Why doesn’t Montenegro subsidize airlines like its regional neighbors?

Montenegro is the only country in the region that doesn’t subsidize airlines, putting its airports at a competitive disadvantage compared to neighboring countries like Slovenia, Serbia, Croatia, Bosnia, North Macedonia and Albania, all of which provide significant financial support to airlines.

Regional subsidy practices

Supported by

• Slovenia subsidized airlines retroactively, paying after flights were completed, though this method wasn’t motivating for airlines.
• Croatia offers joint advertising subsidies, funding marketing efforts to attract airlines.
• Serbia gives generous subsidies for flights from smaller airports (e.g., Niš and Morava), and invested heavily in airport infrastructure.
• Albania provides large subsidies to low-cost carriers (e.g., Ryanair, Wizz Air), helping Tirana’s rapid growth.
• North Macedonia has invested over 40 million euros in airline subsidies over the past 12 years.

Montenegro’s approach

• Air Montenegro received an initial investment of 30 million euros, but no further funding has been provided since.
• The government does not finance routes or frequencies, leaving Air Montenegro to operate at a loss in the winter months when flights are less profitable.
• Airports of Montenegro have been forced to finance airline routes with 10 million euros annually, a unique practice in the region but one that diverts funds needed for airport infrastructure improvements.

Competitive disadvantage

Supported by

• Neighboring countries like Albania, Croatia and Serbia invest heavily in their airports and airlines, providing subsidies for new routes and frequencies, which attracts more carriers and passengers.
• Tirana and Dubrovnik have seen significant growth in passenger numbers, while Podgorica and Tivat struggle to keep up.
• Many Montenegrins fly through nearby airports like Tirana, Dubrovnik and Pristina, due to better subsidies and more frequent flights.

Urgent need for change

• Montenegro needs to adopt a Public Service Obligation (PSO) model to support airlines, particularly for winter connectivity. Routes to key European cities like Frankfurt, Munich, Zurich and Rome are essential for maintaining tourism and business ties.
• The Tourism Organization of Montenegro or the government needs to fund airline routes and frequencies, particularly for low-cost carriers (Ryanair, Wizz Air) and legacy airlines (e.g., British Airways, Air France, KLM).
• Without these subsidies, Montenegro risks further losing market share to neighboring airports, especially Tirana, which is expected to handle over 10 million passengers this year, compared to Montenegro’s less than 3 million.

The consequences of not acting

• If Montenegro does not invest in airline subsidies, the country’s tourism and connectivity will suffer, with fewer passengers flying through Montenegrin airports.
• The ongoing privatization of Montenegro’s airports may further reduce investment in routes, as private concessionaires will prioritize profit over national connectivity.

Montenegro must act quickly to implement a sustainable subsidy model if it is to compete with its regional neighbors and maintain its vital air connectivity.