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The Wings
A Conversation With Dane Kondić, Chief Executive Officer, Air Serbia
By Stephani Hawkins I Ascend Editor
Of Europe
ASCEND I PROFILE
f
or Air Serbia, the national airline
of the Republic of Serbia, 2015
proved to be a stellar year. During
the first quarter, for example, revenues for the airline increased 44
percent over the same quarter the
previous year, from EUR 27 million to EUR 39
million. Passenger numbers grew from 359,000
to 453,000, a 26 percent increase. Available seat
kilometers were up 15 percent at 795 million,
cargo rose by 61 percent, and the airline’s ontime performance was at 86 percent.
Much of its growth can be attributed to
the airline’s strategic partnerships. In 2013, for
example, Etihad Airways entered into an agreement with the Government of the Republic of
Serbia and acquired 49 percent of Air Serbia
(then government-owned JAT).
“We owe a debt of thanks to both our
shareholders — the Government of the Republic
of Serbia and Etihad Airways — for their ongoing
support,” said Air Serbia CEO Dane Kondić.
“The agreement between the Government of
Serbia and Etihad is an example of how a publicprivate partnership can resuscitate a troubled
airline and turn it into a successful, commercially
viable venture.”
Air Serbia is a member of Etihad Airways
Partners, an alliance comprising Etihad Airways,
air Seychelles, airberlin, Alitalia, Etihad Regional,
Jet Airways and Virgin Australia. In addition, early
last year, Air Serbia further expanded its network exponentially through additional codeshare
agreements with some of the world’s leading
airlines, including:
Adria Airways,
Aeroflot,
Air France,
Bulgaria Air,
KLM,
Tarom.
“We have continued to reap the benefits of
our growth, which is fueled by the development
of our network and the expansion of codeshare
partnerships,” Kondic said. “Our results continue to demonstrate the effectiveness of our
business strategy. This is a great sign for our
long-term success.”
In addition to its airline partnerships, Air
Serbia forged an agreement with Sabre-owned
Abacus International, the leading global distribution system in the Asia/Pacific region. This
strategic move provides travel agents at more
than 20,000 locations access to the airline’s network of routes, partner connections and fares.
Air Serbia, above all, has a keen focus on its
customers and employees.
In a recent interview with Ascend, Mr. Kondić
discusses why and how the airline places great
emphasis on its customers and employees,
as well as some of the main factors that have
contributed to the airline’s success; the impact
the carrier has on its region and the industry as a
whole; and the significance of the airline’s theme
song, The Wings Of Europe.
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Question: Air Serbia’s strategic goal is to
become the leading airline in the region and
resume its place among the leading carriers in
the world. What types of initiatives have you and
the leadership team put in place to help achieve
this objective?
A: The deal with Etihad Airways truly marked
the beginning of a new phase in the life of
Serbia’s national airline, one of the oldest airlines in continuous service, founded in 1927 as
Aeroput and renamed as JAT after World War II.
Today, we can truly see the fruits of our labor,
which is a testament to the hard work of the
dedicated team at Air Serbia.
When we started the airline’s new journey
nearly three years ago and renamed it Air Serbia,
we had to re-fleet, rebrand, retrain and reinvest.
We renewed the inherited and aged fleet by
introducing 20 modern aircraft. As a result, the
average age of our fleet has decreased from 25
years to 10 years, delivering greater reliability
and significantly lowering operating costs. We
designed a brand, including a new name, livery,
interior and uniforms. Since the start, some 600
new people have been hired in key areas such as
cabin crew, pilots, sales and commercial, while
administration has been reduced to between 15
percent and 18 percent of the workforce.
We also advanced aircraft utilization from
about five hours a day of point-to-point flying to
a mini-network-carrier status, so our fleet is now
up around 12 or 13 hours a day. Etihad Airways
connected Air Serbia to its own global network,
but at the same time it provided passengers
flows into Belgrade with its own service.
Air Serbia’s network of direct routes grew
to 40 destinations in 29 countries in Europe,
the Middle East and the Mediterranean, while
an additional 63 global destinations are covered
through our codeshare agreements with 14
airlines.
In a single year, the airline went from a
73-million-euro (US$80 million) loss in 2013 to a
2.7-million-euro (US$2.9 million) profit in 2014.
The airline’s revenues rose by 87 percent to
262 million euros (US$289 million), marking the
strongest results in the existence of the national
carrier. In addition, export revenues valued at
close to 180 million euros (US$199 million).
Our latest 2015 results continue strong. Our
revenues grew by 29 percent and passenger
numbers by 19 percent compared to the same
period in 2014. Although traditionally the winter
season presents significant challenges in traffic
levels, Air Serbia broke the one-million-passenger
mark during the first half of 2015, carrying 1.12
million passengers. These results are a great
achievement, validating the effectiveness of our
strategy.
We are proud to have been able to deliver on
our mandate, which was to achieve growth, to
become the region’s leading carrier and, most
importantly, to do so as a commercially viable
and profitable enterprise, while becoming a key
driver of economic growth in Serbia. The results
we have delivered so far are, above all, a great
sign for the future, as they lay a solid foundation
going forward and are proof positive of what
can be achieved when the right strategies and
governance structures are in place.
Air Serbia’s Premium Lounge Last September, Air Serbia opened its new Premium Lounge at
Belgrade Nikola Tesla International Airport. The lounge is the first dedicated, airline owned and operated
lounge in Serbia. The opening of the lounge began with a ribbon-cutting ceremony with Air Serbia CEO
Dane Kondić and Belgrade Mayor Siniša Mali, who is also chairman of Air Serbia’s supervisory board,
followed by a tour of the new facility and a cocktail reception.
ASCEND I PROFILE
sectors. It delivers revenue, not just to our
own business but to thousands of companies,
large and small, around our nation.
According to the results of a recent independent study conducted by Oxford Economics, Air
Serbia was expected make a core contribution
of US$211 million to the Serbian economy in
2015, as well as support 8,700 jobs. By 2020,
Oxford Economics forecasts that our economic
tourism footprint will increase to US$572 million,
supporting a total of 26,200 jobs.
Furthermore, the report highlights that Air
Serbia’s economic impact goes far beyond
its operational footprint, facilitating business
interactions, foreign direct investment and
tourism-related activities through the air connectivity that flows from passenger and cargo
opportunities, further boosting Serbian economy
productivity by US$690 million. This is equivalent
to the creation of nearly 32,000 jobs and equates
to almost 2 percent of the national gross domestic product.
Q: Knowing that Air Serbia’s future depends
on its employees, what types of staff-development initiatives have you implemented to ensure
you have the most skilled employees and that
they have the necessary tools to succeed?
A: We have invested significantly in the development of our workforce, introducing a range of
tailored training programs for a great majority of
our employees, depending on their roles in the
organization and their individual needs. A key
priority from the beginning was to raise the level
of customer service, so we provided appropriate
training for all customer-facing staff, both in the
air and on the ground.
Another notable example is our comprehensive graduate management development
program, in collaboration with Etihad Airways.
In the first phase, nine young Serbian individuals
Photos: NASA
Q: What role does Air Serbia play in the development of Serbia’s travel and tourism industries?
A: Air Serbia is the most natural contributor to
Serbia’s travel and tourism industries.
We represent our country and are often the
first point of contact for both foreign tourists and
business travelers. As a landlocked country, a
significant part of our inbound travel and tourism
is concentrated through our capital, Belgrade.
Belgrade has always been at the crossroads
between the East and West and is now reemerging as a leading commercial and cultural
center.
Therefore, a major aspect of our efforts
is to further develop Belgrade into a hub, so
it really starts to compete against the likes of
Vienna, which was for many years the hub in
this region, as well as the gateway to Central
and Eastern Europe. And we are beginning to
see the results.
In 2014, what a recent CAPA report named
a ‘quiet revolution’ took place at Belgrade
Nikola Tesla Airport, challenging the hub order
in the region. Air Serbia is a major contributor,
with our own passenger numbers growing
tremendously.
Travelers are increasingly taking advantage
of our strong regional network, which now
incorporates all regional capitals, without
exception. Coupled with favorable geography, Air Serbia inevitably places Belgrade, the
region’s largest metropolis, and Serbia, at the
very center of our region. We simply offer the
convenience, comfort and speed of traveling
to one end of the region in the morning and
returning to another in the evening, easily
overcoming the barriers and stress imposed by
alternative modes of transport at an affordable
cost.
Looking inward, the citizens of Serbia are
avid travelers, always eager to visit attractive
destinations worldwide. In 2014, we launched
our dedicated charter brand Aviolet to support
the Serbian tourism sector. Aviolet has already
demonstrated its potential to fulfill the needs
of this particularly important market segment,
offering quality of travel, added value and
experiences rarely seen on charter flights.
During the summer season, Aviolet covered
19 popular destinations in five countries,
operating flights with four of our rebranded
and refurbished Boeing B737-300 aircraft,
configured in a comfortable all-economy cabin
setting of 144 seats.
The tourism industry is growing and showing great potential to be one of the key drivers
of Serbia’s economic growth. As Air Serbia
consolidates its position as the region’s leading
carrier, it is proud to play a role in supporting
the further growth of inbound tourism.
Q: In what way does your airline contribute
to the country’s economic growth?
A: A strong Air Serbia is vital for our national
economy. It creates jobs not just within the
airline, but across a range of important growth
New Name, New Brand, New Look Three years ago, an airline once known as Aeroput and then JAT
was reborn into a new airline, Air Serbia. As part of the airline’s new journey, it created a new brand,
including new livery, aircraft interiors and uniforms.
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ASCEND I PROFILE
completed an intensive theoretical and practical course involving all aspects of the airline
business and are now placed across various
operating divisions in the airline. We are initiating
and organizing a new phase, in which another
group of eight young graduates will attend a
training program with Etihad Airways in Abu
Dhabi. The program will run for two years, and
upon successful completion, graduates will join
operating divisions across Air Serbia.
In addition, Air Serbia has significantly invested in the training of its pilots. Nearly all pilots
who had been able to fly only Boeing 737 and
ATR aircraft have successfully completed training
programs, allowing them to be licensed for flying
our new fleet of Airbus A319 and A320 aircraft.
Q: Last May, Air Serbia launched a national
program of strategic cooperation with a broad
range of educational institutions. What is the
basis of the program? How will it benefit the
airline and Serbia in general?
A: From the outset, we have been dedicated to the long-term development of our
workforce, knowing that our future depends on
our employees, our most important resource.
Their ability to resolve the challenges of our business environment will determine the success
of our company. This is why we contribute to
the development of those capabilities that will
be most valuable both to future employees and
the companies for which they will work. We
also believe that as a responsible company, we
must actively support the young generations in
building their future, because they are a key pillar
of our society and our communities.
The aim of the program is to establish a close
match between students’ knowledge and skillsets and the requirements of the labor market in
Serbia through a series of specific joint activities,
and consequently, to offer Air Serbia and other
companies in our country the opportunity to
identify and select students within required
educational profiles as strong candidates for
immediate or future employment.
Q: As a member of Etihad Airways Partners,
how does your airline gain profitability and benefit from the financial advantages of codeshare
agreements, joint procurement, training and
staff-development undertakings?
A: Etihad Airways Partners is a brand that
brings together like-minded airlines to offer
guests more choices through improved networks
and schedules and enhanced frequent-flyer benefits. This partnership results in synergies and
efficiencies for participating airlines on the one
side, and enhanced network choice, service and
frequent-flyer benefits for travelers on the other.
Individually, we are small participants in the
global market. But collectively, our partnership
serves 330 destinations, flies almost 700 aircraft
and carries more than 100 million passengers
each year, making us the world’s seventh largest
grouping of airlines.
Members of Etihad Airways Partners increasingly collaborate on many joint initiatives. A
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fine example is the recent innovative collective
financing agreement, through which US$700
million was raised on the international markets
to be used by members of our partnership, and
part of this amount will be used by Air Serbia.
Member airlines also work together to reduce
costs and improve efficiency and customer
choice through collaborative initiatives that
otherwise would not be available to them. In
addition to codesharing and joint commercial
activities, Etihad Airways Partners work together
in resource sharing; adoption of best practices;
and joint procurement of assets, services and
supplies. The airlines also collaborate on the
sourcing of IT platforms, aircraft and insurance,
as well as share resources including pilot and
cabin-crew training. A number of airlines in the
group have sourced additional aircraft from each
other or redeployed excess fleet to each other.
Employees have been transferred between
airlines, enabling members of Etihad Airways
Partners to recruit skills or provide fresh employment opportunities within the group.
Services and products of the partner airlines,
in the air and on the ground, are increasingly
being aligned as part of a strategy to offer customers a seamless, high-quality product across
Etihad Airways Partners. Loyalty programs are
also being interconnected. Therefore, the advantages of the partnership both for Air Serbia and
its guests are tremendous and will continue
growing and becoming more evident.
Q: How will Air Serbia’s partnership with
Abacus International benefit the airline?
A: We see our partnership with Abacus as
an important step in growing Air Serbia’s footprint in the Asia/Pacific region, because travel
agents now have access to our network routes
and fares, attracting both business and leisure
travelers. By improving the booking processes
through Abacus agents, Air Serbia has significantly expanded its distribution potential in the
region, bolstering its global positioning.
Q: Last year, you introduced Euro Sky Pass, a
new business- and economy-class fare program.
What is involved in the program, and how does
it benefit your customers?
A: The Euro Sky Pass program gives longhaul travelers arriving in Serbia via Air Serbia’s
codeshare partners from Australia, Canada and
Belgrade: Serbia’s Capital A major goal for Air Serbia is to further develop Belgrade, Serbia’s capital,
into a hub since a significant portion of its inbound travel and tourism is concentrated through Belgrade
ASCEND I PROFILE
the United States the flexibility and freedom
to travel onward to 37 direct destinations in
our European network. Our research shows
that generally guests travelling to Europe from
faraway destinations, such as Australia, Canada
and the United States, are compelled to take
stopovers throughout Europe. The Euro Sky
Pass will make these stopovers convenient and
cost effective, especially when travelers are on
vacation and making last-minute decisions on
where to travel.
The Euro Sky Pass will also boost Serbia’s
inbound tourism as it will create an incentive
for leisure travelers to use Belgrade Nikola Tesla
Airport as the most convenient arrival airport.
Also, the flexible terms and conditions will give
them the opportunity to explore other parts of
Europe.
Q: Air Serbia received the highly coveted
“Best of Serbia” award in 2014 as the “best
corporate brand” in the large services companies
category. What are the main factors that earned
your airline this prestigious award?
A: This is the first time Air Serbia has been
nominated for the Best of Serbia award, and we
are honored to have received it. Since its rebirth
in 2013, Air Serbia has made great progress,
and we received the award not only as acknowledgment of our success in transforming our
business and delivering strong business results,
but also for our contribution to the development
of foreign trade and tourism across the broader
economy.
We qualified for the award based on the
strong operational and financial results we
achieved in 2014, during the first full year of our
operations as Air Serbia.
The judges also took into consideration that
in 2014, Air Serbia had an estimated 53 percent
share in flights to and from Belgrade Nikola
Tesla Airport, and the fact that we invested
more than two billion dinars (US$18.3 million)
in the development of the company, as well
as 7.5 million dinars (US$69,000) in community
programs. That same year, Air Serbia created
more than 400 new jobs. A significant factor in
the selection also included the adherence of Air
Serbia to international and industry standards in
its operations, such as certification according to
the International Organization for Standardization
and an excellent rating in IATA’s operational
safety audit (IOSA).
Q: Last April, Air Serbia opened the first Etihad
Airways Partners-branded retail shop. How does
this benefit the airline and its customers?
A: We are proud to be a founding member of
Etihad Airways Partners and to host its first retail
shop in the world right here in Belgrade. The
facility is equipped to serve travelers on behalf of
all member airlines of the partnership. The retail
shop will effectively support growing customer
interest, enhance customer choice within a
combined offering, help strengthen incoming
and outbound tourism and business travel, as
well as further establish the recently launched
Etihad Airways Partners brand in Serbia and the
wider region.
Q: How does technology contribute to Air
Serbia’s long-term success?
A: The importance of technology in our business is manifold. One aspect is internal. A clear
example is our fleet, because it is essential that
the aircraft we use reflect a correct balance
between the capacities and efficiencies we need
to achieve sustainable business success. That is
why one of our first steps when we launched
the new airline was to modernize our fleet
by leasing 10 new-generation Airbus aircraft.
Within a month of the launch of Air Serbia, we
announced the purchase of 10 next-generation
Airbus A320neo aircraft for our fleet, as part of
a major fleet order by our equity partner Etihad
Airways. The A320neo will replace the eight
Airbus A319 and two A320 aircraft we are
currently leasing. The A320neo incorporates
new, more efficient engines and large ‘Sharklet’
wingtip devices, which together will deliver up
to 15 percent in fuel savings. These modern,
well-equipped aircraft will be vital for our development as a reliable and profitable airline.
Air Serbia is also committed to contributing
to the industry’s sustainability agenda by using
the latest aircraft technology and running its
own fuel-efficiency program, thus playing its
part in the reduction of carbon emissions and
the achievement of IATA’s target to reach carbon
neutrality by 2050. Within the program, Air
Serbia achieves results by carefully controlling
key parameters, such as aircraft weight, cleanliness of outside surfaces to preserve perfect
aerodynamics, length of flight routes and optimal
speed of the aircraft. The airline’s pilots and first
officers are continuously trained on how to be
more efficient on the ground and in the air.
Of course, technology also has a significant external impact, as it increasingly
determines our capability to continuously
offer our guests product and service excellence as our airline develops in the long
term. To make our mark in the European
skies, we must focus on the elements of our
business that are most likely to have a significant effect on customer satisfaction, and
we must continuously innovate. A big part of
that includes introducing new technologies
in the air and on the ground. In fact, during
the past several months, we have truly made
giant steps in this direction, catching up with
our bigger competitors and, in some cases,
exceeding their current offers.
Q: Which customer-centric products and
services have you recently implemented to
enhance your customers’ experience?
A: 2014 was marked by the consolidation of our business, while in 2015 and
beyond we will focus on delivering the best
guest experience possible. After months of
hard work to overcome many of the legacy
obstacles we encountered with outdated
technology, we introduced our Web check-in
service, which has already simplified and
enhanced the travel experience for many of
our guests.
We recently inaugurated the new Air Serbia
Premium Lounge at our hub at Belgrade Nikola
Tesla Airport , our crowning innovation so far,
which is the first dedicated airline-owned and
-operated lounge in Serbia. The opening of
our new Premium Lounge further reinforces
our commitment to the highest standards
of customer service and demonstrates our
ongoing efforts to provide the best travel
experience to our premium travelers.
We have also introduced the comprehensive ‘Air Serbia Wi-Fly’ service onboard our
Airbus A319 and A320 fleet, enabling our
guests to make phone calls, send and receive
text messages, surf the Internet and watch
video content through the onboard streaming
application. Few airlines in the world provide
this — certainly here in Europe — yet our
national carrier, Air Serbia, in making this service available to its guests, will leapfrog many
of our bigger and better-known competitors.
Another area that has continuously had
a critical impact on the overall travel experience since our rebranding is our catering
segment. We introduced a radical shift in
our approach to the in-flight catering service
concept, which rapidly became a central
and broadly acknowledged segment of our
overall service, satisfying a wide variety of
tastes and lifestyles with an industry-leading
precision and attention to detail. The quality
and variety of meals prepared with carefully
selected seasonal products, proudly reflecting and interpreting Serbian tradition and
flavors within the finest of dining experiences, have already clearly differentiated us
in the European skies. We believe our guests
are entitled to a tasty meal of great quality on
all our flights, and we have made a commitment not to compromise that.
Q: Air Serbia introduced its own theme
song, The Wings Of Europe, which was
composed by renowned musician Sanja
Ilić and performed by his band, the famous
ethno group Balkanika. What is the significance of Air Serbia having its own theme
song?
A: Sanja Ilić & Balkanika are no strangers
to Air Serbia, as their music has already
become a part of the overall guest experience onboard our aircraft. Their music has
been with us since the relaunch of our airline. For the first time in the airline’s history,
we now have music composed specifically
for us, with our origin and values in mind,
which will serve as a form of expression
of the soul of our flag carrier wherever
we go. Sanja Ilić & Balkanika have gone a
step further and employed their talent and
sensibility to develop a modern sound that
is specific to Air Serbia and, at the same
time, represents our country and its people.
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