.

  13. Just flew in from BEG, and the fares on *A aren’t half bad, but when I looked at the nonstop it was out of this world. This route could make sense, if they just priced it right and banked onward connections. The other possibility is doing BEG-LUX-JFK, as LUX is dieing for a nonstop to the US, and EY can backdoor the 5th freedom argument by having JU fly the route…

  14. IMHO if you want to operate eastern Europe US flights, then you either have to have strong OD traffic (not the case) or extensive connections to Central/Eastern Europe, Asia and/or middle East. + attractive fares.
    Air Serbia has neither.
    That’s why LOT and Ukraine international generally have full transatlantic flights on a daily basis , while Air Serbia struggle with 3x weekly flights.
    I think direct KievNYC traffic by itself isn’t much higher then BelgradeNYC (people have even less money in UA) , but massive connections network makes a difference.

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