Wizzair/Ryanair AIRLINES
two LCCs in the region will lead to losers elsewhere – the region’s legacy airlines. Many of these, he points out, are still facing financial issues and failing to make money in today’s market, despite the positive outlook.
Wizz Air CEO József Váradi says competing with Ryanair “will be fun”
market share in Europe, and we’re not going to get distracted from that.” However, he adds with many European legacy carriers now focusing on their long- haul programmes, there is an opportunity for new partnerships to be put in place, and conversations are already happening with Norwegian. Jacobs says: “Whether you’re Alitalia
Wizz Air’s CEE
presence Aircraft: 65
Airports: 116 Countries: 38 Bases: 24 in total, of which 22 are in CEE countries Passengers: 16.5 million
or Norwegian we’ve got a pretty good way of connecting short-haul traffic to long-haul destinations.” He argues much of the growth will also be driven by the anticipated delivery of new aircraft to Ryanair, adding: “We’ve been constrained over the last two years by not having the capacity but we’re now getting meaningful delivery of the 350 aircraft that we have on order.” This is not to say that he is entirely unconcerned about Wizz Air. Instead he believes that as Wizz Air looks to grow its route network further west, it will encounter more serious issues than Ryanair has done so in heading east. Jacobs adds: “It will be
harder for them as they must expand to the west where the airports and marketing are more expensive. It costs more for them to
come west than it is for us to go east.” But overall he believes the main losers in any increased competition between the two airlines will not even be from the low- cost sector. “The future is more about the low-cost
group of airlines taking on the legacy airlines as we’re taking 50% of the market share in the next two years,” he adds. Wizz Air CEO József Váradi agrees that any increased competition between the
Pushing ahead “They haven’t added a single bit to their capacity despite all the growth in the region; all the growth has been generated by LCCs. This market is in need of very low-cost fares and the LCCs can deliver it,” he says. “The more we push and the more Ryanair pushes the line, the more pressure there is on legacy carriers and we will see what happens with that. We both understand this reality better than anyone else; we have a strong business and competing with anyone including Ryanair will be fun. “It is perfectly logical from their perspective to keep on growing.” He agrees falling fuel prices have begun
to have an effect in the market, although he believes many airlines have simply become more “bullish” in adding capacity, rather than accepting that in less favourable conditions they would be struggling to break even. This has led to many failing to put their houses in order. Váradi argues that it is the LCCs’ ability
to compete on cost as it seeks greater penetration of CEE that will prove the undoing of many of the rival legacy carriers. “We are focused on delivering this business at a lower cost than our rivals,” he says. “This is the best way of defending ourselves [from rival airlines] and this is the best way to stimulate the market.” Váradi also believes it is the best way of running the business which in its third quarter for the period ending December 31, 2015, recorded a 17.3% boost in revenues to ¤310.5 million with an underlying net profit after tax of ¤17.2 million, an almost four-fold increase on the same period of 2014. He adds Wizz Air remains well on track
to meet its predictions of 18% capacity growth in the 2016 financial year while the underlying net profit for the year should be ¤190 million to ¤200 million. Váradi says: “At the moment we are
growing capacity on our routes of about 20% – that’s already our highest growth rates in the industry.” Like Ryanair, Wizz Air is also aware of the
difference that the delivery of 110 Airbus A321neo aircraft (starting in 2019 and offering a 10% cost reduction compared with the A320s currently in use) will make. Váradi says: “This is a superb aircraft. It beats any of our competitors including the big airlines.”
And given how both LCCs are operating
in the region and their optimism for the future, it is certainly the traditional giants that will need to keep an eye on them. £
routesonline.com ROUTES NEWS 2016 ISSUE 3 21
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76