Why Regulators Have Blocked Ryanair’s New Service To Niš

Ryanair has accused Serbia’s aviation regulator of “protectionism”. That follows the rejection of the carrier’s application to fly between Frankfurt-Hahn and Niš Constantine the Great airports.

Ryanair jet on ground
Serbian officials throw out Ryanair’s application for Hahn-Niš route. Photo: Ryanair

The Serbian Civil Aviation Directorate rejected Ryanair’s proposal on Wednesday 30th October. Ryanair was, as a result, forced to apologize to customers that had already booked tickets for the route. The LCC blamed what it said was the State’s attempt to block outside competition with Air Serbia, which currently flies the route.

Under EU regulations, certain routes flown by national carriers within the former Eastern Bloc are protected from competition. However, this assurance is usually given only in respect of covetous carriers belonging to other countries within the region.

Writes EX-YU Aviation News, Ryanair’s boss David O’Brien said of the obstruction,

Ryanair regrets the forced cancellation of the Frankfurt Hahn – Niš route due to the Serbian Directorate’s decision to block traffic rights. Ryanair apologises to intending passengers on this route, who will now be subject to the high-fare Air Serbia monopoly.”

We have contacted Ryanair for a comment but have not yet received a reply.

Difference of opinion

According to EU law, some routes within the Union are designated Public Service Obligation routes. PSO routes are those that are deemed not to be financially viable but are of a particular social or economic worth.

Air Serbia jet at airport gate
Ryanair considers Niš to Hahn not to fall within the definition of the PSO. Photo: John Taggart via Flickr

A PSO route is maintained by subsidies from the State from which the route originates. In the case of Ryanair’s Hahn-Niš route, Serbia upholds the route as a PSO, the government having enabled 12 such routes originating from Niš in July of this year.

However, Ryanair sees things differently. It argues that the route is not a PSO. And, even if it was, a block on competition cannot apply to a carrier located outside the Bloc. The statement from Ryanair published by EX-YU continues,

Ryanair’s Niš route, which was approved by the German Civil Aviation Agency, has been blocked by the Serbian Civil Aviation Directorate in favour of Air Serbia’s monopoly. Since the route does not qualify as a PSO [Public Service Obligation] route, nor is it designated as such by the European Commission, it should therefore be open to competition”.

Redirection

As a consequence of the latest closed-door, Ryanair has turned its attention to Serbia’s uneasy bedfellow Bosnia and Herzegovina. The budget airline has announced a new twice-weekly route between Frankfurt Hahn to second-largest city Banja Luka which will commence in February 2020.

Ryanair jet take-off
Ryanair turns its attention to Bosnia and Herzegovina. Photo: Ryanair

Safeguarding or protecting?

Ryanair may be correct in its assessment of Serbian “protectionism”. But is O’Brien’s spleen-venting really called for? The blocking of the latest route application should matter little amid the company’s expansion into Eastern Europe. And clearly it has options on the table in the event of such a block.

Furthermore, Ryanair already has a glut of routes to Niš. And, along with Wizz Air and Swiss International Air Lines, is charged only three Euro per landing under the current Niš contract, which will run until 2021.

On the other hand, the Serbian government has much to lose from its $5 million per year subsidies, especially if an outsider starts to carve the choicest cuts. The “PSO” was devised by the EU in order that countries with limited economic weight could maintain routes that are vital to the growth of a region. Hence the reason it is afforded special protection.

Should Ryanair begrudge the Serbian government’s attempt to safeguard the national interest?

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Tamas

The serbian citizens who actually fly that route would benefit from competition. Shouldn’t that be the main focus for their government??