LOT's low-cost subsidiary Centralwings launched flights in February, adding yet another player into what is becoming a crowded Polish marketplace.
The new airline, whose first flights were to London Gatwick from Warsaw and Krakow, expects to carry 800,000 passengers this year on its fleet of five Boeing 737-300/400s.
Centralwings president Piotr Kociolek says passenger growth on low-cost carriers in the Polish market has exceeded expectations. The 2004 figure of 1.2 million passengers was far above the 580,000 predicted in August last year, and he expects 2005 numbers to be more than double the 1.1 million forecast.
However, with capacity this year expected to be about 5 million seats, Kociolek warns that the market will be competitive. Wizz Air and SkyEurope already have Polish bases, and Europe's two largest low-cost players, easyJet and Ryanair, are making inroads. Poland has already seen one low-cost casualty with the demise of Air Polonia late last year.
Against this background, Kociolek believes Centralwings' sales and marketing agreement with fellow low-cost outfit Germanwings may be the shape of things to come in the sector. "This may be the best response to the big two players in Europe," he says.
The agreement with Germanwings includes links on each other's website, co-operation on ground handling in remote third-party stations and IT. Germanwings also has a co-operative agreement with the UK's bmibaby, and Kociolek jokingly refers to the three as the "Starlet alliance", alluding to the fact that all three are owned by Star Alliance members. Germanwings is a subsidiary of Eurowings, which in turn is 49% owned by Lufthansa, while bmibaby is owned by bmi.
The increasing penetration of low-cost players into the Polish market forced LOT to consider either become a low-cost carrier in its own right or launch Centralwings, says Kociolek.
But he stresses that Centralwings is expected to earn its keep. "From the beginning, LOT has insisted that this is a financial investment. We are expected to make a profit." LOT has provided a capital investment of just PZl5 million ($1.6 million), although Kociolek is confident that its payment will provide more backing if needed.
COLIN BAKER LONDON
Source: Airline Business
