In May of last year, the former Ministry of Capital Investments signed an innovative bilateral agreement on air transport with colleagues from Turkey, bypassing the procedure provided for by the Law on the Conclusion and Execution of International Contracts, which caused multimillion-dollar damage to the domestic airline "To Montenegro", and the benefit of the Turkish airline -cost of the company "Pegasus", "Vijesti" learns.
Yesterday, the Ministry of Transport and Maritime Affairs confirmed to "Vijesti" that this agreement is not in accordance with the aforementioned Law, and that they have initiated new negotiations with the Turkish side in order to protect the domestic airline company.
When asked by "Vijesti" who issued those consents for Pegasus flights, and whether they were in accordance with the agreement, the Ministry of Transport stated that the consent was issued by the Civil Aviation Agency of Montenegro on the basis of a signed memorandum of understanding in May 2023.
"When signing the aforementioned Memorandum, the procedure was not carried out in accordance with the provisions of the Law on the conclusion and execution of international agreements. A subsequent check revealed that the Turkish side did not implement all the legal procedures for its entry into force in the air traffic agreement signed in 2011. "The Ministry of Transport and Maritime Affairs, in cooperation with the Ministry of Foreign Affairs and the Civil Aviation Agency, in direct communication with their colleagues from Turkey, is preparing a proposal for a bilateral agreement on air transport that will regulate this area in the coming period," the Ministry stated.
The official signed the disputed agreement
From the former Ministry of Capital Investments, which was headed by Ervin Ibrahimović, it was announced on May 25 that on that day they had a meeting with the Ambassador of Turkey Bariša Kalkavan, the director of "Turkish Airlines" in Montenegro, Mutalip Ilhan, and the representative of "Pegasus", Emro Pekesen, as and that on the same day, an innovative Agreement on air traffic was signed, which will enable the entry of "Pegasus" into the Montenegrin market. According to the announcement, the then president of the board of directors of "To Montenegro" Pavle Ljesar also attended the meeting.
According to "Vijesti" information, the "innovated Air Traffic Agreement" was not signed by Ibrahimović, but by an employee in his cabinet, and the Government did not give its consent nor was it confirmed by the Parliament of Montenegro, which is an obligation from the Law on the Conclusion and Execution of International Agreements.
This agreement abolished all previous restrictions on the number of flights, which allowed Turkish companies to increase flights and take a significant part of passengers to the Montenegrin national airline carrier, which caused a loss of several million on this until then highly profitable line. According to "Vijesti" information, the agreement stipulates that "Pegasus" will pay compensation to the Montenegrin company for entering its lines, but it would only amount to around 300 to 400 thousand euros.
"To Montenegro" requested protection from the state
In the information on the status of the activities undertaken to eliminate challenges in the preparation of the 2024 tourist season, which the Government adopted last week, the unfair competition of "To Montenegro" from the Turkish market was cited as a very big problem, which is why it turned to the state for protection.
"From markets that do not have strict state aid control, e.g. In Turkey, carriers often act aggressively with dumping prices, below the cost price. Until recently, the rights of "To Montenegro" were protected by a bilateral agreement that allowed only "Turkish Airlines" and "To Montenegro" to operate flights, up to 14 rotations per week, but during the summer season a memorandum was signed with which all restrictions on the number were removed of flights, and the entry of the airline 'Pegasus', which enters the market with an ultra low cost model, was approved", this information reads.
It was also stated that "Pegasus" after entering the line Podgorica - Istanbul, began to enter other lines opened by "To Montenegro" under the same agreement.
"In addition to the flights to Istanbul that it introduced in 2023, after the announcement by 'ToMontenegro' that it will operate flights to Izmir from April 2024, 'Pegasus' makes a decision to start flights to Izmir and additionally to Ankara from February 2024 . After 'ToMontenegro' requested protection from the state, consultations between the aviation authorities of Montenegro and Turkey began in February in terms of protecting the rights of nominated carriers, primarily 'To Montenegro'. The assumptions are that the consultation will bring an effect for 'To Montenegro' as early as the summer season of 2024, otherwise 'To Montenegro' will be forced to leave the Turkish market and jeopardize the business result in the long term due to the loss of one of the most profitable lines", the information stated.
The new agreement would allow for more flights
When asked by "Vijesti" what the Ministry of Transport expects from the negotiations with colleagues from Turkey, it was stated that they are harmonizing the proposal for a new agreement on air transport that would be signed to the satisfaction of both parties.
"By defining the new agreement, 'To Montengro' will maintain its position on the route from and to Istanbul, which is very important for the business of our national airline. With the new agreement, we leave room for all interested carriers to establish new lines with all cities in Turkey. Very importantly, the new agreement envisages the possibility of realizing a greater number of flights between Montenegro and Turkey compared to the number of flights realized in the summer season of 2023", the Ministry replied.
When asked whether "To Montengro" was compensated in any way due to the entry of "Pegasus" on its routes, the Ministry said that it was a question for that airline.
To Montenegro, when asked how much revenue they previously earned on the line to Istanbul and whether they were compensated in any way due to the entry of "Pegasus" on their lines, answered that "in accordance with the company's policies, and in order to protect against competition the company is unable to share financial data on the profitability of individual destinations".
When asked what they expect from new negotiations and agreements, the company replied that "in In accordance with the needs and increased demand of the Turkish market, please note that "To Montenegro" will also launch the Tivat-Izmir line from Friday, April 5, in addition to Podgorica and Tivat to Istanbul.
There will be no increase in ticket prices due to fuel, they will also fly to Tel Aviv
In the information on the status of activities undertaken to eliminate challenges in the preparation of the 2024 tourist season, it was stated that due to the war in Israel, "To Montenegro" realization of a series of charter flights to Tel Aviv, consisting of about 110 aircraft rotations, is threatened.
"The tenants of the charter are agencies from Israel and they are still interested in the implementation, stating that life in urban areas has normalized, as well as air traffic, numerous companies from the USA and Europe have returned their flights. It is recommended that due to the officially valid state of war, it is necessary to pay an additional insurance premium, which the company representatives are still negotiating with insurers", the information stated.
When asked whether charter flights to Tel Aviv from "To Montenegro" will be announced this summer, they stated that they will fly to that city, as well as that the flights will be operated on the "Airbus A320" aircraft of the "Trade Air" company.
The information states that aviation fuel prices continue to fluctuate, and that growth could cause problems for the company.
"Fuel prices are relatively stable with small fluctuations. Given that the price of fuel is currently below that planned in the budget for 2024, no increase in ticket prices is expected," replied "To Montenegro".
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