Posts Tagged 'Sky Europe'

SkyEurope And Wizz Air: Different Strategies

SkyEurope B737 at BUD   Wizz Air A320 at BUD

The Central and Eastern European market of low cost airlines is going through some very interesting times. Let’s not talk about the low-cost airlines who operate to this area, but are of other origin, such as RyanAir, easyJet, Sterling, Germanwings, Norwegian, etc., etc., but focus on those which are based in this region!

There are a number of low-cost airlines operating out of Central and Eastern Europe, some smaller ones like Smartwings (Czech Republic, part of the TravelService group with 2+8 aircraft), Niki (Austria), Centralwings (Poland, part of the LOT group with 5 aircraft – planned 15 by 2010) and Blue Air (Romania, with 4 aircraft). The two bigger ones are SkyEurope and WizzAir, who are following a totally different strategy as revealed in the last few days, even though until recently they were direct competitors of each other.

SkyEurope Logo SkyEurope is pulling out of its hubs in Hungary and Poland, and will focus purely on Vienna, Prague and Bratislava from the upcoming winter schedule. The goal for them is to stabilize their financial base. They are on the stock exchange, and can not maintain their losses over a long period of time. They plan to station 6 B737-700’s in Vienna, and 4 in Prauge (up from 4 and 2 respectively), which shows the focus is clearly on Vienna and Austria, where the demand is more stable and financially set, compared to the other countries around Central Europe. SkyEurope plans to operate 15 aircraft in Vienna in 2-3 years time. Currently they operate 14 airplanes, and plan to add another 16 Boeing 737 New Generation planes in the coming years. However, it was also in the news last week, that SkyEurope is selling two of its new Boeing 737-700’s, to raise funds for operations in the upcoming winter schedule. The airplanes were due for delivery this month and in November. Giving up their Budapest base, they also plan to sell their airport handling unit at Budapest Ferihegy International airport, for about USD 3.5 million. This will be an interesting sales process, as the only customer of this handling company was SkyEurope, so what is up for sale is basically only the right to carry out gound handling activites at Budapest Ferihegy Airport, and some equipment. We have witnessed a similar situation at loss-making Malev, when assets and rights need to be sold in order to survive the weak winter travel season… This is not a good sign in my opinion, but we’ll see in a year, whether if it has paid off for SkyEurope or not.

WizzAir On the other hand, the younger, more dynamic, Hungarian WizzAir announced a major Airbus order today, for 50 new A320 family aircraft!! Wizz Air already flies 13 Airbus A320s and earlier said it plans to maintain a uniform fleet. It had earlier predicted operating 53 aircraft within three to five years. Over the last two years Wizz Air, which flies 70 routes in Europe, ordered 32 Airbus A320s that fly up to 180 passengers. “The new deal increases the total order made by Wizz Air for A320 to 82,” the companies said, while they also agreed on an option to buy 25 additional A320’s by 2016. The 50 new planes are to be delivered in 2011-2014, while the option covers the period 2014-2016. This is the largest order for Airbus in Central and Eastern Europe, and would make Wizz Air one of the largest regional carriers with narrow-body aircraft.

So the two strategies are totally different! One budger airline selling off assets to survive the upcoming winter period, while the other one placing the largest Airbus order in Central and Eastern Europe! While SkyEurope predicts to have 30 aircraft in a few years, Wizz Air will have 32, and will start receiving the 50 new ones announced today! While SkyEurope is backing out from Poland and Hungary, and is focusing on Austria and the Czech Republic, Wizz Air agressively gains markets, and focuses on Poland, Hungary, Romania, and Bulgaria, but keeps out of Austria and the Czech Republic. By only looking at the facts and this latest news, it looks like Wizz Air is winning on the Polish and Hungarian markets in the competition against SkyEurope, but it also looks a little bit like if the Central and Eastern European market of budget airlines has just been split up between the two…

by balint01

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