BIRD’S EYE VIEW
Air Scoop - January 2007
Exclusive Interview of József Váradi(CEO of Wizz Air)
CEO of Wizz Air
Could you please present Wizz Air to our readers? What are your speci- ﬁcities compared to other European LCCs? What do you do better than your competitors? Wizz Air
is Central & Eastern Euro-pe’s largest low fare – low cost airlineby number of carried passengers. Theairline was launched to coincide withthe EU accession of 10 new countriesin May 2004. The ﬁrst ﬂight took off from Poland, the largest of these newEU countries on 19 May. Today theairline operates ﬂights from Poland,Hungary, Bulgaria, Croatia, Sloveniaand Romania to many destinationsacross Europe.
ﬂies a young ﬂeet of 180 seater Airbus A320 air-crafts. With 32 new A320 aircrafts onorder plus 12 options
’s ﬂeetshould consist of up to 53 aircrafts by2012.
has carried close to 5million passengers since its start of operations in May 2004.
’s key success factor is itscost structure, which is the most ef-ﬁcient in the CEE region.
’slowest cost is the key to its long termsuccess.
You recently announced an overall expansion of Wizz Air in Poland.easyJet and Ryanair have also an- nounced the launch of new routes to polish market. How do you plan to manage such competition in this market? What are your advantages on this market? Wizz Air
has already proven itself asthe leading low cost airline in all itscountries of operation. According tothe latest report of the Polish CivilAviation Authorities published on 19October 2006,
strengthe-ned its market position as the largestlow cost carrier and the second largestairline in Poland well ahead of com-petitors, taking 15% of the total mar-ket (4 percentage point up from lastyear’s 11 %).
reached 28%share of the low cost sector transla-ting into 8% share of the total marketin Hungary. The share of
inBulgaria, the airline’s new market, hasreached 52% just 6 months after itslaunch in the country.As I mentioned the key focus is onkeeping the costs as low as possibleand offering low fares continuously.The market has been very competi-tive and has shown signs of consoli-dation already, as some competitorshad to withdraw or downsize theiroperations. The key, again, will bethe most efﬁcient cost structure.
“Islanders” (Ryanair and easyJet)need to ﬁnd new attractive destina- tions to maintain their growth; The- refore Central Europe represents an important market for these LCCs.Who are your most dangerous com- petitors: ‘Centralers’ (SkyEurope,CentralWings, Estonian Airlines…)or ‘Islanders’: Now? In near future?
The competition is with other meansof transportation as well as within theairline industry itself. Low costs willbe the key to succeed, as it is vitalto both drive the market growth andsuccessfully compete on the market.Our experience has proven us right:low costs always win. This made usthe market leader in our base coun-tries already and this will keep us inthe top league of European marketplayers.The European Low cost carriersmarket has reached a certain matu-rity which leads to its consolidation.During this transition, what are, foryou, the greatest threats to the Euro-pean Low cost carriers? Fuel rising?Overcapacity? Evolution of airports?Regulation?...There are a number of factors whichrepresent a challenge to further de-velopment and need to be addressedin efﬁcient way. Fuel price is oneof them, however as it concerns all,we have a competitive advantage of ﬂying large (180 seater), very efﬁcient(A320) and new aircraft, while ourcompetitors mostly ﬂy smaller equip-ment losing on the economics of unitcost. Airport infrastructure needs tobe developed in the region, especial-ly from a technical perspective. Andnew market entries are still limitedby regulatory speciﬁcity of individualnon-EU countries. However, newmarkets open, but the competitivenature of the business remains withlocal challenges to overcome.
Many LCCs look after extra-re- venues to offset the low price of their tickets. What are the projects of Wizz Air in terms of Extra-reve- nues?
Ancillary revenue is an area with alot of potential. There are a numberof services already available on wiz-zair.com, such as car rental, accom-modation, insurance, travel packages,week-end breaks, tickets, etc. Thiscircle will be further enlarged as wellas products which are on sale onboard. There are also other servicesand products on consideration to belaunched in the near future, whichare sources of non-ticket revenue.
Do you believe that consolidation of the market will lead to 2-3 main LCCs in Europe, or do you think there will always be many LCCs on niche markets?