EX-YU airlines plan new routes for 2016

Adria, Air Serbia and Croatia Airlines to employ different strategies for future growth

Airlines and airports from the former Yugoslavia have been attending the World Routes summit, which ended yesterday in Durban, South Africa, where the most senior representatives from airlines, airports and tourism authorities met, planned and discussed new and existing global air services. World Routes, which took place over the past three days, is the largest global annual event of its kind and the largest and most prestigious event in the Routes portfolio. Attending among the 250 airlines and 650 airports were Adria Airways, Air Serbia, Croatia Airlines, Limitless Airways, Trade Air, Pula Airport, Rijeka Airport, Zagreb Airport, Zadar Airport, Skopje Airport and Ohrid Airport.

Adria Airways is planning to expand its services in the coming year. The Slovenian carrier has said it will add additional routes from Ljubljana and Tirana, with the latter to become the airline's newest hub, joining Pristina and Lodz in Poland. Adria is the third busiest carrier operating out of the Albanian capital. “Next year we plan to base an aircraft in Tirana and have three daily flights to a number of destinations. We are considering at least two new routes. Italy is a very real possibility”, Mark Anžur, Adria's CEO, has said. Earlier this year the airline launched flights from Tirana to Brussels and Paris, complementing its services from the city to Frankfurt and Ljubljana. From the Slovenian capital, Adria is also considering additional routes with Spain and Italy the main focus points for 2016. Furthermore, Lodz Airport has noted that Adria is mulling new routes from the Polish city, after basing a Bombardier CRJ700 aircraft there in March. Paris is among the new services being considered, according to sources close to the airport.

At the Wold Routes summit, Air Serbia was identified as one of the fastest growing airlines in Eastern Europe. Air Serbia recorded the largest year-on-year capacity growth between 2013 and 2014 with a rise of 68.3%. While the airline plans to discontinue services to Budapest and Larnaca this winter season, it has stayed coy on future expansion plans. Earlier this year, Air Serbia's CEO, Dane Kondić, noted that the carrier will work on improving its average cabin load factor before expanding its operations. “It was always envisaged that we would go hard at trying to drive our load factor. Last year we closed at 70% load factor. It shows there is plenty of room to grow in the existing network”, Mr Kondić said. He added, “Unless there are specific opportunities that present themselves, we really need to go fitter and faster with what we have. Once we get to that 80% plus average load factor, then we can look at expansion”. Previously, Zadar Airport confirmed it was in talks with Air Serbia over potential services from Belgrade. Zadar Airport’s Managing Director, Irena Ćosić, which attended the summit in Durban, said, "This is a great opportunity for Zadar because we know this route would have excellent loads. Today, new routes are secured by offering your product on the market. You can’t sit with your hands crossed. As a result, we have to present our offer to carriers that could be interested in our market and Air Serbia is one of those". The Serbian government has said the airline will launch services to New York during the first quarter of 2016. Air Serbia has applied for a license to operate services to the US through a codeshare agreement with Air Berlin, which could eventually lead the airline to operate the flights with its own metal. Caitlin Harvey, from the United States Department of Transportation, says Air Serbia's application is "under active Department consideration", adding that the processing time for applications varies from case to case.

Croatia Airlines is also planning on expanding its destination network next year, with a greater focus on Eastern Europe. According to CEO Krešimir Kučko, the airline plans to lease two Embraer E190 aircraft and is considering opening bases outside of its home country, with Sarajevo being a likely option. “At first, Eastern European countries within the European Union are our priority. At a later stage we intend to fly east outside of EU boundaries”, Mr. Kučko said. According to its CEO, the airline’s ultimate goal is to expand across the Atlantic. “We should not forget the significant demand for flights between North America and Croatia and we are keeping an eye on this market as well. But to achieve this goal we will first have to significantly develop our regional network”, Mr. Kučko noted. Croatia Airlines’ restructuring process, which has limited its opportunities for network growth over the past four years, will be completed at the end of 2015.