The Montenegrin Ministry for Capital Investments has requested for the country’s competition watchdog to investigate whether state subsidies provided to low cost carriers (LCCs) Ryanair, Wizz Air and easyJet between 2013 and 2020 distorted the market. It comes as the state continues its efforts to set up a new national carrier following the collapse of Montenegro Airlines last December. The Ministry has urged the Agency for the Protection of Competition to open an investigation into whether incentives in the form of subsidies provided to the three airlines by operator Airports of Montenegro, the National Tourism Organisation and the former Ministry for Sustainable Development and Tourism resulted in a lack of free and open competition on the market.
Low cost carriers entered the Montenegrin market in 2013 and have quickly established themselves as key players, with Ryanair becoming one of the largest airlines at Podgorica Airport. The budget carrier, along with its counterpart Wizz Air, maintain year-round operations to the Montenegrin capital, while easyJet runs seasonal services to Tivat. It is unknown how much the three received in subsidies and incentives over the seven-year period, however, the agency has begun preparatory work into the matter. Last year, Ryanair reported Montenegro Airlines to the European Commission for being the beneficiary of illegal state aid, which the government cited as one of the key reasons for its decision to shut down the former national carrier.
The state hopes to launch a new airline called ToMontenegro by the start of summer. However, the European Commission has requested for the Agency for the Protection of Competition to look into the government’s recent purchase of two Embraer E195 aircraft for the new national carrier and for it to investigate whether there were elements of illegal state aid in the acquisition. Meanwhile, ToMontenegro is hiring staff members for several positions as it aims to commence operations before June. “Our goal is to launch before the summer, which would be important for Montenegro’s entire economy. We know everything that needs to be done and we are working on achieving this goal. However, not everything is up to us. There are certain regulations that have to be met, both at home and abroad”, the company said.
Oh oh
ReplyDeleteWow, what a comment, the evolution of the ouch.
DeleteOuch
DeleteI fail to see the point in this. How many millions did Montenegro Airlines get distorting the competition?
ReplyDeleteExactly
DeleteI didn't realize these airlines were getting subsidies.
ReplyDeleteThese sort of airlines always do.
DeleteWhile accusing everyone else of getting aid...
DeleteThat's the modus operandi of all major European LCCs.
DeleteI think the benefits far outweigh the investment, whatever it may be. These LCCs have secured year round connectivity for Montenegro and also brought hundreds of thousand of tourists.
ReplyDelete+1
DeletePayback to Ryanair.
ReplyDeleteYeah, I'm sure they are shaking
DeleteThey want taxes and other charges removed yet they are against governments helping their flag airlines.
DeleteWhat's the point of this exactly?
ReplyDeleteThis is about politics. The new government is trying to discredit DPS/Milo by uncovering corruption scandals that took place over the past 30 years. Elections in Podgorica are coming after summer and they are already preparing for that.
DeleteNever a smart idea to mix politics and aviation.
DeleteDepends on what kind of politics we are talking about here. You have airlines such as EK who were political projects that turned out well and then you have disastrous airlines such as YM ... among others... which eventually collapsed.
DeleteAnd the European Commission already asking investigation into state aid for To Montenegro lol.
ReplyDeleteAnd what if the agency find it did distort the market. What is the government going to do? Ask them to pay it back? Please
ReplyDeleteFor of intimidation maybe?
DeleteIt's just a tactic to end their funding and possibly getting out of existing agreements if the agency rules their way.
DeleteOr preventing an LCC to open a base in Podgorica. Montenegro Airlines is gone and if there was not a pandemic I'm sure Ryan or Wizz would already be stationing a plane in TGD.
DeleteSounds plausible.
Delete@9.09 yes, in some cases Ryanair was ordered to pay back subsidies offered by airports which were concluded to be illegal or distorting.
DeleteIn relation to that here is an article. They had to pay back almost 10 million euros.
Deletehttps://www.politico.eu/article/ryanair-ordered-to-pay-back-e9-5-million-in-illegal-state-aid/#:~:text=Marketing%20deals%20and%20other%20arrangements,according%20to%20the%20European%20Commission.
This won't end well.
ReplyDeleteWell didn't the government say To Montenegro would be an LCC?
ReplyDeleteIt's amazing how quickly Ryanair has been growing from Podgorica.
ReplyDeleteit has only 6 destinations (of which 2 seasonal)
DeleteThey have been shrinking even faster. Stockholm-Skavsta, Stuttgart, Dublin, Bologna, Poznan are routes that are gone so far.
DeleteYes, for an airport like Podgorica that is large. They were the second busiest airline at TGD before the crisis. They even overtook Air Serbia.
Delete@9.26 we are in the middle of a pandemic. Those routes will evntually return.
DeleteLCCs benefited Montenegro a lot. They made travelling a much affordable option not only for the locals but for the tourists visiting them.
ReplyDeleteIs there any chance Ryanair will open a base in TGD? Maybe this is related to that.
ReplyDeleteWe never expected FR would launch flights to Podgorica in the first place so you never know.
DeleteSuch a shame the government is adopting this sort of attitude towards low cost airlines.
ReplyDeleteLet's just hope they don't chase them out.
DeleteThey won't. Being responsible for chasing LCCs out wouldn't be a popular move with the electorate.
DeleteWhy is it a shame? The government is right. LCCs should pay full airport fees. Ryanair even has the audacity to complain while receiving aid themselves.
Delete^ Typical FR
DeleteDidn't someone claim here how they have it on good auhtority that Montenegro will offer a similar model to LCCs like Macedonia did to Wizz in Skopje? These actions don't seem to be going in that direction.
ReplyDeletePeople can write whatever they want in the comments. Doesn't mean it's correct.
DeleteWell, in my opinion, that would have been more rational then this tomontenegro business.
DeleteI think that was indeed their first idea but then there must have been a lot of pressure from somewhere
DeleteBoohoo I'm so sad we can't have a Wizz monopoly :(
DeleteMontenegro was the last market in ex-Yu that started getting LCC flights, which is ironic for a tourist destination. The government should embrace them, not fight them.
ReplyDeleteIf Pobeda, Norwegian, Transavia can operate without subsides, than so can Easyjet, Ryanair and Wizz. Nobody is chasing them away.
DeleteBecause FR and W6 have significantly bigger operations than the one you mentioned. They also fly year round.
DeletePobeda flies year round and carries 100k+ passengers. I am sure others would be willing to expand routes and frequencies should they get incentives like these three airlines.
Deleteas if a state own airline which isnt profitable doesnt distort the market
ReplyDeleteYes, especially one like Montenegro Airlines which has received millions and millions.
DeleteI understand what you are saying and agree. However, if YM had to pay ~24€ per passenger it would be very difficult to compete against FR and W6 which pay much less for airport fees. Besides, YM had a very incompetent management in recent years so that makes the situation a lot worse.
DeleteIf Ryanair was complaining about MGX why didn't they open a base in Podgorica once they were shut down?
ReplyDeletebecause its not a year round destination?
DeleteWell they fly year round to TGD.
DeleteGuys you are all acting as if there is no Covid. Their response would have been much different if there was no pandemic. Don't forget that Montenegrins can't enter EU at the moment and Montenegro is on red list almost everywhere, meaning those with EU residency that go to Montenegro have to quarantine for days when they return.
Delete@9.32 would be lovely if you used this argument too for the articles about other cities/countries
DeleteWho says I haven't? Other non-EU members in the region are in the same boat.
DeleteThey should be VERY careful what they wish for ..... this could come back to bite them hard ! This will simply put those LCCs on notice and they will watch what this Govt does with ToMontenegro. Any smell of aid of any nature - over and above the intial capital invested to start this new airline and these guys will be all over them.
ReplyDeleteSometimes it is best to let sleeping dogs lie .....
+1
DeleteAgree with this comment. They should tread very carefully.
DeleteI think this has more to do with the government looking at all the expenses and seeing a huge amount being spent on these LCCs. Now they are trying to get out of legally binding agreements and a judgment by the agency that the money distorted the market would probably be enough. The government is trying to reduce spending. The country was on the bring of bankruptcy at the end of last year. So I don't think this is particularly targeting these three airlines, it's just looking at reducing costs.
ReplyDeleteAll contacts with them expired in 2020. So Govt of Montenegro has no obligations towards low cost airlines.
DeleteSo we might see them drop flights since subsidies are ending and it does not seem the government is willing to continue financing them?
DeleteRyanair already dropped four routes, and I think easJet removed Milan flights. Wizz Air is yet to respond. So far they have kept their network unchanged.
DeleteWizz have barely two flights a week this winter season. tells you alot about the market and its not about the pandemic because others in the region are in the same position
DeleteWizz Air is not doing much better in other markets in the region either. Many flights are suspended from SKP where they get subsidies and are more or less the only dominant airline. Many routes suspended from TZL and BEG as well. So I don't think it's related to Montenegro.
Deletethey are doing much better.
Deleteyour SKP argument doesnt work anymore (and beside that that they are not receiving a penny since March last year) because the article above is exactly about Wizz receiving subsidies from Montenegro, secretly,
We will see what comes out of it
ReplyDeleteI doubt anything will.
DeleteNothing will happen. It will take the agency months to make a decision if not a year.
DeleteSomehow I think these LCCs really couldn't care less about the government's scare tactics.
ReplyDeleteI don't see anything wrong in the government asking for an investigation. Isn't it better for the agency to determine if this was illegal state aid?
DeleteOut of all the airlines in the world why did Ryanair go after Montenegro Airlines by reporting it to the European Commission? I mean seriously, it's not as if Montenegro was a majorly important market for Ryanair for it to do something like this.
ReplyDeleteIt goes after everyone. No matter how big or small. It's part of their strategy.
DeleteRyanair is constantly complaining about something.
DeleteWell done to the government of Montenegro! Smart decision.
ReplyDeleteHow much money could it be?
ReplyDeleteIt would be interesting if they publish it. Then we would know the going rate in the region.
DeleteIt would be interesting to know. At least Macedonia is transparent with the amount of money it gives to Wizz. I didn't even know Montenegro was giving money to LCCs.
DeleteMacedonia is NOT transparent as to why every single tender is won ONLY by Wizzair. They are tailor made only for Wizz so no other airline would even apply! Extreme transparency, of course!
Delete@0.08 lol
Deletebecause ONLY Wizzair applies for it.
No, because they are custom made so ONLY Wizzair could apply.
DeleteThis all reminds me so much of when the new government came to power in Serbia in 2012 and they arrested the CEO of Belgrade Airport for subsidies given to Wizz Air (they arrested him when Air Serbia was created). Of course he was let go afterwards since the accusations were baseless.
ReplyDeleteHaha true. Forgot about that little episode.
DeleteIt's a sad episode indeed.
DeleteLooks like EC did not complain about Montenegro subsidies to EU based LCCs but is now complaining about government starting a new airline. Is EC trying to prevent Montenegro from having a national airline and would prefer if they use EU LCCs instead?
ReplyDeleteSo much for "free market" in aviation in Europe.
"Is EC trying to prevent Montenegro from having a national airline and would prefer if they use EU LCCs instead?"
DeleteMost likely yes.
I really don't think a Montenegrin airline is something the European Commission is worried about.
DeleteAnonymous 20:42 Read the article before making a comment. It clearly says EC is worried, they are investigating Montenegro.
DeleteI really hope that this does not affect the operation of low cost airline in Montenegro.
ReplyDeleteSome routes might be suspended because subsidy contracts with LCCs have expired.
DeleteOdd easyjet never started flights to Podgorica.
ReplyDeleteBecause they only wanted to fly seasonally.
DeleteHere we go a little touch from the Hogan! Pressure+ investigation+ win the case + set the new airline + still the money and move to the next victim...
ReplyDeleteDid Hogan's company win the consultancy agreement?
DeleteThe results of the tender have not been announced yet.
DeleteStay in Abu Dhabi please
DeleteSorry but I really don't understand what market distortion the government is talking about. Montenegro Airlines not only received subsidies from the government, it also didn't pay any fees at the airport (that's why it had huge debt), it didn't pay any taxes for the last four years. If anyone distorted the market it was Montenegro Airlines.
ReplyDeleteGermany has a strong presence within EC. They can and do act to protect Lufthansa but will direct EC investigate and possibly punish tiny Montenegro.
DeleteOn the other hand, Montenegro does not have any rights to have presence and their say within EC but is forced to follow any decision EC will impose on them.
How is that fair?!?!?! This is not a level playing field! Completely distorted "market" rules!
I am sad that we still live in socialisms when it comes to aviation. :(
ReplyDeleteWhat's with the hate towards lccs here by some? They pretty much opened the doors to travel in many ex-Yu countries. You should be grateful they are around.
ReplyDeleteLove for overpriced national airlines offering same service standards is bigger.
DeleteLCCs are abusing local airports, threatening to leave if they have to pay any fees to the airport (or anything more than a few eur), they are not investing in building or expanding airports, they are taking all the profits away and not investing locally, they are not serving key airports, not even some of the key countries. They require subsidies and incentives, without any guarantees they won't pick up and leave at any moment. LCCs are aviation bullies.
Deleteso Air Serbia and Croatia are investing in building airports ok
Deleteand they dont require "subsidies and incentives"? ok again
It is widely recognized that if it wasn't for Air Serbia early growth there wouldn't be a lucrative concession for BEG airport ,so yes - Air Serbia was crucial for investing in BEG infrastructure. Why don't you dare respond to other abusive LCC behaviors listed above?
DeleteRightfully so.
ReplyDeleteBravo Montenegro
ReplyDelete