Will Turkish Invest in JAT?

Fast-growing Turkish Airlines is no stranger in the former Yugoslavia since it bought 49% of Bosnia's national carrier, B&H Airlines, in December 2008. Under the deal B&H has been able to secure substantial investment for newer aircraft, while Turkish now has access to a growing business market and can feed traffic from Sarajevo through its Istanbul hub.

However, Turkish remains tight-lipped about a possible investment in Serbia's ailing carrier, JAT, with speculation that it could be looking to purchase a 49% stake in the airline.

In an official press statement this week, Turkish said: "At the present time, no board of directors decision has been taken regarding a strategic partnership with JAT Airways, however, we are open to consider any possible opportunities as part of our growth strategy."

JAT Airways needs a partner if it can secure investment to grow profitably as well as rationalise and modernise its aging fleet.

If Turkish took a minority stake in JAT, what are the network benefits?

Routes News has examined the top markets served by JAT at its main base in Belgrade.

Source: Flightbase June 14-20, 2010

Belgrade Network

The Serbian market is heavily focused on Belgrade, which accounts for 77% of all departures in Serbia. Almost half of all traffic (48%) in Belgrade is operated by JAT Airways.

JAT currently operates an almost wholly European network with 29 scheduled destinations from Belgrade mainly linking major European cities as well as capital city markets. Its two largest markets out of Belgrade are to Tivat and Podgorica in neighbouring Montenegro.

Historically JAT was a much larger carrier and at one time served over 80 destinations on five continents.

Investment from Turkish would be a boost for JAT. Similarly as with the investment in B&H Airlines, Turkish could choose to take a share in almost half of a national carrier that dominates the capital city market. In neighbouring Bosnia, Sarajevo is the major market and B&H Airlines takes a 32% market share.

Investment in JAT would also give Turkish access to destinations in the Balkans that it doesn't currently serve, such as Podgorica, Tivat and Ohrid and it could potentially look to operate a mini regional hub.

There will certainly be some rationalisation in the network and a focus on feeding Istanbul and other Star Alliance hubs. Destinations such as Gothenburg and Stockholm would more than likely lose frequency or be at risk altogether, however frequency into Star Alliance hubs such as Vienna, Frankfurt and Istanbul would increase.

Serbia is likely to join the European Union in the future, leaving Turkish well positioned to take advantage of the economic boost that will occur and the inevitable rise in passenger numbers.