Air Serbia reaffirms its hub strategy at Belgrade airport


  • Strong growth in traffic before the pandemic had been reported at Belgrade airport.
  • Passenger capacity is approaching 2019 levels, but cargo volume is lagging behind.
  • The impact of CCV was moderate.
  • Political decisions may have to be made regarding the future direction of the country.
  • Ambiguity remains over a proposed new airport.

New track ready by end of 2022

The new 3500m runway at Belgrade Nikola Tesla Airport is expected to be completed by October or November 2022.

The works are part of an 80 million euro expansion project, including the expansion of the terminal and the construction of a new control tower, whose completion is scheduled for 2024 according to the CAPA Airport database. Building Database.

Work will continue until 2024 and a final figure of over $1 billion has been suggested as the airport tries to position itself as a competitor to airports in Vienna, Prague and Budapest, as well as in preparation for any cooperation in China’s Belt and Road. Initiative.

An extensive reconstruction of the area in front of the terminal is underway, including modernization of access roads, construction of car parks and extension of the terminal for centralized check-in and security procedures.

Check-in will be centralized, with around 100 check-in counters, after which passengers will proceed to the first floor for centralized security checks and then proceed to a large duty-free area.

There have been several CAPA articles in the past about the expansion of Belgrade Airport and whether or not it can compete with the larger hubs in the region.

The first was in March 2015 and was anchored on an announcement by Air Serbia that it intended to develop a hub in Belgrade.

See: Belgrade Airport, with the resurgence of Air Serbia, challenges the order of hubs in Central and Southeastern Europe.

The conclusion was as follows: “In five or six years, Belgrade airport could certainly be able to challenge the accepted order in its part of the world, but there are still many bridges to cross. Much of this future will be closely linked to the development of Air Serbia – and there the signs are positive.

The second took place in March 2019, following the privatization of the airport through a concession agreement won by the French VINCI Airports; its first airport in Central and Eastern Europe.

See: Belgrade Airport: VINCI Airports winner, the challenges to be met

The conclusion was: “Growth has not been what was expected…and the road could be longer and more difficult than expected”.

Air Serbia recommits to developing its hub and spoke model

Recent announcements regarding the completion of the airport expansion works coincidentally come as Air Serbia reaffirms (mid-December 2021) that it will continue to develop its hub and spoke model, despite the coronavirus pandemic which strongly impacts the demand for such flights.

Air Serbia’s General Manager for Commerce and Strategy, Jiri Marek, no doubt speaking on behalf of many smaller airlines, recently said: “Covid-19 has completely changed the network planning approach. You don’t really use long-term planning anymore. You are still doing the three-year and five-year plan but, in a way, it is an exercise that you will continue to change and adapt according to external inputs.

He added: “The network has always been driven by demand and demand is the most affected by the pandemic. It fluctuates both ways. It’s limited whenever you have new travel restrictions, while you have peaks in demand when something opens up because people still want to travel. The question is how quickly you can adapt to these changes in demand, especially with the network. What we have observed throughout the pandemic is that the booking window is eight to ten days before departure, where you get most bookings. The question is how to plan for the medium or long term in such an environment”.

The airline has changed its internal practices to adapt to fluctuating demand, monitoring bookings on a daily basis.

“What happens with the hub and spoke model is super difficult because you’re not just going after point to point,” he says. However, we strongly believe that we will stick with the hub and spoke model as it is one way to address seasonality.

The seasonal variation between summer and winter is high in Serbia. What Air Serbia has done is to focus on some of the strong days like Monday, Friday and Sunday, where operations are almost at the same level as before the pandemic, in order to provide connectivity.

At the same time, it drastically reduced the weakest days, such as Tuesday and Wednesday, which were always weak even before the pandemic, by allocating maintenance work on these days and other issues to ensure that on strong days, all resources are available to deliver the product.

The paradigm has changed – “you see an opportunity and go for it”

Commenting on the introduction of new routes, Mr Marek said: “Market reaction is essential. If you want to open a new destination, you no longer do it three or four months in advance with planning, calibration, different GDP entries, etc. Basically, you see an opportunity and you take it. We proved it during the pandemic. We launched a few new destinations and some of them were launched in two weeks. I think this flexible model will stay with us for the next five years, where you will still have to react very quickly to all the changes that are coming. The greatest undiscovered truth of Covid is that change is possible and the speed of change is incredible.”

In other words, Air Serbia will now operate “instinctively” as one would expect from an LCC, and even where apparent opportunities can be seen when a hub-and-spoke model applies.

So, given the dichotomy in the findings of the two previous reports, how is the airport evolving?

Prior to the coronavirus pandemic, and using 2015 as a starting point, passenger growth had been steady if unspectacular; but in 2019, and against the tide of many other airports, it was strong, at 9.2%.

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Traffic growth had been strong and pandemic losses less severe than competitors

In addition, the 2020 traffic collapse of -69% was not as severe as at other airports (Vienna was -75.3%; Budapest -76.1% and Prague -79.4%), and these losses were almost recovered in Q1-Q32021 (+64%).

2019 passenger capacity levels could be reached in early 2022, but cargo volume is lagging

As far as seat capacity is concerned, 2021 has been a better year, with the level of capacity coming close to that of 2018 – if not 2019 – twice already.

If current trends continue, 2019 levels should be reached in early 2022.

Considering previous comments on the Belt and Road Initiative and Serbia’s desire to be part of it, as well as Serbian support for Chinese foreign policies and China’s previous interest in the development of airports in Eastern Europe, the volume of cargo must also be taken into account.

China will need to trade with countries like Serbia to maximize the benefits of the Belt and Road Initiative as its options in the Eastern European region are shrinking.

This cargo volume has decreased in line with the number of passengers (-64.7%), but there is still some way to go before reaching 2019 levels.

As of the week beginning December 20, 2021, available volume is around 67% of 2019 levels.

Air Serbia operates and has codeshare/alliance agreements with several intercontinental airlines

All flight operations at the airport are currently international and Air Serbia is the largest airline by number of seats, with 38.3% (and 46% of movements).

After Wizz Air, Lufthansa and Turkish Airlines are the second largest airlines in terms of capacity. Air Serbia has codeshare agreements, allowing intercontinental routes in all directions, as well as its longstanding agreement with Etihad, which has reduced its stake in the airline over the past two years. All three, as well as Air Serbia, are members of Star Alliance.

This is important because direct flights are mainly limited to Western Europe (54%) and Eastern/Central Europe (38%). There is little capacity to the Middle East (6.2%), almost none to the Americas and zero to Asia-Pacific. The new track will help in those latter respects.

The impact of LCC was moderate, helping to justify Air Serbia’s strategy

Low-cost carriers have made inroads in Belgrade. Their total seat capacity currently stands at 28.8%, but this is considerably less than in Budapest (74.2%), Prague (46.4%) and even Vienna (33.9%), where LCCs were discouraged until recently.

Of course, these three places are much higher on the tourist wish list than Belgrade, with tourism being the main driver of LCC demand.

On the other hand, it lends some support to Air Serbia’s strategy of maximizing Belgrade as a hub airport.

Again however, 77% of capacity is unaligned (i.e. not attached to an alliance member airline) and only 17% of capacity is represented by Star Alliance, including Air Serbia is a partner, along with Etihad, Lufthansa and Turkish Airlines.

Airport utilization as measured by arrival and departure capacity per hour is solid, well spread over the day and balanced in terms of arrivals and departures in a manner appropriate to hub operations facing waves of activity.

The chart below is for Friday 24th December 2021, which could be busier than a normal Friday due to pre-Christmas flights.

Political affiliations will influence decisions from now on

The evidence points to an airport that was beginning to realize its dream of becoming an alternative regional hub for passengers – albeit on a small scale – before the arrival of the COVID-19 pandemic and a cargo airport both internationally. within its own borders and beyond, which justifies Air Serbia’s belief that it can continue to fulfill its hub aspirations.

However, although this hub is made up of only Air Serbia and a handful of other Star Alliance members, and Serbia’s political future is unclear – let it tip its hat to the China or continues to pursue the goal of joining the EU – agreeing a hard deal and quick strategy is not easy.

As far as the EU is concerned, Serbia was recognized as a candidate for membership in 2003, but the accession process was long and arduous. Much still depends on whether or not he can normalize relations with Kosovo.

Ambiguity remains over proposed new airport

Another complicating factor is the announcement earlier in 2021 that a new Belgrade airport is to be built west of Belgrade, with three runways, as part of a national spatial plan.


It is not yet known who would finance and build such an airport, but Chinese companies have bid for the Belgrade airport concession and yet could find themselves in competition with VINCI, at least on the freight segment.

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