Directors of Sarajevo, Tuzla, Mostar, and Banja Luka Airports Request Moratorium on Aviation Taxes and Fees Due to Risk of Crisis

(Patria) - Directors of four airports in BiH have submitted an initiative to reintroduce a moratorium on the Decision on the amount of fees for a period of two years. The initiative has been sent to the Ministry of Transport and Communications of BiH, the Directorate of Civil Aviation of BiH, the Council of Ministers of BiH, and the Committee on Transport and Communications of the Parliamentary Assembly of BiH. The initiative was signed by the Director of JP International Airport Tuzla, Dževad Halilčević, the acting Director of Airports of the Republika Srpska, Valentina Kecman, the Director of Mostar International Airport, Marko Đuzel, and the acting Director of Sarajevo International Airport, Dino Selimović.

As stated in their letter, which Patria has seen, considering the current circumstances, global uncertainty, significant increase in aviation fuel prices, rise in air ticket prices, reduction and cancellation of flights, demands from airlines for a reduction in airport fees and aviation taxes, and the potential risks and consequences for the transport sector in our country, this measure, similar to the period of COVID, would be strategically important, correct, and necessary.

"At the same time, we want to re-emphasize the significance and importance of an institution like the Directorate of Civil Aviation of BiH, as well as the relevant fees for its financing. Our request simultaneously highlights the need for the Council of Ministers of BiH to provide the necessary funding sources for the smooth operation of our regulator if our initiative for the reintroduction of the moratorium is supported. This is because we believe that if this measure is not reintroduced, the further growth and development of the transport sector in BiH will be significantly slowed down and jeopardized. In this regard, at this very sensitive moment for the aviation industry, we consider it necessary, and we ask that our initiative be reconsidered once again in terms of reintroducing the moratorium for a period of at least 24 months.

As we have already stated, we are submitting this request based on the indicators/effects on air traffic during the previous temporary suspension of the Decision on the amount of fees paid by aircraft operators per departing passenger, and the amount of fees paid by aircraft operators per ton of cargo/freight transported departing from airports in BiH. During that period, Sarajevo Airport recorded its best/record results to date in terms of passenger traffic, with a growth of as much as 34%, or 459,755 more passengers compared to the reference period before the moratorium was introduced.

Regarding the results achieved at the international airports of Banja Luka, Tuzla, and Mostar, which base their operations primarily on business cooperation with low-cost airlines whose core business principle is extremely low air ticket prices on their flights, and in order to minimize all costs, including the cost of the aforementioned tax, it is important to emphasize that they would have been significantly below the achieved traffic if it weren't for the mentioned moratorium. Furthermore, we believe that the one-year moratorium that was introduced at the time could not yield full effects, given that airlines plan their operations on a multi-year basis and that a one-year moratorium cannot be the basis for long-term business decisions and strategic planning.

Also, a positive effect of the introduced moratorium on the application of the Decision is contained in the fact that all airports have continued their cooperation with all airlines operating from these airports. In this context, we want to re-emphasize all the benefits achieved as a result of the introduction of this measure during the period it was in effect, in the sense that, in addition to traffic growth and the arrival of new airlines, this measure also encouraged a significant number of airlines to introduce additional and new flights to all four international airports in BiH. Therefore, in addition to increasing the competitiveness of all airports in BiH and ensuring the necessary preconditions for continued traffic growth and network expansion, in the current circumstances, this measure would confirm the proactive and strategic approach of all key stakeholders in this industry, as well as related industries, where potential negative effects caused by global events, which are already partially reflected in the planned and expected air traffic at all four airports in BiH, with a very uncertain outcome, would be prevented.

The sharp increase in aviation fuel prices is already having negative effects in the sense that we are already facing demands from airlines to reduce airport fees and taxes, in order to mitigate the negative effects and prevent the cancellation or reduction of traffic by certain airlines at all four airports in BiH.

In this regard, we believe that our proposal/request to freeze this tax in the next two-year period is necessary and essential, all with the aim of preserving the further competitiveness of all airports in BiH, preventing negative effects and better risk management, as well as introducing measures that will ensure the necessary preconditions for stable growth of both the transport sector and the tourism sector, which are the main generators of economic development for any country."

They further state that these benefits are best confirmed by analyses conducted by relevant organizations, namely USAID and UNDP, which have shown that air transport plays a key role in the economic, social, and spatial development of the country, and represents a strategic factor of competitiveness for any state. Studies have confirmed that air transport directly influences the growth of tourism consumption, the extension of the tourist season, and the diversification of the tourism offer, thereby contributing to increased foreign exchange earnings and the development of the country.

"For illustration purposes, a USAID study showed that providing incentives in this industry has a huge positive economic impact on our country, in the sense that for every 1 EUR invested through incentives, 15 EUR are returned to the economy when the average multiplier effect of tourism is added to the equation.

Therefore, the primary goal, in addition to retaining existing airlines, is to attract new airlines, with an emphasis on low-cost carriers, which generate significant passenger traffic and a network of destinations for all four airports in BiH. Any withdrawal or reduction of flights by these airlines could have significant negative implications for the operations of all airports in BiH, as well as for the entire transport sector and other related sectors/activities. The potential loss for the citizens of BiH in case of flight suspensions by certain airlines is far greater, given that potential passengers are denied the opportunity to travel at affordable prices, and the current crisis with aviation fuel has already resulted in an increase in air ticket prices.

Additionally, a possible decrease in traffic volume can simultaneously negatively affect the reduced volume of total revenue from other ancillary activities, which consequently reduces budget revenues.

In relation to all of the above, recognized risks, and possible consequences, we believe that the reintroduction of the moratorium from 01.04.2026 would prevent potential negative effects and reduce the risk of a possible decline in traffic, and further improve our competitiveness. We kindly ask you to consider the possibility of reintroducing a temporary moratorium on the Decision for a minimum of 2 years (2 summer and 2 winter seasons), and to simultaneously find the necessary funds for the financing of our regulator during the moratorium period, especially considering the importance that airports, directly and indirectly, have for Bosnia and Herzegovina and the economy of our country, as confirmed by the aforementioned studies," they stated.

They are of the opinion that the reintroduction of the moratorium on the relevant tax would represent a strategic measure of importance for the development of air transport, tourism, and the overall economy of Bosnia and Herzegovina, and would contribute to the preservation of existing and opening of new air routes, an increase in the number of passengers, growth in tourism consumption, and strengthening the competitiveness of Bosnia and Herzegovina in the regional aviation market.