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Montenegro tourism set to fly with airport loans

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Montenegro's dramatic coastline.

Bigger planes will soon land in Podgorica.

Milovan Djurickovic, Airports Director-General

Montenegro tourism set to fly with airport loans

Once visitors reach Montenegro, they don’t regret having made the effort to get there: pristine Adriatic beaches, ancient coastal towns, hilltop monasteries and a deliciously languid pace of life between mountain and sea. And no crowds – for the time being.

That could soon change, as tourism is the main hope for economic development in Montenegro. In this tiny, poor country of 650,000, at least 10 per cent of the population lives below the poverty line. Another third is deemed ‘economically vulnerable’ to slipping under that line. Tourism has the potential to become Montenegro’s leading generator of sustainable jobs and foreign revenues, diversifying its economy, building small businesses and catalysing other investment.

Yet the yen among travellers for new holiday destinations has not yet translated into a flood of foreign visitors into Montenegro. One main bottleneck for tourism development in this former Yugoslav republic is the lack of capacity at its airport in the capital, Podgorica and another in the coastal town of Tivat. There are few direct flights from European capitals and travellers from outside Europe, particularly the Montenegrin diaspora living in the USA, often must overnight at an EU airport to make their connections to Montenegro.

“Tourism already accounts for about 15 per cent of Montenegro’s economy and could increase to 21 per cent by 2014. But this will happen only if facilities and infrastructure improve,” says Dragica Pilipovic-Chaffey, head of the EBRD’s office for Serbia and Montenegro.

Loans for better airports

To help Montenegro overcome the transport hurdle, the EBRD and the European Investment Bank are investing €11 and €11.5 million respectively in airport improvements in Podgorica and Tivat. In addition, donors* have funded technical advisors to help the state-owned airports company. With the goal of ensuring its sustainability, the advisors are helping the company to implement the project, maximise non-aeronautical revenues, enhance the commercial relationship with airlines and attract more airline companies to use the airports.

“The airport’s growth is very important for Montenegro’s growth because the future of this country is in tourism,” says Milovan Djurickovic, Director General of Airports of Montenegro.

“Because this is a mountainous country, and because of the general state of our roads and railways, air travel offers the best opportunity to improve transport in the country,” he adds. “The Podgorica airport is already getting 28 per cent more aircraft traffic than was anticipated back in 2003 when its last Master Plan was written. We have just two check-in desks and it can get very, very crowded in the terminal if we have to deal with more than two flights per hour.”

With EBRD financing, both airports are being upgraded to handle more flights with greater speed and passenger comfort. The existing terminal building at Podgorica will be put to other uses once a new, larger terminal is completed beside it, while the terminal at Tivat airport will be extended. The taxiway and runway apron at Podgorica airport are being refurbished and extended and a new airfield lighting system installed. There will be a new access road and car park, and security systems, including fire fighting and passenger rescue, are being updated. Airside civil works around the runway apron, taxiway widening, new taxiway, refurbished and extended

“Passengers who’ve been through Podgorica or Tivat airport before will notice the difference,” says Danica Kilibarda Jevtic, EBRD operations leader on the project. “For example, at Tivat, it used to be they had to pick up their own baggage, which was off-loaded directly onto the tarmac, or it would be transported by tractor to the terminal. Now things are getting more sophisticated, with proper baggage handling and delivery inside the airport building.”

Boosting business

International companies dependent on the airport for business growth in Montenegro are delighted with the airport plans.

Austrian Airlines was the first foreign airline to set up a base in Podgorica last year. When Erika Fustuos arrived to assume her job as the airline’s manager in Montenegro, things were so cramped that her office was created by partitioning off a bit of hallway. “We definitely need a new terminal and better airport services in return for the handling charges we are paying,” she says. “We trained the ground staff ourselves, which was very successful. More airlines and more people will come to Montenegro because it’s beautiful, like Croatia, only less well-known. But the tourism infrastructure has to be developed.”

The airport improvements are part of a larger plan among international financial institutions, donors and the Montenegro government to upgrade tourism-related facilities generally. This includes water and waste-water management, building a tunnel through the mountains to the coast, and the planned privatisation of hotels including the famous Sveti Stefan, located on a tiny island few kilometres away from the beach at Budva.

Siniša Milutinović, local manager for the international courier service DHL, says airport improvements will have an impact beyond the tourism sector. “Businesses depend on fast communications and transport. They can’t wait two or three hours while the airplane is unloaded. The airport improvements will really help us deliver to our customers quickly.”

*Donors involved with the EBRD in various aspects of the airport improvement project include the European Agency for Reconstruction, France, Spain, USAID and the Balkan Region Special Fund.

Kate Dunn is the EBRD’s Senior Writer.

17 May 2005