Croatia Airlines is on sale, and Aegean Airlines expressed an interest to buy it. Why did the Greek flag carrier do this, and what plans could it have for Croatia Airlines?
Croatia Airlines is on sale
For several years now, the government of Croatia has been trying to sell Croatia Airlines. The national airline is loss-making and has not launched a single new route in 2019.
To help with the sale, the Croatian government is injecting 250 million Kuna (almost 40 million USD) into Croatia Airlines, to cover its operational losses.
Croatia Airlines has a fleet of 12 aircraft, flies to 40 destinations and it’s greatest assets are the slots it holds at the major European airports and its own maintenance division that services not just Croatia Airlines but also other European airlines.
Why is Aegean interested?
Both Croatia Airlines and Aegean are members of Star Alliance, and part of the Miles and More frequent flyer program. They both operate in fairly seasonal aviation markets where tourism is the main driver of growth and domestic air traffic is heavily subsidized through PSO tenders.
Also, both Croatia Airlines and Aegean operate a fleet of Airbus narrow-body aircraft, and they both have the A320neo on order. They also both operate the Dash 8 – Croatia Airlines on its own, Aegean through Olympic.
In the last several years, Aegean has been expanding in Croatia slowly but strongly.
In the Croatian capital Zagreb, Aegean started flying in May 2018, as reported by Zagreb Airport at the time. The route was originally seasonal and operated by Olympic for Aegean, with its Dash 8 aircraft. Simple Flying published a trip report of the Athens-Zagreb Olympic service.
Now, just two years later, Aegean flies to Zagreb year-round, and the three weekly flights in the summer months are operated not by Olympic but by Aegean’s own Airbus A319 and A320 aircraft. This represents an increase in seat capacity of over 100% during the summer.
Elsewhere in Croatia, Aegean flies to Dubrovnik since 2015, and to Split since 2016. On both of these routes, Aegean has been increasing frequencies every year. This winter it even started flying to Dubrovnik year-round, while in the summer it operates the service five times weekly with its Airbus A320 aircraft. Aegean competes against Croatia Airlines on the Athens-Dubrovnik route.
What would Aegean do with Croatia Airlines?
Simple Flying previously described Aegean as an example of an airline that makes effective use of tourism growth in its home country. Given that Croatia and Greece are such similar aviation markets, with tourism being the primary economic activity and air traffic being so seasonal, Aegean is perhaps intending to deploy its own management strategy to Croatia Airlines to turn it into a success story as well.
The fleet of these two airlines is almost identical, with the only difference being that Aegean has the A321. This aircraft would be of use to Croatia Airlines on some of its most frequent routes, especially in the summer months from the Adriatic coast, so Aegean could lend Croatia its A321 for this purpose.
Most importantly, Aegean would make use of significant economies of scale that it would obtain if the two airlines became one. Much of Croatia Airlines’ administrative staff and management would no longer be needed, though Aegean might consider keeping services like maintenance and customer support in Croatia to benefit from lower average wages there.
Do you think Aegean will follow through and purchase Croatia Airlines? Let us know in the comments below.