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Codeshare Request from Serbia's New Airline Met with US, EU Pushback

Airlines for America (A4A), the oldest and largest airline trade association in the United States, has submitted a response to the US Department of Transportation regarding the joint application of Etihad Airways and Air Serbia for codeshare authority, calling the request “bizarre”. 

Delta Airlines also responded with a similarly critical assessment, arguing that the application was “irrational” and “not in the public interest”. The letters from both A4A and Delta cite concerns about fair competition of privately held commercial air carriers with state-supported carriers.

Official promotional photo of Etihad-JAT (Air Serbia) partnership; public domain image.

Official promotional photo of Etihad-JAT (Air Serbia) partnership; public domain image.

Earlier in 2013, Etihad Airways, the state-supported national airline from the United Arab Emirates, purchased 49 percent of Serbian national air carrier JAT, also a state-funded company. The two partner companies then decided to shut down JAT and establish a new company in its place, Air Serbia, that would function with JAT's restructured resources and flight routes.

On September 19, 2013, Air Serbia applied for authority to place its existing code on now partner Eithad’s flights from Abu Dhabi to Chicago O’Hare, New York’s John F. Kennedy and Washington Dulles airports, as well as several European airports. As Novi Magazin reports [sr], Turkey was the first country to react, while some EU countries also lodged complaints:

Vazduhoplovne vlasti Turske oduzele su slot (aerodromsko mesto) i premestile su novu srpsku aviokompaniju na drugi istambulski međunarodni aerodrom Sabiha Gokčen koji je na azijskoj strani ovog grada.[...]

Neke (za sada neimenovane) evropske kompanije, kako pišu beogradski mediji, traže od regulatora u EU da ponište sve slotove koje je Jat imao na evropskim aerodromima i tvrde da Er Srbija ne može da ih nasledi, naročito zbog odredbi Sporazuma o otvorenom nebu (open sky) koje se odnose na suvlasništvo van teritorije EU.

Turkish aviation authorities have revoked slots (airport positions) and have transferred the new Serbian airline to Istanbul's other international Sabiha Gökçen Airport on the Asian side of the city.[...]

Some (for now unnamed) European carriers, according to Belgrade media, have asked EU regulators to cancel all slots that JAT had in European airports and claim that Air Serbia cannot inherit them, in particular due to regulations in the [EU-US] Open Skies Agreement regarding joint ownership [of airline companies] outside the EU.

In its 13-page response to the US Department of Transportation [PDF], A4A brings to light various issues regarding planned flights to the United States to be operated by Etihad-Air Serbia, but focuses particularly on the lack of business sense and commercial viability of the planned flights:

We oppose the Application. Because the service proposal can fairly be described as bizarre, at best, and JAT reportedly is receiving substantial state aid, the public interest does not support granting it. Furthermore, the Application and information in the public domain indicate that JAT, rebranded as Air Serbia, is (or soon will be) under the effective control of a non-Serbian citizen. For these reasons, the Application should be denied.

The Consolidated Answer of Delta Air Lines, Inc. [PDF] has an almost identical stance and goes on to explain:

The proposed codeshare routes are irrational and do not serve the public interest

While Delta believes that codeshare arrangements are typically in the public interest where they increase opportunities for travel and expand air service networks for the benefit of consumers, the codeshare services proposed by JAT and Etihad are not in the public interest because they have no market or consumer service based rationale and would only create confusion and complexity for consumers.

JAT and Etihad are proposing codeshare services on routings from Belgrade (BEL) to New York (JFK), Washington (IAD), and Chicago (ORD) via Abu Dhabi (AUH). These routes are so extraordinarily circuitous (nearly 5,000 miles of additional circuity in each direction) that one must question why any consumer would regard their addition to the marketplace to constitute a rational service option or to offer any consumer benefit.

Delta's main concern is the distortion of the market and confusion of travelers, as the two state-funded companies Etihad and Air Serbia seem to be planning on offering rerouted flights from Belgrade via Abu Dhabi to US cities, approximately an additional 5,000 miles (8,000 kilometers), for the same or lower prices as other air carriers who fly directly. The state subsidies provided to the new Air Serbia company by both the UAE and Serbian governments are inconsistent with international aviation policy, Delta and A4A claim, as well as tax advantages, fuel and airport fee subsidies, and government investment in airport infrastructure that Etihad and Air Serbia benefit from.

Although both documents have been made public, Serbian media have shown little to no mention of this case nor any discussion about the possible repercussions for the new national airline should the former Serbian airline JAT's codesharing not be granted to Air Serbia for US and EU-bound flights, thus there is very little discussion about the matter on social networks or public forums. No media outlet in Serbia seems to have even made these documents available to the public, while Kurir simply quoted a tweet by Vladimir Todorić, a politician and member of the Democratic Party (DS), in a short article titled “HATE: Delta More Important than Serbia to the Democrats!” [sr].

Todorić complained on Twitter in recent days:

The Association of American Airlines is against Air Serbia/Etihad. [It has been] on the web since October 4, no Serbian media has published it http://t.co/xgjXx11SjC

— Vladimir Todoric (@VladimirTodoric) October 18, 2013

When asked by another Twitter user why the A4A was against Air Serbia-Etihad, Todorić responded:

@MidzaBg @Bezdanj Who normally flies to NY through Dubai, i.e. 5000 miles more? If the price of the ticket is the same as for a direct flight then that [ticket] is subsidized

— Vladimir Todoric (@VladimirTodoric) October 18, 2013

An Air Serbia aircraft had its first test flight [sr] on October 23 under the new brand and colors at 3 p.m. over Belgrade, but it remains to be seen just how far Air Serbia's other planes will be flying.

This post was updated on October 24, 2013 at 1630 GMT. An earlier version of this story incorrectly stated that Air Serbia flights would be routed from Belgrade through Dubai to US cities. Air Serbia plans to reroute flights from Belgrade through Abu Dhabi to US cities. Thanks to our reader Vladimir Gojkovic for spotting the error.

  • Vladimir Gojkovic

    “as the two state-funded companies Etihad and Air Serbia seem to be planning on offering rerouted flights from Belgrade via Dubai to US cities, approximately an additional 5,000 miles (8,000 kilometers), for the same or lower prices as other air carriers who fly directly.”

    Firstly, it’s not via Dubai, it’s via Abu Dhabi. Secondly, there are no direct flights between Belgrade and the US, and it shouldn’t be up to the US aviation authorities to decide which hubs are OK for Belgrade passengers to route through, and which are not.

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