Croatia Airlines has selected the Boston Consulting Group (BCG) to support its post-Covid-19 strategy, which will include competing against low cost giant Ryanair on its home turf in Zagreb. BCG will develop plans for how the carrier can tap into rapidly unfolding summer opportunities, albeit in an agile manner in light of the continued uncertainty. The strategy also focuses on preparing Croatia Airlines for the “new normal”. “BCG will help us redefine new market opportunities for connecting European destinations with the region of Southeast Europe, maximise future revenue potential and increase aircraft productivity. It will help us define opportunities for further rationalisation and improvement of business processes”, Croatia Airlines said.
Boston Consulting Group is an American management consulting firm and the world’s second largest by revenue. “We serve seven of the ten largest network carriers and six of the top twenty low cost carriers, in addition to airports, original equipment manufacturers, cargo carriers, and other key players in the aviation ecosystem. Our airline consulting teams combine expertise in all aspects of the airline industry, including strategy, network planning, airline operations, pricing and revenue management, sales and distribution, personalisation and airline loyalty, MRO, people and organisation, digital and travel technologies, and sustainability. By working in cross-functional teams, we view each airline holistically to ensure that every move delivers cascading benefits for the business overall”, BCG said.
The company noted its work has achieved “groundbreaking impact”. “One airline client’s transformation has been described as “the largest corporate turnaround in the country’s history”. Another client became the most punctual airline in the world. And another achieved a three-point improvement in on-time departures”, the consultancy firm said. Croatia Airlines is facing increased competition, with Ryanair to commence operations to Zagreb next week and base its first of two aircraft in the city by the end of August. Furthermore, the carrier is awaiting a ruling by the European Union’s General Court on a Ryanair complaint over state aid provided to the airline by the Croatian government in order to cover losses generated by the Covid-19 pandemic last year. The court has ruled in Ryanair’s favour last week in similar cases brought against the European Commission for aid granted to KLM and TAP on the grounds that regulators failed to justify the cash injections.
Am I reading that after 30 years they have realized that being a Lufthansa feeder doesen't work and that it is time to try something new?
ReplyDeleteWell they don't say that anywhere. Maybe BCG concludes that feeding LH hubs is the best way forward and the only way to make money. We will just have to wait and see.
DeleteOf course BCG will conclude feeding LH is the best way. They are instructed to do so. It's clearly written in the article. And just one small correction of what you say - it is the only way to lose money, not to make it, because that's what they do for last 30 years - losing public money, not making
Delete@pozdrav
DeleteYet you want OU to begin long-haul operations with wide-body aircraft. If we talk about losing money, now THAT is a very effective way for OU to lose as much money as possible.
OU will pay consultants to conclude there is nothing to be done about it....just my 2c
DeleteThat will help...
ReplyDeleteDoesn't hurt to try.
DeleteIt only costs money.
DeleteOnly.
Something OU should have tried to do 10 years ago or more was to try and position itself as a transfer airline from the region as they say they want to do now. But it's too late now.
ReplyDelete+1
DeleteThis firm is huge with very good references.
ReplyDeleteApparently they have consulted KLM
DeleteYes, KLM is one of their clients
Deletehttps://www.bcg.com/industries/travel-tourism/airline-industry/optimizing-digitizing-airline-operations
Other known clients are Virgin Atlantic and GOL (Brazil).
DeleteAlthough should be said, each in a different capacity.
DeleteThey say they might launch new routes. Any idea which it could be?
ReplyDeleteWhatever it is let's hope it's not seasonal. In the last 5 years not a single route was year round.
DeleteWasn't Mostar?
DeleteThat worked out well
DeleteThere were many opportunities but one by one other airlines are taking over. A major missed opportunity for them was Kiev.
DeleteBased on this, one would expect more regional routes
Delete“BCG will help us redefine new market opportunities for connecting European destinations with the region of Southeast Europe"
There are opportunities like Pristina, Tirana, Podgorica, Sofia...
DeleteRyanair is starting Zagreb - Podgorica in September.
DeleteYes, but what good does that do for transfer passengers?
DeleteI wonder how much this contract is worth.
ReplyDeleteI doubt we will ever find out but I doubt it's cheap.
DeleteWe will probably be able to see in their financial report eventually.
DeleteI never understood why airlines need someone from the outside to tell them how to do their job. OU certainly isn't the first or last but just in general isn't it an admission that you don't know what you're doing?
ReplyDeleteThat is normal thing in business, corporations from any field are taking consultancy for various things.
DeleteI think this is a positive step. Let's hope for a good outcome.
ReplyDeleteSurprised they didn't choose Lufthansa consulting.
ReplyDeleteHaha.
DeleteLike Montenegro. ;-)
Waste of money
ReplyDelete+1000
DeleteIt's no brainer that OU is done.
DeleteWhat can Croatia Airlines realistically do to turn things around?
ReplyDeleteMe thinks it's too late for any turn around.
DeleteAt this point not much. Too little too late. The moment FR entered the market the race was over. Why? Because FR has low operating costs. Compare those on ZAG-MMX/CPH and you will see what I'm talking about
DeleteOU will have to completely transform, but like other say, it is way too late. Should have been thinking about it for the last 10 years.
DeleteOU has to leave Star Alliance and join OneWorld. Star Alliance comprises way too many European airlines and there will never be a role for OU other than feeding LH. OneWorld has a huge void in Central/Eastern Europe and OU can fill that void. That's the only way to get growth perspective.
DeleteStep in the right direction.
ReplyDeleteSomehow this reaks of desperation.
ReplyDelete“One airline client’s transformation has been described as “the largest corporate turnaround in the country’s history”
ReplyDeleteWho?
That's just corporate bs.
DeleteWell they can't tell you names of the clients they've had because of confidently agreements.
DeleteOU didn't seem to mind not keeping it a secret.
DeleteThis is how the director gets the cash. An external service is paid for and half is returned to a private account.
ReplyDelete+1
DeleteI am no friend of these consultant companies. They cost u a fortune and all they tell u, are things u should know on yr own as u lead the company, even worse, they dont know yr biz, the way u know it. Mostly they ll tell u get rid of staff and the the main reason to hire such companies is to delegate out responsabilities for ungood decisions, so u always can tell yr staff, they adviced us to fire you, it was not our decision. It is one of these neoliberal stupidities we see today and where do they come from? America of course. But America is def no good role model anymore in terms of Business practises as their neoliberal system feeds like in communism mainly the top 1%, where the rest loses slowly but surely.
The way OU has been loosing money, not sure they know their business really well, otherwise they'd be able to turn it around fairly quickly themselves.
DeleteBravo Hrvatska!
ReplyDeleteHahahahahahaha
DeleteAgree with the above, consultants are great to tell you things you should already know or to take the blame on making hard decisions. But the question is why with a company that is so generic? I'm sure there are more knowledgeable consulting companies in the airline industry, Amadeus, Sabre, IATA even has, that really speaks the same language as you and for sure... cheaper!
ReplyDeleteKLM or large airlines can maybe afford BCG, but OU...
The problem here is never in what they advise you to do - the problem is always in the implementation/execution .... that's where it always fall short because mgt / Govt's never have the balls or will to implement politically unpalatable/difficult recommendations.
ReplyDeleteSo in the end, nothing ever changes as they only go for the easy things that need doing, but seldom do they ever do the real game changing things
This is good news. They obviously do not have experts who can turn things around, so outsourcing professionals to do the math is a positive step. I hope it helps them stay afloat.
ReplyDelete+1
DeleteThis is scam which will change nothing except adding money to OU "management" accounts
DeleteThose consultancy firms are the biggest BS. They are just corporate elite club.
ReplyDeleteWhy pay BCG when they can just visit this blog and find solution in the comments? I believe 'Pozdrav iz Rijeke' can sum up in couple of bullet points what they have to do , and free of charge :)
ReplyDeleteIf they follow Pozdrav's advices they will go bust in a week instead of in a year.
DeleteEveryone is entitled to his or her own opinion. You are absolutely free to advocate loss making model OU operates and reject need for real, serious and big changes, which this fraud is not. Whenever I wrote something I backed it up with names and numbers. Everything you said was I was wrong. No facts, no names, no numbers. You even answered me once I asked the number, you don't have them. I will let people here judge who is right and who is wrong and will not discuss it further today. Cheers!
Delete@pozdrav
DeleteAnd when we explain that your ideas are loss-making too, you won't even listen.
He either loves to play dumb or has a terrible short term memory. Everyone who have tried arguing with him are hit with ''uhljeb na aparatima'' or get no response at all. There's no point. People here have already seen it all, no need to judge.
DeleteOne and only person hiding behind Anonymous to make impression of several other people arguing with me, provoking all the time, giving no numbers and facts why should long-haul be unprofitable, never accepting fact I propose long-haul ONLY and ONLY as a part of thorough and complete change of modus operandi within OU which would include double bigger network which would enable feed, NEVER commenting millions of tourists from distant markets in Croatia, and keeping advocating criminal and corruption in OU. Of course long-haul would be unprofitable in OU, the same as feeder short haul is. Not because there is no market but because public money is not spent on growth and development but on criminal acts as this "consulting" BS is. Several people here support me, with names and nicks, and one anonymous uhljeb defending OU management repeating as a parrot mantra invented by LH that long-haul for smaller companies is unprofitable, in order to move the focus of real problem I talk about - criminal and corruption in OU
DeleteIako bih kritizirao OU više puta zbog postojeceg modela, vi biste me prozvali uhljebom jer smatram da su vaši planovi za long haul sa A350, svakodnevnim letovima prema Bangkoku čiste bajke. Al eto gospodin "MALEV je propao zbog ne postojecih letova prema Indiji" je očito upravu i svatko tko mu se suprostavi sa argumentima je uhljeb.
DeleteAs longhaul for small airlines is unprofitable I don't get what the problem is Rijeke?
DeleteNeos in Italy starting North America
DeleteGulivair in Bulgaria starting North America
Sata Azores operating to North America
Air Serbia operating to North America
Icelandair operating to North America
Blue Panorama operating to the Carribean
Smartlynx acquiring 4 A330
Long haul unprofitable for smaller airlines
Yeah, right
Propaganda by LH brainwashed uhljebs
Neos, SATA, Air Serbia and Blue Panorama operate from much bigger markets.
DeleteIcelandair flights to North America are not long-haul and are flown with narrow-bodies.
SmartLynx is a charter airline and therefore not dependent on home market capacity.
Gulivair is a start-up starting from scratch, making sure they have the financial capital before they do something AND they operate from a bigger market.
All those airlines are not comparable. OU is an established short-haul narrow-body airline operating with minimal margins, for which it is a huge investment to switch to long-haul wide-body operations that they cannot afford. Plus the whole fact that the Croation market is just not ready to sustain based wide-body aircraft profitably.
Bigger country doesn't mean bigger market.
DeleteSATA is one of 4 portuguese companies operating long haul
Neos and Blue Panorama are from country with 3 airlines operating long haul, one of those pretty big
Icelandair operates B767, including Florida and US West coast, which IS long haul.
Smartlynx is not charter airline, it's primarily ACMI airline
And please, stop saying Bulgaria and Serbia can sustain long haul and Croatia cannot
On standby here just to spit on me because I dare telling 2+2=4, says everything, especially stressing "established operator', Graz is your ultimate ideal
Some of the airlines you listed: Blue Panorama, Gullivair are only operating long-hauls on behalf of tour agencies to destinations like Maldives or Dominican Republic. Neos has been doing the same until recently that they're launching JFK-MXP. Yes, definitely not a bigger market than ZAG lol. JU launched JFK 5 years ago, and to this day it's their only long haul route and barely profitable. But here we have Rijeke telling us how the likes of ZAG-DEL and BKK would be OU's path to success. The airlines you choose as an example truly show how you have no idea what you're talking about and that you're living in fairytales.
DeleteIf Icelandair can make KEF-Anchorage work then I don't understand how OU can't make ZAG-JFK or ORD work.
DeleteOf course they can. That's why su uhljebi na aparatima LOL :) :) :) :) :)
DeleteAnd just btw : OU couldn't have launced JFK 5 years ago? OU couldn't operate charters on behalf of tour operators? Yes, they could. Succesfully. But they didn't because of uhljebs, of incompetence, of corruption, of nepotism, of pure crime, of party elployment, of excessive work force and low productivity, of lack of vision, lack of thinking out of the box, lack of strategy, of money poured into private pockets instead into growth and development, because of fixed tenders, of double lease prices, consultants which consult only how to steal more public money, and so on and so forth. I am so sorry you are not capable to see that are the problems which should be solved in OU result of which could probably be introduction of long haul, for which there is market and there is capacity. You just admited it. And why you keep insisting on "established narrow body operater" for pathetic servant feeder, I leave others to conclude
DeleteWhen you begin to understand that we (well at least me personally) are not here to defend OU but simply are opposed to your ideas, maybe we can have a normal discussion. Until then you're just continuing to show your delusion in each comment. No one ever denied that JFK-ZAG may work. It's just your double daily A350 ZAG-DEL and BKK routes, successful LCC division and how long haul flights would be OU's saviour. Heck like you can't be successful without long haul. Aegean must be run by uhljebs as well. And comparing Iceland-US market with ZAG, seriously? Let's just forget about the travel boom between Iceland and US in the last years, about the much shorter flying times and about KEF having the most strategic location for a trans atlantic hub. This is like me saying why can't OU fly to JNB from ZAG, if EK can from DXB? Wake up, you're in 2021 Croatia not in 1970s Yugoslavia.
DeleteYou are liar. You lied I suggested daily Kansas City. You lied I suggested double daily Delhi on 350. You lied about both on several occasions. You are manipulative. You choose particular segments of my posts, you then comment, without commenting basic ideas of the posts. You constantly refuse to speak about real reasons, crime and corruption which brought OU in position to be feeder, to be unprofitable feeder and to be insignificant unprofitable feeder. So you refuse to discuss the most important reasons, you manipulate and you lie and then you conclude it is my fault we cannot have normal discussion. Wow, one really need to have djon obraz for such behaviour. Interesting thing, I have normal discussions with all people here on blog, and in life generally. I wish you good night!
DeleteIt will be interesting to see what they've got planned.
ReplyDeleteState aid
DeleteGood I support this initiative.
ReplyDeleteThey now hired some external advisors to give them millions for an outcome that most likely won't be worth it.
ReplyDeleteLet's wait and see.
DeleteThey should explore new market opportunities i.e new routes.
ReplyDeleteSuch as?
DeleteGood luck in the post covid world OU.
ReplyDeleteIn the end, nothing will change.
ReplyDeleteBut why the need for BCG?
ReplyDeleteHave you seen OU's results and performance?
DeleteSo hopefully some sustainable plan can be made.
DeleteHope for the best.
ReplyDeleteIf nothing let's hope this wakes up the management and they really seize some opportunities as they have left many slip.
ReplyDeleteWith Ryanair entering the scene, it is too little too late.
DeleteThis could finally mean and end to the LH feeder model!
ReplyDeleteIf they stick to Star Alliance, there is no alternative to the LH-feeder model. OU has to switch to OneWorld if they want any perspective for growth.
DeleteSo, what next for OU?
ReplyDeletewas there a tender for the external partner?
ReplyDeleteNo
DeleteIt seems they have found the solution to pay someone externally. We already had two privatization advisors paid for unsuccessful privatization attempts. Since it would be hard to justify another privatization advisor, I guess this will do.
ReplyDeleteThis may turn out to be a very good decision for Croatia Airlines. BCG is a big and successful company and they have advised many large airlines. Hopefully OU can turn things around under their guidance.
ReplyDeleteThey have been sleeping this entire time so maybe these guys can give them a push and some sound advice and we finally see some changes at OU.
DeleteTheir clock is ticking
ReplyDeleteUnfortunately, in the middle of the pandemic, I'm not sure OU has the strength to compete against Ryanair in any way. Some very challenging times coming.
ReplyDeleteBiggest challenge for Croatia Airlines certainly in the last 20 years. Let's see what happens.
DeleteI'm really concerned about their future. Hopefully the consultant can do something about it.
ReplyDeleteI only wish they found an external consultant to advise them years ago. It might be late now.
ReplyDeleteFinally something smart from Croatia Airlines.
ReplyDeleteI don't see anything changing as a result of this partnership.
DeleteI don't know how many of you read carefully the article and have you spotted the sentence : "BCG will help us redefine new market opportunities for connecting European destinations with region of South East Europe..." This sentence clearly says that NOTHING will be changed. They are basically hiring BCG to tell them what to do within the system they already operate, not to suggest the new one. So, yes, as someone already said before, this is corporate BS, and scam as well, where enormous amounts of money paid for "consulting" will be split between BCG and "management" which was supposed to have capacities to lead the company, not to steal from it
ReplyDeleteAgree, unfortunately :(
DeleteIt's last moment for management to take money before collapse, that's why they hired BCG.
DeleteIf the Govt has the money for big ticket consultants like BCG, then surely they should think about spending 10% of that fee on some top flight management to come in and implement the recommendations that BCG will eventually propose - because the current management team is incapable of making any decisions whatsoever.
ReplyDeleteBoston Consulting Group is American only in name. All "experts" are local, from Slovenia, Croatia and Hungary. I will remain highly sceptical about the consultants. My guess is that this charade is made so that more money is sucked out of OU through new channels. Please note it is only a guess, I don't want to slander anyone.
ReplyDeleteThis will be of no use to Croatia Airlines or their passengers.
BR, E.
I can only imagine how they got the job in the first place...
DeleteThe company I work for used a very famous international consulting firm for M&A. My opinion about them, IYI intellectual yet idiot. They are bright academically, but they know f**k all how the real world is. The strategy and plan looks good on paper but won't work.
ReplyDeleteWhy didn't OU opt for any Iberian flights? Spain is opening for everyone this summer as long as they are vaccinated. I think FR will be quicker as they are very quietly and sneakingly launching flights in June and especially reopening new stuff in July.
ReplyDeleteTime to resume LIS and connect OPO, MAD, BCN, PMI, ALC, VLC and TFS, PMI, ACE in winter!!
In reading the article, OU has hired consultants to help them find "new market opportunities for connecting European destinations with the region of Southeast Europe, maximise future revenue potential and increase aircraft productivity".
ReplyDeleteThey have gone to the wrong consultants if this is what they want. Seabury are the best consultants for network and fleet reviews, not BCG - who are better for process / organisational reviews.
Looks like an opportunity lost - sadly
Why are you surprised? They are Lost Opportunities World Champion
DeleteOU is in need of cash. That's the only part of the analysis I am interested in. Where will BCS propose for OU to find the money to redefine their whole business model.
ReplyDeleteAgreed. Without loads of cash there can be no implementation of any changes.
DeleteBenevolent shareholders .....
DeleteBut will EU let the benevolent shareholders give OU more money?
DeleteAnd at what point will there be political will to let OU go? As it is becoming much too expensive to run this airline for the benefits OU brings to Croatia. At what point will the citizens be ok will leting OU go bye bye?
Never ....
DeleteOU is such a key symbol of Croatian sovereignty and nationhood. No Govt will be prepared to let it go down the toilet on their watch.
Mind you, the same applies to JU.
Both govt's are in this for the long haul, no matter what the cost