Serbian national carrier Air Serbia might lose the right to fly to and from Croatia if it continues to ignore the infringement procedure issued against it by the Croatian Transportation Ministry, Croatian daily Jutarnji list reported on January 13.

Jutarnji list said that the Croatian Civil Aviation Agency launched an infringement procedure against Air Serbia in the spring of 2015, for breaching the bilateral air traffic agreement between Croatia and Serbia, since Serbia had not yet met the provisions of the Agreement on Establishment of European Common Air Traffic it signed with the EU as an associated country.

According to the agreement, Air Serbia should flight only between Belgrade and European cities but it continues to offer so-called transfer flights to other destinations via Belgrade and thus creates non-loyal competition. For example, Air Serbia offers flights from Zagreb to Paris via Belgrade for significantly lower price than other companies.

According to Jutarnji list, representatives of the Croatian government told Air Serbia leaders that they were showing disrespect to the Croatian state by not coming to scheduled hearings, adding that it could cost them the license. Air Serbia denies the accusations.

“Air Serbia operates in accordance with all European regulations applicable in the field of civil aviation. The fact that the Croatian Civil Aviation Agency (CAAC) has approved Air Serbia to operate flights to and from Croatian by seasonal schedule speaks in favour of our statement," Air Serbia said in a comment.

Air Serbia currently operates flights to the Croatian cities of Zagreb, Split, Dubrovnik and Pula, and is negotiating the launch of regular services to Zadar. The flights to Zagreb from Belgrade were re-launched in December 2014 after 23 years.

Air Serbia is a joint venture between the Serbian government and Etihad Airways, following Etihad buying a 49% stake in the airline in 2013. In 2014 it recorded a net profit of €2.7mn, from a €73mn loss in 2013, with total revenues jumping 87% to €262mn thanks to a 68% rise in passenger numbers and a 67% increase in cargo traffic. It saw total operating revenues increase by 29% to €95.5mn y/y in the first half of 2015.