Macedonia to extend LCC subsidies

The Macedonian government will introduce a new round of subsidies for low cost airlines next year in a bid to attract more carriers and develop connectivity, a move which will not sit well with authorities in Kosovo who say the policy has distorted competition in the region. Speaking to the "Srpska ekonomija" monthly, the Macedonian Minister for Transport and Communications, Goran Sugareski, said, "The government of the Republic of Macedonia is strongly committed to the development of air transport. We will maintain the policy of subsidising low cost airlines, which has resulted in cheap fares for Macedonians. The contract with the airline currently benefiting from incentives for the introduction of new routes [Wizz Air] expires next year. After this, we plan to issue a new public call, which will be open to all interested budget carriers. The end result will be an extensive network accessible to all citizens".

The Macedonian government launched a three-year subsidy scheme for low cost airlines in 2012. It proved successful with Wizz Air opening a base at Skopje Airport, which has, in turn, led to significant passenger and traffic growth. A fresh round of subsidies was offered in 2015, with Wizz Air basing a further two aircraft in the Macedonian capital, launching a handful of new routes and introducing services from Ohrid as well. However, the Kosovo Civil Aviation Authority has filed a complaint with the European Commission over the policy, while Pristina Airport says it is unacceptable for the state to provide such subsidies. It argues that they should come in form of incentives from the airport operator instead. Pristina and Skopje airports are now neck and neck in terms of passengers handled.

Speaking to EX-YU Aviation News, a European Commission spokesperson said, "The Commission is aware of concerns raised about the financial incentives' scheme granted by the government of Macedonia since 2012 to both domestic and foreign airlines to fly from the "Alexander the Great" Airport. It could possibly distort competition between airports in the area and indirectly between the airlines concerned. DG MOVE [Directorate-General for Mobility and Transport] is in contact with the competent Macedonian authorities and is examining this matter. This is taking place in the framework of the European Common Aviation Area Agreement, which was signed in 2006. While this Agreement is not in force yet, it is applied administratively". In its most recent annual progress report on Macedonia in the area of air transport, the European Commission said that "concerns about possible state aid in the aviation sector need to be addressed".

Several low cost airlines have previously expressed interest in launching flights to Macedonia, including Ryanair, Norwegian Air Shuttle and, most recently, Eurowings. Over the past few months, the Macedonian government has held talks with a number of carriers, such as LOT Polish Airlines, Onur Air and Arkia Israeli Airlines, which are considering potential operations to the country. "At this point we believe that the capacity at Skopje and Ohrid airports is not fully utilised and we are working hard on attracting new airlines", Mr Sugareski said. He added, "We are in negotiations with several carriers that want to fly to our country, however, these are only preliminary talks related to terms and conditions, as well as possibilities for cooperation".