Moderators: jsumali2, richierich, ua900, PanAm_DC10, hOMSaR

 
VS11
Topic Author
Posts: 1673
Joined: Mon Jul 02, 2001 6:34 am

Balkan To Sell LHR Slots To BA

Fri Feb 01, 2002 1:01 pm

I realize that not too many of you would be interested in this news but to me it is breaking news. Obviously, after finalizing talks, Balkan Bulgarian Airlines decided to sell 10 of its 12 LHR slots to BA for $6 million.
The slots are in the noon to 3:00pm range.
It seems that BA has been targeting those slots for some time as its service to Sofia was from LGW.
Balkan has been in receivership since May and they had been gradually expanding their services, still a long cry from the 50 destinations they used to have. However, Balkan is practically out of planes, and the occasion for the slots sale has the lease of 2 B737-300 from Lufthansa.
Still, however, the deal is a complete disaster, and will ditch Balkan even further. The LHR slots were really one of the only left assets of Balkan, and probably a sign of its former prestige. This year Balkan will actually turn 55 years, and I know that greater airlines have gone - Sabena ans SwissAir to mention the recent ones - still Balkan used to be the second-largest East European airline, according to some accounts, I guess after Aeroflot.
I did feel actually better and prouder as I am a Bulgarian knowing that Balkan offers flights to Sofia from LHR, and BA from LGW, however the slots sale will badly hurt Balkan.
In the first place, any flight to LGW adds about $30 dollars to get to London on the Gatwick Express so it is really not in the interest of the Bulgarian pax to fly to LGW as it is more expensive. The slots transfer practically eliminates any competition on the London-Sofia route as BA and Balkan are the only airlines offering a direct non-stop service, and if Balkan had any advantage over BA in terms of price, now this is gone as the fare of Gatwick Express will even make a Balkan ticket to London more expensive than BA's, and thus BA will achieve the only way it knows to operate - eliminate competition. And not very much longer after that, Balkan could be expected to terminate its LGW service, because it will be a huge loss-maker.
Some of you may wonder what is the big deal with London to Sofia route as if it so travelled. The truth is that it is travelled, and here is why:
There are a lot of Bulgarians in the USA, me being one of them, and there is not a direct flight from Sofia to the USA. Balkan used to fly to JFK but not anymore, so all of the traffic to the USA flies some foreign airline, BA being one of the more popular.
Balkan did not wanna miss some profitable traffic and in 2000, I believe, it started to offer tickets to the USA with a connection at LHR on Virgin, and they still do. Believe me or not, their price is unbeatable - right now it is $480 - a return ticket from Sofia to BOS! Some of you may know, and it is certainly not hard to guess from my user name, that I am quite of a fan of Virgin Atlantic, and I only welcome the partnership of Balkan and Virgin. However, the competitive travel solution they offer would be completely unviable because of Balkan flying to LGW and Virgin concentrating most of its flights to the USA out of LHR.
I am absolutely pissed because because
1. Balkan losses one of its few competitive advantages and its prospects for a better future become even more obscure.
2. BA will completely control the London-to Sofia route and thus will eliminate competition not only on the this route but also on all flights from Bulgaria to USA via London.
3.Flying Virgin to get to Bulgaria from the US will be even harder and more expensive althogether with transferring at LGW.

I have asked many times the question, why do the people who manage Balkan now, and these are appointed by the creditors as Balkan is in receivership, attempt to strike deals with Balkan's biggest competitiors - Lufthansa and BA.
How is it possible to go and ask one of companies that would be happy for you to die, to lend you two planes so that you can go and compete with it? This is the case with Lufthansa.
And then, go and strike another deal with the company that could not be happier to remove you out of their way to completely control one route and many others via it.
This slot transfer deal will not only kill Balkan but also it will be such a blow to Bulgarian aviation industry, which has been gradually demoloshed during the past 12 years. As a result, the Bulgarian public, and the Bulgarian economy is not one of the best in Europe, would have to pay exorbitant prices to the most expensive carriers in Europe and in the world, because the stupid politicians in Bulgaria irresponsibly destroyed a major company and a whole industry with it.
When people living in the richer European countries enjoy low-cost travel, and fly across Europe for just $50, Bulgarians would have to pay $300 to get to London! This is why I am so mad and angry.
Now the game as long as the Bulgarian market is concerned will be between BA and the Star Alliance - Lufthansa and Austrian Airlines, in particular. Very sad.
Sorry for the long post, but I really needed to share my grief with people who would understand....
 
hisham
Posts: 752
Joined: Fri Aug 20, 1999 11:32 pm

RE: Balkan To Sell LHR Slots To BA

Fri Feb 01, 2002 1:24 pm

Yeah, selling LHR slots is a hopeless move. Six million dollars is like a week's expenses, then what?
I flew balkan from Beirut to Sophia back in the 80s. Are they currently flying this route? They were banned from flying there a couple of years ago because some Israelis got a major share in the company.

Hisham.
 
VS11
Topic Author
Posts: 1673
Joined: Mon Jul 02, 2001 6:34 am

RE: Balkan To Sell LHR Slots To BA

Fri Feb 01, 2002 1:40 pm

They are definetely not flyng to Beirut. Gad Zeevi was the Israeli businessman who "bought" Balkan in 1999. His stake was 75%. Now the Bulgarian Government as the biggest creditor will try to transform debt into stake and regain control of the airline but selling slots to an airport like LHR is pretty hopeless and stupid.
What is an airline without convenient slots at profitable destinations? Anyone could register an airline anywhere but if you don't have the right to fly to profitable places what is the point?

regards
vs11
 
747firstclass
Posts: 821
Joined: Tue Mar 28, 2000 2:45 pm

RE: Balkan To Sell LHR Slots To BA

Fri Feb 01, 2002 1:43 pm

It kind of reminds me when Pan Am and TWA were in a hopless situation and they sold their USA-LHR slots to AA and UA. It is strange sometimes how history repeats itself.
 
vfw614
Posts: 3852
Joined: Mon Dec 10, 2001 12:34 am

RE: Balkan To Sell LHR Slots To BA

Fri Feb 01, 2002 5:21 pm

Funny thing is that slot trading is illegal in the EU since, other than in the US, an airline does not have any property rights as far as their slots are concerned (not that it is not happening but I am surprised that they don't keep it under the sheets....). It is illegal for exactly the reason that leaves an uneasy feeling in this case: To stop BA buying almost all slots at LHR, LH at FRA, AF at CDG etc. etc.
 
Ikarus
Posts: 3399
Joined: Mon Jan 08, 2001 10:18 pm

RE: Balkan To Sell LHR Slots To BA

Fri Feb 01, 2002 6:24 pm

Funny. I was once told that the value of a slot at Heathrow is around GBP20m per annum. That would mean 10 slots = GBP 200m of revenue for BA in one year. OK, so that's probably not quite accurate for this particular route, but it's still worth a lot more than $6m in the long run. Balkan should have sold its slots to someone else....

At least they've got 2 slots left. I guess that means their Virgin deal might still be applicable. Probably only in the weekends, but they're not completely gone out of LHR, are they?

Regards

Ikarus
 
artsyman
Posts: 4516
Joined: Wed Feb 28, 2001 12:35 pm

RE: Balkan To Sell LHR Slots To BA

Fri Feb 01, 2002 8:21 pm

Why could they not have sold the slots to someone else, or does BA have a monoply on this also ?, while I know that new US carriers couldnt use them if they bought them, AA, UAL or people like Virgin would probably want the slots

Jer
 
Skymonster
Posts: 3428
Joined: Fri Oct 12, 2001 7:53 pm

RE: Balkan To Sell LHR Slots To BA

Fri Feb 01, 2002 9:04 pm

Actually, I don't think Balkan are allowed sell their slots to BA, or indeed to anyone else. What they might be able to do, or have done, is allow BA to use their slots, for some sort of financial "consideration".

And whilst this might work for now, when the next scheduling conference comes along I very much doubt whether Balkan will be allowed to just transfer their slots to BA (Balkan would be able to keep their own slots due grandfather rights) - I think that when the next scheduling conference comes around, unless Balkan are prepared to use thier slots they'll just go back into the pool for anyone to request.
There are old pilots and there are bold pilots, but there are no old bold pilots
 
VS11
Topic Author
Posts: 1673
Joined: Mon Jul 02, 2001 6:34 am

RE: Balkan To Sell LHR Slots To BA

Sat Feb 02, 2002 12:46 am

I also believe that Balkan (or any airline) does not have the right to sell slots as they do not belong to any airline. I may be wrong but I think that slots actually belong to governments, and they let airlines use them. I believe that this is the case with formerly national airlines which got their slot rights thanks to mutual bilateral agreements betweeen countries.
Interestingly, the Bulgarian minister of transport sad that Balkan could sell the slots, although he did not approve of the deal.

Regards

VS11
 
doug_or
Posts: 3244
Joined: Sat Mar 18, 2000 9:55 am

RE: Balkan To Sell LHR Slots To BA

Sat Feb 02, 2002 3:11 am

i can garuntee that BA had more than 200m in revenue foir a year... perhaps your thinking profits?
When in doubt, one B pump off
 
LZ-TLT
Posts: 427
Joined: Mon Apr 23, 2001 10:34 am

RE: Balkan To Sell LHR Slots To BA

Sat Feb 02, 2002 4:29 am

The topic was well discussed in the bulgarian newspapers during the week. Apparently, the Pilot's union is trying to block the deal.
 
vfw614
Posts: 3852
Joined: Mon Dec 10, 2001 12:34 am

RE: Balkan To Sell LHR Slots To BA

Sat Feb 02, 2002 5:15 am

Quite correct, you are not allowed to sell slots as you can only sell what belongs to you - and slots don't belong to airlines in Europe. BALKAN and BA however can change BA moonlight slots against BALKAN peak-time slots; barter trades are allowed under the EU legislation in question with approval of the national slot-coordinator - and nobody knows if BA puts a cheque into the mail addresses BALKAN, Sofia, Bulgaria. Same procedure for example when KLM uk pulled out of the GCI-LHR route and exchanged its slots with useless BA slots and returned those ex BA slots into the slot pool - the thing even went to court in 1999 (?) as KLM uk's audited files clearly showed that a couple of million pounds had smoothened the slot exchange.
 
VS11
Topic Author
Posts: 1673
Joined: Mon Jul 02, 2001 6:34 am

RE: Balkan To Sell LHR Slots To BA

Sat Feb 02, 2002 8:07 am

Well, in this case, the BA cheque is quite obviously and openly given to BALKAN.

LZ-TLT -

I do not know which Pilot's Union you have in mind, whether it is the Balkan Pilots' or some other but according to the online edition of DNEVNIK, the Union of the Civil Aviation Pilots not only does not object but actually applauds, supports and encourages the deal and the active efforts of the administrators to save the airline.
Here is the link in Bulgarian:

http://www.dnevnik.bg/show/Default.asp?storyid=36555

I am not sure that efforts of the administrators are to save the company but I do hope that within Balkan there is opposition to the deal!

Regards.
vs11
 
LZ-TLT
Posts: 427
Joined: Mon Apr 23, 2001 10:34 am

RE: Balkan To Sell LHR Slots To BA

Sat Feb 02, 2002 8:56 am

VS11

The info about the pilot's union was in Wednesday's online edition of Standart...can be actually that i got something wrong
 
JU101
Posts: 831
Joined: Sun Mar 25, 2001 1:57 am

RE: Balkan To Sell LHR Slots To BA

Sat Feb 02, 2002 4:24 pm

This is very dissapointing to hear that Balkan will give up 10 out of 12 prime slots at LHR. For an airline such as Balkan, LHR should be regarded as the prime route in western Europe. In any case, if Balkan are desperate for money, they should have opted to conditionally lease the slots to other airlines at LHR, if that were technically possible.

It would be wise for Balkan to do the following: (1) Operate regular flights between SOF and a select number of major European destinations (LHR, AMS, VIE, FRA, and MUC). If these routes all experience adequate profitability, expansion to SVO and ZRH should also be considered. (2) Attempts to code share major routes with competitors would establish a sense of security for the airline in the short run. (3) Lease operationally feasible aircraft, as they are doing.

Nevertheless, it still puzzles me how the national airline of Bulgaria has become so vulnerable and insignificant. I would have never imagined that the national airline of Macedonia, MAT, would one day be larger than Balkan.

Lets hope Balkan Bulgarian celebrates many more years of service, but under better terms!
 
VS11
Topic Author
Posts: 1673
Joined: Mon Jul 02, 2001 6:34 am

RE: Balkan To Sell LHR Slots To BA

Sun Feb 03, 2002 12:32 am

The two questions concerning Balkan (or any company for that matter) are

1. Is there a market to support the airline? and
2. Is there adequate company management to exploit the market opportunities?

I believe that there are market opportunitites for Balkan to grow, and as is the case with many airlines nowadays, you can serve many more markets, not just the one where your company is based.

The bigger problems of Balkan, and almost all of the formerly state companies come from (mis)management. In the case of Balkan, there is the additional complication of ownership, courts, corruption, and many other issues by which Bulgarian governments and Balkan managed to make a laughing stock of themselves.
To me, the primary issue is lack of leadership as the really capable leadership have long left the country after losing interest in dealing with the overwhelmingly mediocre and short-sighted policy makers, cronies and what not.
The drama of Balkan exemplfies the drama of the Bulgarian economy and society, and that is why I am so attached to the issue.

Regards,
VS11
 
JU101
Posts: 831
Joined: Sun Mar 25, 2001 1:57 am

RE: Balkan To Sell LHR Slots To BA

Sun Feb 03, 2002 2:23 am

VS11, exactly how many Bulgarian airline companies are in current operation? The only ones i can think of is Balkan and Hemus Air. Although i am particularly confused about the difference between the two airlines, since Hemus operates some aircraft in the Balkan livery. What how large are the fleets in Balkan and Hemus? How many of what aircraft do they operate?

Looking at many of the pics of Bulgarian airliners, i couldnt help but notice that there are no recent photos of the two leased B737s from Lufthansa, that you mention earlier.

Adding to the problems, i dont think operating TU154s and TU134s are an economical decision these days, especially when they compete against B737s and aircraft from the A320 family.


Click for large version
Click here for full size photo!

Photo © Jason Taperell

 
donder10
Posts: 6945
Joined: Sun Oct 21, 2001 5:29 am

RE: Balkan To Sell LHR Slots To BA

Sun Feb 03, 2002 3:31 am

Stage 4 noise compliance is a factor?
 
VS11
Topic Author
Posts: 1673
Joined: Mon Jul 02, 2001 6:34 am

RE: Balkan To Sell LHR Slots To BA

Sun Feb 03, 2002 4:51 am

JU101 -

In addition to BALKAN and Hemus Air, the ones that I know of are Air Sofia, Vega Air, Dandy, Bulgarian Air Charter and VIA. The first two are only cargo, Dandy, as far as I know operates pax services to Varna and Bourgas, VIA and Bulgarian Air Charter operate only charter services for package tourists.
Hemus Air may have been privatised already as there were such plans.
In general, all of the airlines in Bulgaria relate somehow to BALKAN either because their planes and pilots come from Balkan, or because the companies were created by the Government to compete with BALKAN.
BALKAN presently owns only one aircraft TU-154, and leases another two of the same type.
The B 737-300 from Lufthansa are not leased yet, and the slot deal with BA is to provide money for the lease of those two LH B737.
But still, is LH offering the best deal for the 2 B737, and then what other ways of financing have been considered?

Regards
vs11
 
JU101
Posts: 831
Joined: Sun Mar 25, 2001 1:57 am

RE: Balkan To Sell LHR Slots To BA

Sun Feb 03, 2002 9:42 am

I have heard of both VIA and Bulgarian Air Charter, and as i can remember they both operate TU154s. Nevertheless, you cant expect much from a charter company.

On the other hand, thanks for the clarification on Balkan. I still dont know why the government was so intent on forming competition within the Bulgarian airline market, because by doing so they lost the dignity of their national carrier by allowing foreign airlines to overpower Balkan. In any case, for realistic change to come about, Balkan will need to totally replace its management, and will require a significant restructuring plan.

It would be in Balkans interest if they attempted to forge a partership with a carrier in the region, by enabling some factor of stability (from Tarom, JAT or Malev). Because if they continue this course of uncertainty, several potential customers will rather fly on other carriers (to Sofia), to be assured that their tickets dont suddenly become meaningless, as in the case of Swissair and Sabena.

BTW, what is the aircraft registration for Balkans remaining TU154?
 
VS11
Topic Author
Posts: 1673
Joined: Mon Jul 02, 2001 6:34 am

RE: Balkan To Sell LHR Slots To BA

Sun Feb 03, 2002 3:40 pm

This should have occured to me before but I was thinking that if the two airlines exchange slots does that mean that they are still going to take off and land as they used to only from a different airport, or are they adoprting the other airline schedule because if British Airways would have to take off from Sofia at noon and land at 7:30pm then its plane would have to stay overnight at SOF, or do another flight to London, and if the Balkan is using BA's schedule then Balkan would have to leave LGW at 10:30am, and arrive at LGW back and 6:00pm, which would imply that their aircraft would have to stay overnight at LGW, or goes some other place (where, though?) and come back for the 10 am flight to SOF.
If this happens, I think it is operatioanally more expensive for both airlines since they would not be utilizing optimally their aircraft, at the same time, it absolutely makes no sense for BA to have its pax arrive at LHR at 6:00pm when most of its flights to the US would have taken off, so there isn't any advantage for Bulgarian pax, and they do not benefit.
What do you think?

JU101-

In socialist economies, as governments used to control every economic activity, there used to be giant holding companies, and because everything was state property, companies within those giant holdings were easily created, merged, split, destroyed, what not. So Balkan was part of one of these giant holdings, and Hemus Air, I believe, was the Balkan arm dealing with charter flights. The government did not want to create foreign competition for Balkan but at some point they wanted the two state companies to compete with one another on the charters market, I assume, so Hemus Air became separate company.
I am not very well familiar as these facts were not very much publicized, and I may be wrong about the history of Hemus Air.

I do not know the reg number of Balkan's TU-154 but it starts with LZ-BT_, and I have no idea, what is the last letter. All of Balkan's TU-154 reg numbers started with those four letters and only the last one differed.

Regards,
VS11
 
JU101
Posts: 831
Joined: Sun Mar 25, 2001 1:57 am

RE: Balkan To Sell LHR Slots To BA

Mon Feb 04, 2002 3:55 am

VS11 - Thanks for the reply regarding the registration number, even if you dont know it. Its unfortunate that i couldnt even find any official website on Balkan Bulgarian Airlines. Im very interested to see their destinations and flight schedule.

BTW: I did find it helpful that Sofia Internation Airport update their website frequently. The new terminal project looks really good. I just couldnt help but see their arrival and depature list - and the absolute majority of flights to and from Sofia are apparently cancelled today! These include flights from the following companies:

Balkan (Varna)
Tarom (Bucharest)
Lufthansa (Frankfurt and Munich)
Austrian (Vienna)
LOT (Warsaw)
Air France (Paris)
Aero Svit (Kiev and Belgrade)
CSA (Prague)
Malev (Budapest)
Crossair (Zurich)
British Airways (London)
Alitalia (Milan)
Turkish (Istanbul)
Hemus Air (Pristina)
ELAL (Tel Aviv)
JAT (Belgrade)
 
VS11
Topic Author
Posts: 1673
Joined: Mon Jul 02, 2001 6:34 am

RE: Balkan To Sell LHR Slots To BA

Mon Feb 04, 2002 4:56 am

JU101 -

It seems that the registration of the only left Balkan TU-154 is LZ-BTH, judging by the picture database of this website.
I also checked the SOF site, and it seems it is closed due to fog, I guess.
Funnily, Balkan managed to take off for Paris as LZ431 and then go the London as LZ432 (this is the flight number CDG-SOF), according to the LHR live arrivals.

regards,

vs11
 
AceVentura
Posts: 21
Joined: Mon Mar 12, 2001 9:38 pm

RE: Balkan To Sell LHR Slots To BA

Mon Feb 04, 2002 4:59 am

The flights are cancelled because of the fog.
Balkan uses LZ-BTH, LZ-BTZ, OM-ABB (leased from Slovenske Aerolinie) and LZ-TUG (TU-134)
 
ben
Posts: 1369
Joined: Fri Aug 06, 1999 9:27 pm

RE: Balkan To Sell LHR Slots To BA

Mon Feb 04, 2002 6:18 pm

Just a quick addition, to emphasise how important/profitable LHR is to Balkan, consider that it was the first destination they started serving after this most recent bankruptcy fiasco.

Also don't forget they have the blue and white former Centrafrican TU-154 LZ-LTV.

JU101: Their own Tu-154M in full original livery is LZ-BTH. I have flown on this aircraft many times - absolutely brilliant!!!

I read an article in a magazine a few weeks ago saying that Balkan had leased OM-AAA together with AAB. Can anyone confirm that?
 
VS11
Topic Author
Posts: 1673
Joined: Mon Jul 02, 2001 6:34 am

RE: Balkan To Sell LHR Slots To BA

Tue Feb 05, 2002 12:42 am

Ben -

You are right, they leased OM-AAB but not OM-AAA. LZ-LTV seems to be other leased aircraft, although it seems to be registered with Balkan.
You are also right about the LHR route. The former administrators started the LHR route because Balkan would have lost it otherwise. According to the former administrators, Balkan to lose its LHR slots was exactly what BA was waiting for.
The former administrators did an excellent job but the rumor has it that they got replaced because they refused to recognize as a creditor to Balkan one company that was related to one deputy-minister, who I believe, later got fired.

Regards,
VS11
 
VS11
Topic Author
Posts: 1673
Joined: Mon Jul 02, 2001 6:34 am

RE: Balkan To Sell LHR Slots To BA

Tue Feb 05, 2002 7:19 am

Here is the latest development of the scandalous story:

As Balkan is in receivership, the administrators appointed by the creditors are supposed to defend a recovery plan before a judge. At the last hearing, the judge postponed the approval of the plan for another two months. This postponement of the approval of the restructuring plan was the reason for Balkan to fail in obtaining the gurantees for the leased 2 B733 from Lufthansa and as a result the administrators agreed to the BA proposal for slot exchange as they could not secure funds from elsewhere.
However, the same judge resigned last Friday, although it was announced today.
Interesting what will happen now as the new judge may approve the restructring plan and Balkan might be able to get their 2 B733 from LH without having to sell their LHR slots, provided they can actually do so...


Regards,

VS11
 
JU101
Posts: 831
Joined: Sun Mar 25, 2001 1:57 am

RE: Balkan To Sell LHR Slots To BA

Tue Feb 05, 2002 1:20 pm

Guys, thanks for all the information.

I hope the status at Balkan improves soon!
 
B744F
Posts: 2927
Joined: Sat Jan 21, 2006 4:52 pm

RE: Balkan To Sell LHR Slots To BA

Tue Feb 05, 2002 5:14 pm

what's for connection at LHR to continue to America then I doubt if Balkan+other carrier will be cheaper than all sectors on BA at special fares..

Popular Searches On Airliners.net

Top Photos of Last:   24 Hours  •  48 Hours  •  7 Days  •  30 Days  •  180 Days  •  365 Days  •  All Time

Military Aircraft Every type from fighters to helicopters from air forces around the globe

Classic Airliners Props and jets from the good old days

Flight Decks Views from inside the cockpit

Aircraft Cabins Passenger cabin shots showing seat arrangements as well as cargo aircraft interior

Cargo Aircraft Pictures of great freighter aircraft

Government Aircraft Aircraft flying government officials

Helicopters Our large helicopter section. Both military and civil versions

Blimps / Airships Everything from the Goodyear blimp to the Zeppelin

Night Photos Beautiful shots taken while the sun is below the horizon

Accidents Accident, incident and crash related photos

Air to Air Photos taken by airborne photographers of airborne aircraft

Special Paint Schemes Aircraft painted in beautiful and original liveries

Airport Overviews Airport overviews from the air or ground

Tails and Winglets Tail and Winglet closeups with beautiful airline logos