Wizz Air succeeds where its rivals fail

By bne IntelliNews July 12, 2011

Kester Eddy in Budapest -

The website Wizzair Sucks does not beat about the bush. "Wizzair Sucks, aka No Wizzair, is an anti Wizzair site exposing the nightmare of flying 'the Wizzair way'," it baldly states, before listing a host of grievances likely to deter all but the most determined traveller.

(This list includes allegations that the low-cost carrier intentionally keeps customers waiting on its phone enquiries while charging €1 per minute, and just gets worse.)

But the carrier that proclaims itself the largest low-cost airline in Central and Eastern Europe has at least one happy customer in Targu Mures, Romania - despite that person's "natural bias" airline. S-P O'Mahony, chief executive of Opportunity Microcredit Romania, a microfinance company based in Targu Mures, is a former director of sales and marketing for legacy competitor Malev Hungarian Airlines - hence the bias. Yet, he says, "You'll only get positive from me about Wizz. I fly them regularly, on routes such as Tirgu Mures to London and Budapest, both launched this year. On the latter you can get incredibly low fares. They clearly want volume and that's what they get."

O'Mahony says Wizz Air provides good service, direct flights and has an excellent web-based process for booking, check-in and buying extra services. Furthermore, when things go wrong "they look after you," he says, citing an incident in 2009, when the Cluj-London flight was fogbound. "We could not get out for six hours, but they still sent the plane, provided meal vouchers for Luton airport and transported their pax as soon as they could. I know several other budget carriers who would have just cancelled and offered a refund in the same situation," he says.

Such an endorsement must be music to the ears of Jozsef Varadi, Wizz Air's chief executive. The carrier, which set out to revolutionise affordable air travel opportunities in the region just over seven years ago, now operates from 15 bases in eight countries across the region, with at least one more, Macedonia, to be added later this year.

Passenger numbers rose to nearly 10m in 2010, a jump of 23% on 2009, but Wizz Air declines to reveal profit or loss figures. "We are very satisfied with our results, with growth across all markets despite all the unfortunate circumstances like volcanic ash, flood and extreme snow conditions," Attila Dankovics, head of marketing, sales, and communication, tells bne.

The airline has added has added three more planes to its fleet in the first six months this year, bringing the total to 37; opened two new bases (Vilnius and Targu Mures); enhanced operations from Belgrade; and in May initiated new services to London's Luton from Skopje, Macedonia. Developments scheduled for later this year include new routes from Kyiv, Ukraine, and Brno, the Czech Republic.

It is all rather breathtaking, but Dankovics says the airline does its homework before launching new flights. "We have seen strong growth in Romania, and Serbia is also very promising. The figures are driven by increasing travel demand, which makes us very hopeful for the future," he says.

Not every route launch has gone to plan, but Dankovics insists that Wizz Air "makes very few mistakes" due to very careful preparation. "We have very few examples, such as Lodz-Stockholm Skavsta and Budapest-Venice that have both stopped operating recently," he says.

Growth to date might appear impressive, but the current fleet is but a fraction of the staggering total of aeroplanes on order; the carrier plans to have 132 Airbus A320s on its books by 2017 as it aims to expand further into the Balkans, Turkey and the former Soviet Union.

All very exciting and entrepreneurial, but can Wizz Air stay in the air given the challenges to the industry?


Eli Abeles of ABS Consultancy, a London-based air industry specialist, is quick to recognise the airline's success. "Wizz Air has continued to grow in a challenging economic environment, exploiting the weaknesses of the competition, continuing to be the lowest-cost operator in many of markets, and bravely exploiting new market opportunities in CEE countries," he says.

As a business model, Abeles calls Wizz Air "the Ryanair of Eastern Europe. They even go so far as to pull out of certain destinations on the stated grounds that airport fees are too high - just like Ryanair."

Financially, however, the situation "remains a little uncertain," he says. "They published results last year that showed an operating profit, but a significant overall loss after taking into account financing and development costs."

Wizz Air is able to avoid high capital outlays, and therefore expand quickly, since it acquires its aircraft through sale and leaseback arrangements - with the financiers secure that in case of default, the A320 is a marketable aeroplane, he argues.

Then there is the curse of all airline managers - the price of kerosene. "Rising fuel costs remain a major problem for Wizz - fuel represents a higher proportion of their costs than for the legacy airlines, meaning that their fares will have to rise [disproportionately vis-à-vis their legacy rivals], and that may choke off passenger demand," Abeles cautions.

Wizz Air had failed to answer an enquiry about the phone charge allegation by Wizzair Sucks by press time.

Wizz Air succeeds where its rivals fail

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