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AVIORADAR - Croatian aviation website

INTERVIEW: Stjepan Bedic - CEO of ETF Airways

Written by: Nenad Sredojević.

Stjepan Bedic

 

The COVID19 pandemic has brought the aviation industry to its knees and shown all the weaknesses of some airlines, while even the biggest are struggling to survive.

Since its independence, Croatia has had several projects to launch new carriers, most of which have been unsuccessful, while some have sounded more like science fiction.

With its business model, the second largest Croatian airline Trade Air has ensured its survival and even development in these difficult times. But that is not the end of success stories in Croatian aviation.

Although the project began even before the pandemic, it did not stop its realization. Of course, we are talking about a new Croatian airline, ETF Airways.

In the midst of the pandemic, the ETF brought two Boeing B738 aircraft to Croatia and immediately started operating ACMI and charter flights, which was the plan of the team that founded this company.



We are talking to Stjepan Bedić, CEO of the ETF Airways about the company, plans, cooperation with other carriers as well as about the stumbled national airline Croatia Airlines:

- What can you tell us about yourself? Who is Stjepan Bedić?

I have been in love with aviation since I was a child. As a kid, I used to come to Lučko with my dad. I graduated from the Faculty of Transport and became an aeronautical engineer and a professional pilot.

I worked for two years in Croatia Airlines on flight operations, Eurocontrol Experimental Center, as a consultant for the Government official aircraft, I was a security auditor for our aviation authorities, performed many managerial functions by companies (Safety, Security, Compliance, Training, Flight OPS, etc.). As for flying, in 2004 I became a co-pilot on the MD-80, and in 2008 a captain. I flew both the B737NG and the Learjet 75, and am currently a captain, instructor and examiner on a Boeing 737.
In addition to aviation, I spent a good part of my time on various other projects, from space exploration and stratosphere. All in all, I would say that I love aviation and everything related to it, but life somehow guided me so I did a number of other jobs besides flying.


- Tell us about the journey to ETF Airways.

Two years at Croatia Airlines, Eurocontrol Experimental Center, Air Adriatic, Dubrovnik Airline, ATA Air, SunExpress, Kermas Aviation, IJM and now ETF Airways. In the meantime, I was engaged in many other jobs, such as consulting for at least a dozen companies (Directorate for the use of official aircraft, Trade Air, Winair, ECOS, Air Action, Albatros, Delic Air, Air Medulin, IvaDom, Losinj, etc.)

I participated as an expert advisor on behalf of Dubrovnik Airport, a consultant for Brač Airport, in working groups of flight control and aviation authorities, I was also a safety auditor.

In space technology, I led Team Stellar, an international team that competed in the Google Lunar XPRIZE competition, and the Stellar Association with which we did high school competitions in which we sent experiments into the stratosphere. I am pleased to say that we have sent the Croatian flag to the International Space Station.


- How was the idea of founding ETF born?

First, I didn’t want to compete with scheduled-flights airlines, I wanted to find a niche for our business model. I saw that there are such companies in the world and that they operate successfully, so I thought it would be a shame not to try to do something in that style, just, of course, better.


- Who makes up the ETF?

ETF is made up of all investors, employees and our families, as well as all friends of the company.

On paper, there are six investors, of which the main investors also lead the Supervisory Board, and the three of us from the initial start-up Management. The company was formed as a corporation, which in my opinion is very good, because we have a disciplined way of making decisions, financial supervision, constant updating of business plans, cash flow projection and all other things that make up the right approach to management.

Therefore, our goal is to fulfill our business plan, therefore, the value of the company after 5 years and in that sense, we are ready for temporary turbulence on the road like the COVID pandemic and the like.


- A lot of time passed from the idea to the realization, a lot of work and effort. There were a lot of steps backwards in that process. How problematic is the bureaucracy in such ventures and how much does the state make it easier for startups like this?

It depends a lot on how good the team is and how well it has prepared the package for the AOC (Air Operator Certificate). The documentation part is the most painful, there are a lot of questions and requests, but again, the better the project is prepared before submitting the request, the less work is done during the process itself.
I would like to recognize the efforts of state institutions and Agency. They helped wherever they realistically could, they worked, they cared, mourned and rejoiced together with us, as one team. I hope that our business will meet expectations in terms of meeting regulations and aviation standards.

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- How problematic was it to find crews?

Honestly, it was harder to find cabin crew than pilots. The reason for this is probably that pilots find it much harder to change occupation than cabin crew. In addition, the capacity for initial training of cabin crew, especially during a pandemic, is much smaller than for pilot training.


- Why the 737?

There is essentially no big difference between the A320 and B737-800, with Boeing always being more expensive when buying or leasing, but it has some other advantages, such as 9 more seats, a slightly higher range and slightly cheaper maintenance.

Since we got excellent conditions due to the crisis, the price difference between the B737 and the A320 was lost and the decision was clear. Now, during the winter, we already see the benefits of that choice.


- Will you stay in a unified fleet of this type and how many aircraft in the fleet do you see in the near future?

For now, our business plan is to grow to 7 B737-800 aircraft, but we are considering other possibilities.


- When can we expect additional aircraft?

We are currently thinking about how much to increase the fleet in 2022.


- Would you introduce 737MAX if you had the opportunity?

Max is a fantastic aircraft, it would open up many possibilities for us, but I think that new aircraft are always better for large systems that are able to deal with childhood diseases.

Here I am mostly referring to the engines, which are phenomenal in terms of consumption, but for the CFM56 maintenance is both cheaper and more affordable. I still think that the Boeing 737MAX was a safe aircraft even before the modifications, if it is flown by well-trained crews in good systems.


-Who does the maintenance?

Line maintenance is done by Global Aerotech, a Croatian company with great people in it. They are also a promising startup and we have a great collaboration, they work like they are part of our company.


- The planes are 17 and 20 years old, how many more resources do they have?

According to our contract, we have to return the planes to the lessor before the first big check. Voyager has another 2 to 3 years, Enterprize 4 to 5. I think airplanes of that age are the best choice, because the younger ones require different conditions when returning to the lessor, while the older ones have less reliability.


- I know you're a Star Trek fan. The planes were named after the ships of the Federation. Your idea?

Officially they are not. I don't know what you're talking about. 😊

- How many passengers have you transported so far and are there any goals you want to achieve?

So far, we have carried about 100,000 passengers. This year, our goal is to put the company “on its feet” in terms of organization, people, procedures, sales and finances. Of course, we also want to achieve the best possible business result, and we are currently forming a team for fleet growth.


- Is there a possibility of launching scheduled flights in the Republic of Croatia in the future or do you stay with the ACMI / charter business model?

In my opinion, line flying is something you can do if you have an investor for at least twenty planes, or you fly PSO lines or something like that. It is not interesting for us at the moment, we know where our place is in aviation.

We can’t fight firms that have hundreds of planes, but we can do some things that aren’t interesting to them or maybe even work for them. For me, regular routes are a nightmare, from marketing, ticket pricing, slots at airports when it's busiest, obligations to keep lines with half-empty planes, connected tickets, contracts with other airlines, code-shares, card business, payment fraud and a hundred other things. We don't have the resources for that.


- Is there a flight in this short operating time that you will especially remember (other than the first one)?

We are happy with every flight and we try as hard as we can. We really flew everywhere, but there were no special flights to remember.


- You participated in the recent evacuation from Afghanistan. How did it all go?

We did not fly to Afghanistan, but we transported these people from the surrounding countries. In such operations, it is necessary to be extremely flexible, because all approvals for flights are resolved through diplomacy, i.e. through the Ministries of Foreign Affairs. It’s not easy, when you get an inquiry on a Saturday afternoon for a flight that should go on Sunday, and you need to get diplomatic approval for five or six countries, sort out service, fuel, and everything else.


- You work closely with another Croatian company, Trade Air. How important is this cooperation?
We consider them friends, we collaborate on a daily basis about a hundred little things and we want them to have as many aircraft as possible, lots of success and luck. The same goes for FlyAir 41, Croatia Airlines and all other companies.


- The situation with CTN is, to put it mildly, very bad. Can and should Croatia be saved? Do you think it will be saved?

I wish them all the best. It can be saved if these two conditions are met:

1. If the state declares what it wants with Croatia and acts accordingly

2. If a way is found to restore employee enthusiasm, which I know still exists in most people.

To explain the first point, we still do not know what we want from Croatia Airlines. Do we want low cost, charter, regular lines, long range, cargo ... What do we want?
A company is not designed in the same way if it is a low cost or legacy carrier, and Croatia is forced to be everything. Maybe we should put the air fire defense unit under Croatia Airlines as well?
It is not the same if we want a carrier that flies throughout the year with the interest of connecting the country, or we want a carrier whose sole goal is to make a profit. For example, this year Pegasus sold 300,000 tickets to Turkey for 1 euro. Well, Pegasus didn't pay for it.

Today, the airline serves as infrastructure, just like the Peljesac Bridge or highways. From year to year, studies are paid that do not reveal anything new to us, and they cost a lot of money.
So, when we as owners declare what we want, we have solved the external problems that Croatia Airlines has, at least that part of the external problems that can be solved.

As for the second point, after so many decades of negligence, Croatia has accumulated many internal problems, and that is why I am of the opinion that the enthusiasm of the workers should return. Internal problems will not be solved by penalizing, nor by lowering or raising salaries. Internal problems are solved when people feel that they are an important part of the team, that they contribute to the creation of something bigger than themselves, when they are personally identified with the project.

When the division into "we" and "they" stops and when they realize that they are all "we". That part is called corporate culture, it’s the DNA of a company that is carefully created over the years, that can’t be bought with money.
I am sure that if a concrete restructuring starts, people will be willing and ready to give new energy to the company.

A concrete reconstruction plan cannot be just lump sum statements such as "digitalization", "rationalization", "fleet renewal", etc. A concrete plan has some goals, steps, and measurable indicators.
If you have a restaurant that doesn’t work well, you won’t solve anything if you buy a new kitchen. That is clear and I do not understand that we have to pay hundreds of thousands of euros to foreign consultants to tell us that. We could have asked the same question to a random private business owner, they would have told us the same.

Don't forget that Croatia Airlines has created a number of experts in Croatia. You will hardly find a company related to aviation in which at least one leading position is not held by a person who worked in Croatia Airlines. In three out of four carriers with large planes, the directors came from Croatia Airlines. The fact that they did not know how to keep us turned out to be good aviation in Croatia.


- Science and the universe are your great loves. Are you still working on projects related to that? Do you have time for your hobbies?

For now, I've taken a break. I am very interested in flying cars, I have some good ideas, but we will have to wait a bit. My dream is that in a few years you could fly from one end of the city to the other, without getting stuck at every traffic light. I have a couple of ideas for the missing links in that story.

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