Montenegrin Government Looks Set To Subsidise Its Flag Carrier

Montenegro Airlines is set to receive an investment of €155m ($172m) from the Montenegrin government over the next six years. The legislation was proposed yesterday, partially because Montenegro Airlines needs to modernize its fleet very soon.

A Montenegro Airlines Embraer 195
Montenegro Airlines will be getting a cash injection. Photo: David via Flickr

Montenegro Airlines

Simple Flying previously looked at Montenegro Airlines in an analysis of European flag carriers.

The analysis found that Montenegro is a booming tourist market, with the number of tourist arrivals up 50% this year. However, Montenegro Airlines is not keeping up with this growth.

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In fact, the European Travel Commission notes that it is “connectivity” that is aiding the incredible boom in tourism in Montenegro. Many new flights have been launched this year from Montenegro’s two airports, Podgorica and Tivat.

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Lufthansa launched scheduled services from both Frankfurt and Munich to Tivat. Also to Tivat, Norwegian has launched flights from Helsinki and Air Serbia has also done so from Niš. In Podgorica, Ryanair launched flights from Stuttgart, Bologna and Barcelona.

Meanwhile, Montenegro Airlines launched just one new route this summer, from Tivat to Hannover. At the same time, it also cut one route from Copenhagen to Tivat, which means it had no scheduled changes in frequencies this year at all.

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The lack of expansion is due to financial constraints, as the carrier is in debt. This is why the Montenegrin government wants to offer further funding.

Montenegro Airlines only launched two routes this year. Photo: calflier001 via Wikimedia

The subsidy

As reported by Balkan Insight, the proposed legislation is for an injection of €155m ($172m) over the next six years. The legislation was put to the parliament, classed as “urgent”.

The government is attempting to justify this by claiming that the bankruptcy of Montenegro Airlines would have a negative impact on the economy. It claimed that Montenegro Airlines will use the money to repay its debts and begin new investments.

What will the money be used for?

Montenegro Airlines is one of the few remaining carriers to use a Fokker aircraft for scheduled passenger services.

It has two and their average age is 29 years, according to airfleets.net. This ranks Montenegro Airlines as the 28th oldest operator of this aircraft, out of 29.

The other aircraft type used by Montenegro Airlines is the Embraer 195. Both the E195 and the F100 are smaller aircraft, reflecting the regional flight demand that Montenegro Airlines caters for.

Montenegro Airlines
Montenegro Airlines has some of the oldest Fokkers in the skies. Photo: aeroprints.com via Wikimedia

The Embraer aircraft used by Montenegro Airlines are much younger, averaging just 10 years. But if the airline is going to replace its two Fokkers, and it only has a fleet of five aircraft, it would only make sense that its fleet is unified.

This makes it most likely that the Montenegrin airline will use the money it has been allocated by the government on a purchase of two, or perhaps three, further E195s. However, the airline also has another option.

It could sell the three Embraers to a new buyer, sell the two F100s to be dismantled for parts, and replace the whole fleet by five new aircraft.

A Sukhoi order?

Last week it emerged that Montenegro’s neighbor Serbia is also looking to update its fleet. It is looking at purchasing new SSJ100 aircraft and turning Belgrade Nikola Tesla Airport into a regional maintenance facility for Sukhoi.

If this materializes, Montenegro Airlines would benefit too. Belgrade Nikola Tesla Airport is only 45 minutes’ flight time away from Podgorica Airport, where Montenegro is based.

What aircraft do you think Montenegro Airlines should choose to renew its fleet? Let us know in the comments below.

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TonytTDK

But is the Suhkoi actually any good…?
& can they get the necessary spares for it.?
If the answer to both is YES, then it should be an easy decision.
If it isn’t YES to both, they’d probably be better off with pre-owned A318/9’s
or the bigger Embarear’s.?

Gerry S

Not a wealthy nation, Montenegro should stick with Embraer. Look at the deal Congo got. If the Russians now have their stuff together, the Sukoi Superjets should be ideal. Just purchase a lot of spare parts. In addition, their neighbour next door, as stated, are going Sukoi. Both should combine their purchase orders and get a better deal.