Speaking at CAPA Live today, Wizz Air’s CEO, József Váradi, said that the airline will exceed 2019 capacity in the next month or two. However, there will be no real focus on business travelers. Upgauging and a younger fleet will be crucial for future advantage, and Abu Dhabi may even be more important than expected in the longer term.
Rules out real focus on business travelers
Wizz Air was founded on visiting friends and relatives (VFR) demand between Central and Eastern Europe and Western Europe. This remains its bread-and-butter, and Váradi noted thatt VFR demand has recovered the strongest in this coronavirus era.
Váradi ruled out any explicit focus on business travelers away from what it already does, even if legacy airlines cut back further on short-haul capacity and frequencies. Ultra-low-cost carriers in Europe tend to only focus on this market segment when they evolve, like Ryanair did with its ‘always getting better’ campaign. Váradi said that:
“The business travel market might be attractive at some point, but it can put significant stress on your business model. It can come with a higher cost and more constraints. It could eat into your core model.
“We see a lot more opportunities than we have capacity, so we remain very selective in the opportunities we exploit. It is very important that we stay focused on our core business. We just need to stick to it.”
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Upgauging and a younger fleet
Váradi said that the Wizz Air Group had 121 aircraft in March 2020, which has now grown to 140, although not all are operational. Key here and for the future is both upgauging and a younger fleet. ch-aviation.com shows that the Group has 26 239-seat A321neos so far, with a further 210 on order.
Upgauging and a younger fleet enable lower unit costs, so permitting lower fares to stimulate new demand and grow markets. This is the very thing that “yield passive, load factor active” Wizz Air revolves around. Moreover, upgauging enables more passengers to be flown per trip, so generating higher trip revenue, including from ancillaries. Váradi commented,
“The only way you can structurally gain in changing technology is what we have been doing with the neo. It has a 20% lower cost than the A320ceo. It is a huge advantage.”
Upbeat on Abu Dhabi
The Group’s Abu Dhabi unit received its air operator’s certificate (AOC) in October last year. It now has 29 routes from the UAE capital, with its fleet exclusively comprised of the A321neo. It focuses on low-frequency point-to-point services, just like it does in Europe.
Váradi was upbeat on Abu Dhabi and its prospects, at least longer-term. The shorter term, however, will be difficult because it is a “closed market”. Nonetheless, “whenever the market is ready to go we can go immediately and we can scale the business very quickly”. Váradi said that,
“The strategic rationale for this has not changed. I would even say that it has become a better proposition. From strategic perspective I’m very upbeat. I think that this is a nice move for this COVID era and we will see significant returns on our investment [from the unit].”
What do you think about Wizz Air and its future? Let us know in the comments.