Developing stronger relations with the United States was the main reason why Serbian government decided to back Air Serbia with introducing the regular Belgrade-New York flight.
It’s been two years since President Aleksandar Vucic cut the ceremonial ribbon, officially inaugurating the Belgrade-New York service, and expressing his sadness at “not being able to personally use the service”. However, nobody reported how much did the new service cost the Serbian taxpayers. As it turns out, it cost a total of 14 million euro which the government paid to Air Serbia to cover for the losses that the Belgrade-New York service generated.
This was also stated in a government’s document, published by KRIK, which was written by the Ministry of Trade on November 7th.
On 27th December 2017, the Government concluded a contract with Air Serbia under the title “Agreement on the Conditions of Use of Financial Resources”, and only a day later, the Ministry of Economy transferred 14 million euro to Air Serbia from the state budget.
As the document describes, “the plan was to use the money solely for the purpose of financing the costs of the so-called JFK line (Belgrade-New York service)”, says KRIK. It is further stated that 11.7 million euro was spent last year alone on covering the losses generated by the Belgrade – New York service, and another 2.3 million euro was spent on fuel costs during 2018.
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When asked where did the 14 million euro come from, Air Serbia refrained from commenting, as did the Ministry of Economy, Ministry of Trade, Ministry of Finance and the Serbian government. It remains unclear whether the government had planned this expenditure in the budget or not.
Privatization advisor, Branko Pavlovic says that it is obvious that the Belgrade-New York service was never going to be profitable and that the government knew that it would have to give huge funds to compensate for the loss.
“This has been a heavily subsidized project that has generated real losses that we did not need”, Pavlovic added.
He went on to say that the Belgrade-New York service made sense during the former Yugoslavia because it was an all-state project. “Now, the government is funding a private company with state money”, Pavlovic notes.
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