Racaru, Blue Air: Passengers are not shifting their travel choices to low-cost in times of crisis

Even if the majority of companies say the lion’s share of the earnings will be driven by the migration of passengers from traditional to low-fare travel, Blue Air, the biggest low-fare airline company in Romania in 2008, doesn’t see sky high growth stemming from this direction.

“Clients of traditional companies are not shifting their travel choices to low-cost because of the crisis, except for an irrelevant number. Only an insignificant number of passengers have chosen Blue Air only to reduce the cost of travelling, but we equally see some of our clients migrating to traditional operators, therefore it is a normal fluctuation”, said Gheorghe Racaru (photo), managing director of Blue Air.

Not the crisis, he adds, will lift the low-cost aviation industry in Romania, but the natural potential of this segment. “Not the problems of traditional carriers will fuel the increase of the low-cost market. I expect the low-fare segment to grow 12-15% in 2009”, said the head of Blue Air.

The company aims at carrying 1.5 million passengers in 2009 and a roughly 150-million euro turnover.

The only imprint of financial crisis over Blue Air was the reduced frequency of charter flights operated by the company. “In December, we were fully impacted by the financial crisis in charter segment, which shrank 60% in 2008 compared to a year-ago period”, said Racaru.

Blue Air is renting charters mainly to the travel agencies, the segment gearing 10% of the company’s turnover.

Nevertheless, the number of passengers travelling with Blue Air is rising: “In January, we carried nearly 75,000 passengers, more than 8,000 than a year earlier”, Racaru added, with the occasion of leasing the International Airport in Bacau, George Enescu.

Blue Air said it would invest about 45 million euro in Bacau-based airport.

The shareholders of the airline carrier expect to amortize the full amount over a period of 25 years. “We rely on a 1-1.5 million-passenger traffic between 2013 and 2015”, said the managing director of the company, Gheorghe Racaru.

The leasing contract which will commence in July 19 was concluded on January 19, 2009 and will continue over a period of roughly 34 years since it had been concluded, this date being set within 180 days since the performance of preliminary duties by the two parties.

Under the provisions of the agreement of the lease, Blue Air will impose to competitors a charge for operating from Bacau-based operator.

Blue Air carried 75,000 passengers in January, 8,000 more than prior-year period, and expects 1,500,000 clients for 2009.

The director of Bacau-based airport, Radu Bondar said: “We will completely demolish the runway and we will remake it. The runway will be shut down for construction no more than three successive days”. “The lease agreement imposes the payment of an annual overriding royalty of 400.000-500.000, the total amount following to be paid over a period of 34 years”, Racaru added.

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