TAROM, the leader of the airline market in Romania, posted a 33% increase in traffic in the first nine months, to 1.3 million passengers, according to the Association of European Airlines (AEA), based on new flights to Italy and Spain. The regular airline market in Romania will increase by 20% to 360 million euros this year, according to the International Air Transport Association.
"The nine-month turnover is higher, yet not necessarily proportionate with the number of passengers transported," said Sorin Georgescu, TAROM's executive vice-president of marketing and sales.
TAROM reported a 25% increase in revenues from international flights in the middle of the year, to a total 110 million euros. The revenues did not go up proportionately with the number of passengers because of the downward trend of ticket prices. For instance, the prices of tickets to Spain, one of the company's main markets, fell 8 to 10% on average.
"In the first half of the year alone, we noticed the number of passengers transported to Spain rose to 85,000 from 36,000 in the first half of last year. This increase was because of the introduction of new flights, as well as of the decline in ticket prices by 8-10%," said Sorin Georgescu. The Spanish and Italian destinations registered a high passenger load factor, of around 80%.
At the same time, the average occupancy of the company, which most of the time translates into profitability, rose by 7-8% in the same period to 69%. This will help the company attain its profit target for this year, 5.4 million euros, double last year's profit. TAROM experienced a profit slump in 2005, when it stood at merely 1 million euros, and is now trying to catch up in this respect. Its target for this year is to reach 1.6-1.8 million passengers, partly through domestic flights. Domestic flights, which account for about 20% of the total number of passengers transported, witnessed a 45% increase over the last few months.
TAROM is 95% controlled by the Romanian state, through the Transports, Constructions and Housing Ministry and the rest of the shares are held by the Henri Coanda Airport (2.58%), ROMATSA (2.18%), Muntenia Private Financial Investments Fund (0.15%) and the Romanian Civil Aeronautic Authority (0.09%). TAROM will have a private manager that will be selected by tender soon, in order to prepare for privatisation.
In Europe, TAROM is similar in terms of its number of passengers to airlines such as Croatia Airlines, Air Malta or Cyprus Airways and chiefly competes with operators such as Carpatair, Malev, Lufthansa, Air France-KLM, Austrian Airlines and British Airways.
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