Macedonia’s low cost boom coming to an end?

New national carrier could affect low cost travel in Macedonia

Skopje Alexander the Great Airport is heading for an all time passenger high this year, with low cost airlines fuelling the growth. It comes two years after the Macedonian government first offered subsidies to budget carriers as an incentive to launch flights to the country. However, as the government prepares to set up a new national carrier together with a foreign partner, questions have been raised whether these subsidies will be on offer to the likes of Wizz Air and Flydubai next year. In 2012, the state forked out 1.4 million euros for low fare carriers to set up services to and from Skopje, a move which proved successful as Wizz Air opened a base in the Macedonian capital shortly after and is now the country’s busiest airline. This year the government upped the stakes, offering 4.9 million euros in subsidies. Airlines have been offered a one-off 40.000 euro cash injection for each new route launched for the first six destinations. Each subsequent route launch receives an additional 30.000 euro subsidy from the government. The new subsidy scheme also rewards each carrier for the number of passenger they carry.

In 2013, low cost airlines handled 440.127 passengers to and from Skopje Airport, a massive increase of 240% compared to the year before. Of those, Wizz Air carried 358.003 passengers, followed by Pegasus Airlines with 57.075 and Flydubai with a further 25.049 travellers. In comparison, 481.809 passengers used the services of full fare carriers, with Turkish Airlines the most popular. However, experts believe it is unlikely the government will be able to keep subsidising cheap flights to the same extent while at the same time managing a flag carrier. “A national airline would bring benefits such as employment, GDP growth and new destinations which would improve ties. Establishing a national airline would cost less than the subsidies currently provided to Wizz Air”, former CEO of Macedonia’s first national airline, Palair, Vanja Bitoljanu, says.

Despite the exceptional growth, spearheaded by low cost airlines, TAV, which manages Macedonia’s two international airports, warns the boom could come to an end if a national airline is not established. “TAV wants to compete with airports in neighbouring countries and attract foreign airlines. If you do not have a national carrier, then you miss out on the opportunity to attract airlines from other countries. This is because of commitments outlined in bilateral agreements. We are trying to attract foreign airlines to Macedonia and establish a national carrier, otherwise air traffic in the country will stall”, TAV said in a recent statement. Istanbul is currently the most popular destination out of Skopje, followed by Vienna, Zurich, London, Basel and Malmo, with the latter three all served by Wizz Air.