Albania launches flag carrier in bid to offer cheaper ticket prices

Tirana Times
By Tirana Times September 17, 2018 15:00

Albania launches flag carrier in bid to offer cheaper ticket prices

Story Highlights

  • The launch of the Albanian flag carrier also comes at a time when Albania is planning to open up two new airports in a bid to break the de facto monopoly that the country's sole airport managed by a private concessionaire has on international flights

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TIRANA, Sept. 17 – Albania has launched its Air Albania national airline, a joint venture with Turkey’s flag carrier Turkish Airlines, in a bid to offer lower ticket prices as part of a bigger project to open up new airports that would also serve the emerging tourism industry in the country.

A test flight carrying high school students of excellence inaugurated the national carrier last weekend with a Tirana-Istanbul flight that will apparently be followed by regular flights linking Albania to Turkey and other major regional and European destinations, including a projected direct flight to New York.

Speaking at a launch ceremony, Prime Minister Edi Rama said the establishment of Air Albania wouldn’t have been possible “without the initiative and generous support of Turkey’s President Recep Tayyip Erdogan,” with whom he has met several times since the ambitious project was first unveiled in mid-2017.

The flag carrier and the opening of new airports will offer better service and cheaper prices, Prime Minister Rama says.

“Air Albania is an instrument to get rid of the past [troubled] legacy, and will offer flights at decent service and very competitive prices. Likewise, the construction of new airports has the same effect,” said Rama.

Albania is one of the few European destinations to have a single airport, whose concessionaire charges on airlines using it are often blamed for the high local ticket prices that often force Albanians to choose neighboring airports to reach their destinations.

The launch of a new flag carrier comes seven years after Albania’s former national carrier, Albanian Airlines, where the Albanian government also held a minority stake, ceased its two decades of operations after having its licence revoked.

The launch also comes at a time when air transport at the country’s sole international airport is overwhelmingly controlled by foreign companies and Belle Air, a former private Albanian-owned company that controlled 50 percent of the market went bankrupt in 2013 after almost a decade of operations.

Air Albania is a newly established company where the Albanian government owns a minority 10 percent stake through its state-run Albcontrol enterprise which manages Albania’s airspace and air traffic. A 49 percent stake is held by Turkish Airlines, Turkey’s flag carrier and one of the world’s leading carriers where the Turkish government controls almost half of its shares.

The remaining 41 percent stake is held by Albanian-owned MDN Investment, a company based in the southern Albanian city of Vlora, where Albania’s new airport is projected to be built.

Some opposition Democratic MPs have claimed Air Albania is a show of the Prime Minister and only an extra flight by Turkish Airlines, already offering flights to and from Tirana.

However, Albania’s Civil Aviation Authority says the partnership with Turkish Airlines will guarantee the Albanian flag carrier access to Turkish Technic, the maintenance, repair and overhaul center of Turkish Airlines, serving 300 destinations in over 120 countries. Albanian staff will also get training from the Turkish Airlines Aviation Academy.

“Air Albania will have access to the deals that Turkish Airlines has with the airports it flies, which means favorable commercial packages,” says Krislen Keri, the head of the Civil Aviation Authority.

According to him, similar joint ventures such as Turkey-based SunExpress, a 50/50 partnership between Turkish Airlines and Germany’s Lufthansa, have been already operating successfully for decades.

Established with capital of up to $30 million, Air Albania currently has a single Airbus A319, but plans to order two Airbus A320 aircraft as it gradually launches new destinations that will mainly link Tirana to regional unserved destinations.

 

New airport plans amid price concerns

The launch of the Albanian flag carrier also comes at a time when Albania is planning to open up two new airports in a bid to break the de facto monopoly that the country’s sole airport managed by a private concessionaire has on international flights. If materialized, the project is expected to increase market competition, lead to lower ticket prices and also serve the country’s emerging tourism industry through faster access to southern and northern destinations.

While negotiations with a Turkish consortium to build a new airport in southern city of Vlora are in their final stage, the government is also planning to reactivate Kukes airport, a north-eastern Albania airport that has been abandoned following an unsolicited proposal by a local company.

The new airport projects come at a time when concerns over ticket prices in the country have been growing and high prices are considered a key barrier for the emerging tourism industry.

Last summer, the Albanian government announced a call for a consultant to carry out a review of the concession contract it has with the Tirana International Airport whose high charges on carriers are often blamed for Albania having one of the region’s highest ticket prices.

The probe comes after Albania’s sole international airport has already been operating under a build-own-operate-transfer concession contract for the past 13 years and a Chinese consortium has taken over the airport’s operations from the original German-led concessionaire since mid-2016.

While the airport’s exclusive rights on international flights were lifted in mid-2016 paving the way to the operation of the small Kukes airport in northeast Albania in return for extending its concession term for 2 years until 2027, no new airports have been activated in the past couple of years and TIA continues to have a de facto monopoly.

Albania’s competition watchdog has earlier blamed the monopoly conditions under which the Tirana International Airport concessionaire and the aviation fuel company operate for increasing operating costs for airlines and affecting ticket prices.

The Tirana International Airports is one of the most profitable companies in Albania with profit rates of up to 38 percent. The Chinese-led concessionaire saw its net profit climb to about 2.3 billion lek (€18 million) in 2017, up 25 percent compared to the previous year, according to reports filed with the National Business Center.

Some 18 airline companies operate in Tirana, the overwhelming majority of which foreign-owned, linking Tirana to dozens of foreign destinations through direct flights, mainly Italy.

New low-cost carriers have been linking Tirana to Budapest, Amsterdam and more recently to London in the past year in what looks like a policy change under the new Chinese takeover since mid-2016 amid government plans to build new airports.

The Tirana airport handles more than 2 million passengers a year, being one of the country’s main hubs.

Tirana Times
By Tirana Times September 17, 2018 15:00