Demand for lower prices, more competition and easier geographical access is placing increased pressure on the Albanian government to review a 20-year concession agreement with an international consortium that forces Albania to have Tirana International Airport as the country’s sole international gateway.
TIRANA, April 8 – The floors shine, the terminal is roomy and the staff is friendly. Unlike a decade ago, arriving at Tirana’s international airport today is a modern, slick and well-run experience.
After upgrading its facilities to European standards from 2005 to 2008, Mother Teresa International Airport, which is managed under concession by an international consortium, has seen its passenger numbers more than double to a high number of 1.8 million per year in 2011. The increase has been attributed to better management as well as growth in the country’s economy and the Albanians’ new-found ability to travel without visas to much of the European Union.
TIA is largely seen as a success story from the business standpoint, but it has an ace up its sleeve. The airport has a monopoly on international flights from and to Albania. A clause in the concession contract between the Albanian government and international consortium, achieved following an international tender in 2003, stipulates that TIA must be Albania’s sole international airport for 20 years.
Critics say the clause puts Albania at a disadvantage compared to neighboring countries and allows the airport to charge higher fees due to a lack of competition. They also argue that parts of Albania that are a long drive away from Tirana need easier geographical access for their residents and for attracting foreign tourists.
The Albanian government now says it wants to review the 20-year concession agreement in order to build a second international airport.
“The aviation sector serves to explore the development potentials of Albania, of tourism in particular. Therefore, it is necessary to construct an airport infrastructure in southern Albania, as the region with the biggest tourism potential,” says Transport Minister Edmond Haxhinasto.
The Transport Ministry said this week they would renew efforts to build a new international airport in southwestern Albania, somewhere in the Vlora or Saranda regions.
Authorities envision a time in the near future when Albania can copy the full-package tourist deals applied by Greece and Croatia. These all-inclusive packages bring planeloads of sun-starved northern Europeans to the Mediterranean shores. “But they don’t happen if the airport is an eight-hour bus ride away from Saranda or when the hotel infrastructure hasn’t completely caught on,” a tour operator said in a recent television interview.
Haxhinasto, who was speaking at conference on the Albanian civil aviation held in Tirana, said quality service in air transport was among the priorities of developing a better tourism infrastructure in Albania.
“It is also imperative that the services being offered are not only safe and qualitative in serving travelers, but also be at an affordable cost,” Haxhinasto said.
He added that all neighboring countries had at least two international airports, including tiny Montenegro, and that fees being charged by TIA are not competitive.
“Seeing that airport fees here appear to be the highest in the region Šcompared to Corfu, Thessaloniki, Ohrid, Skopje, Dubrovnik, Podgorica, Tivat and Prishtina is very discouraging. We have higher fees than all regional airports … so this is a great challenge and I am confident that with proper understanding, we will move in the right direction to address this issue,” Haxhinasto said.
High fees have some driving elsewhere for better deals
But there more than a second international airport in Albania that threatens TIA’s dominance. With improved road infrastructure Albanians are now voting with their feet looking for cheaper fares.
More and more Albanians are choosing the Prishtina international airport in neighboring Kosovo for European destinations over considerably lower ticket prices.
“Some tickets for flights from the Mother Teresa Airport in Tirana are 50 percent to 100 percent more expensive than flights from the Prishtina,” wrote one Kosovo media outlet that has covered the recent trend.
Experts say much of the saving come for specific destinations served by low-cost carriers that do not fly out of Tirana and by lower landing fees that airlines ultimately add the tickets.
Data by Kosovo police show around 1,400 Albanian citizens entered Kosovo to fly from the Prishtina airport on January 1 and 2 alone. Tickets from Prishtina airport to Verona, Basel, Zurich, Berlin and Munich vary from Euro 59 to Euro 91, according to Kosovo media.
While several new airlines have entered Albania after the bankruptcy of Belle Air in 2013, ticket prices to European destinations remain high for a country such as Albania where GDP per capita is among the lowest in the region, aviation experts say.
The bankruptcy of Belle Air, which had a market share of around 50 percent and was considered a monopoly, temporarily lowered ticket prices especially because of the entrance of new carriers targeting to gain market shares. However, tickets to European destinations, mainly Italy, where most Albanians travel, are back to their previous levels ranging from 100 to 150 Euros for a single ticket.
When compared to regional airports in Macedonia, Kosovo, and even Slovenia, aircraft charges at the Tirana International Airport are considerably higher. Charges on landing and take-off, base ground handling, cargo handling and parking and lighting stand considerably higher, data made public by the airports shows.
Consortium likely to hold its ground
The previous government tried unsuccessfully to convince the international consortium that runs TIA to give up its exclusive rights to international flights at TIA. Those participating in the negotiations at the time said that the consortium was even offered to run the second international airport, but an agreement was not reached. And government negotiators back in 2004 have said that without the 20-year exclusive clause in the concession the consortium would have not signed the deal to take over the airport, which at the time was under state management and under dire need for improvements.
The government cannot unilaterally change the contract without paying massive damages, legal experts say.
TIA is a consortium owned by commercial partners and development investors. AviAlliance GmbH, one of the leading private airport investors in the world, is the lead commercial investor. Others include DEG Deutsche Investitions-und Entwicklungsgesellschaft, a member of the KfW development banking group and the Albanian-American Enterprise Fund.
While the airport had been expanding for years, the first time during its nine years of concession, the Tirana International Airport registered a shrink in passenger numbers affected by global crisis impacts. Passenger numbers at TIA fell by 8.4 percent in 2012. This is the first annual decline in passenger traffic recorded at the airport as the euro zone crisis hit air travel and businesses, airport officials said.
Government looks to improve access, services
The government says is also looking for a longer-term aviation strategy. A twinning project between the Albanian, French and Romanian civil aviation authorities was funded by the European Union with 800,000 euro, seeking to assist the modernization of Albania’s air transport model toward a liberalized, efficient and safe civil aviation sector, officials say.
Through the close and daily cooperation of the French and Romanian counterparts as well as trainings, the Albanian Civil Aviation Authority will have the opportunity to learn and adopt best practices from the EU, develop the skills and know-how of its staff, and improve its overall institutional management.
The twinning will also assist the Albanian authorities to develop the country’s civil aviation legislation in line with EU standards in aviation transport.
Albania’s proximity to this large market entails immense potential for investments, trade, tourism and jobs. Through the EU integration process, which entails the adoption of EU standards on air transport as well, Albania will be able to ensure more, shorter and cheaper routes, less delays and more safety for passengers and businesses alike.
The twinning will be implemented over a period of 24 months by the French General Directorate of Civil Aviation and the Romanian Centre for Excellence in Civil Aviation.
