Vojinovic: Establishing an airline in Kosovo would be an extremely challenging business venture

Although passenger numbers at Pristina Airport indicate that a market exists, establishing an airline in Kosovo would mean facing strong competition from both traditional and low-cost carriers, limited opportunities to find a viable market niche, and numerous regulatory obstacles, Petar Vojinovic, editor of the Tango Six portal, told Kosovo Online.

Regional air traffic is dominated by major national carriers as well as European low-cost airlines, with Ryanair leading in terms of traffic volume and passenger numbers across the wider Balkan region, Vojinovic said.

“The first thing viewers might think of are the two major national airlines, Air Serbia and Croatia Airlines, along with the second incarnation of Montenegro’s national carrier. However, what matters more here are the European, or rather Western European, airlines operating under the low-cost business model. Ryanair is actually the largest in terms of both traffic volume and passenger numbers across all the former Yugoslav countries, as well as Albania, Bulgaria and Romania—in other words, across the wider Balkan region. It is followed by Wizz Air and several smaller airlines,” Vojinovic said.

He noted that the area between Turkey and Germany had long lacked a major airline capable of developing a significant hub for connecting passengers. Air Serbia, he said, seized that opportunity, gradually developing a hub model in Belgrade that also includes long-haul flights.

When it comes to Kosovo, Vojinovic believes that establishing an airline is formally possible, but that finding a sustainable business model would be considerably more difficult in a market where most demand is already being served.

“When we discuss the business rationale and whether an airline could be established, absolutely, yes. Formally and commercially, you can set something up. But then you have to analyze the commercial viability of the entire operation and the passenger structure,” he explained.

According to Vojinovic, a significant proportion of passengers using Pristina Airport are members of the diaspora, meaning that demand for a new airline would probably be concentrated on a limited number of destinations in Western Europe, particularly Switzerland and Germany. A similar pattern, he added, had contributed to the strong growth in air traffic in Tirana.

“It is almost certain that this is essentially ethnic traffic involving a very limited number of destinations where, to put it simply, aircraft are consistently full flying from, for example, Kosovo to certain cities in Western Europe—Switzerland, Germany and other destinations where that population lives outside Kosovo,” Vojinovic said.

Potential demand, however, does not mean that a new airline would easily find room to operate.

“When you set something like that up, you have to decide which business model you are going to apply. That is when it becomes clear just how challenging a business venture this would be, because virtually everything you could do from Kosovo has already been covered by larger airlines. Connecting traffic and transfers are already served by traditional carriers, primarily the Lufthansa Group, while the highest-volume segment is covered by low-cost carriers,” Vojinovic said.

As an example of a different approach in the region, he pointed to countries that do not have national airlines but instead encourage connectivity by subsidizing routes and holding annual tenders aimed at low-cost carriers.

“North Macedonia, Bosnia and Herzegovina and several other countries do not have national airlines because they have decided to organize connectivity through low-cost carriers, including through subsidies and annual tenders—in other words, through a form of financial support for those companies,” he said.

Vojinovic also warned that despite the perception among passengers that airline tickets are expensive, aviation is a business with extremely narrow profit margins.

“It is very important to understand that this is a business which, regardless of how expensive airline tickets may sometimes seem to passengers, is extremely low-margin. Globally, when all the airlines in the world are taken together, the average airline profit margin per passenger is below five percent,” he stressed.

For that reason, he explained, traffic volume is crucial to an airline’s survival. He cited Air Serbia as an example, saying that the airline initially had to rely on government funding while simultaneously expanding its operations in order to achieve the necessary scale.

“Traffic volume is what matters. If a national airline needs to be supported initially with government funding, it has to grow and achieve those volumes. In Kosovo’s case, that volume has already been captured by the two categories of airlines I mentioned,” Vojinovic said.

One potential option for Kosovo, he said, would be a model in which an airline existed primarily as a brand, while flights were actually operated by an existing carrier with its own aircraft and an established operating model.

However, Vojinovic believes that even such a venture would face considerable difficulties in expanding over the long term.

“It is all extremely complicated and difficult to make work. At this point, it is already late to establish such a business venture with the intention of expanding it later, because there is nowhere to expand. You have Tirana, which is relatively close, the Lufthansa Group, particularly with its connecting options, and then the low-cost carriers. Whoever manages to establish such an airline successfully will be studied as an example of an exceptionally successful business model in what is a very challenging industry,” Vojinovic said.

In addition to market constraints, establishing an airline in Kosovo would entail regulatory, technical and staffing challenges. Vojinovic pointed out that Kosovo does not have aviation industry experience comparable to that accumulated over decades by JAT and its successor companies.

“They would face technical difficulties in getting an authentic legal entity of their own, staffed by their own people, to function. It is a smaller territory without that kind of aviation history, and they simply have not developed those capacities. Compared, for example, with Air Serbia and JAT—with their accumulated knowledge spanning generations and the former companies that formed part of the broader system required to operate an airline—nothing comparable exists there,” Vojinovic said.

Speaking about airspace, he explains that, due to Kosovo's specific legal and international status, air traffic control is organised differently than in other parts of the region. According to him, this could create additional obstacles for a potential new airline, including issues related to overflying Serbia and regulatory procedures in Europe.

“Because of the specific situation, as it is still formally the territory of Serbia, the radar picture of the Serbian Air Traffic Control Agency is technically, in a way, exported to Hungary, which then took over this method of air traffic control. However, due to international circumstances, namely the non-recognition of this territory by certain EU member states, Serbia has blocked them, meaning they would not be able to fly over Serbia. They would also face other problems with the European regulatory agency,” Vojinović says.

He adds that, regardless of the business model, an airline operating flights to the European Union would have to meet the relevant safety and regulatory standards, which entails significant costs.

“How sustainable that would be is questionable, because an airline's profit margin is extremely small, while the costs are enormous due to regulatory requirements, which are primarily based on safety. It makes no difference whether you are a member or formally a state: if you fly to the European Union, you have to comply with all those enormously expensive standards,” he points out.

For this reason, Vojinović reiterates that a simpler solution for Kosovo could be to engage an existing airline rather than build an independent operational system.

“Within that kind of mixed business model, you could once again create a project that could succeed politically, one that could have an ethnic identity and attract some passengers, but how sustainable it would be is questionable. The simplest solution is to hire someone else, paint those aircraft in national colours, call it a national airline and see how it goes,” Vojinović concludes.