Eastern Europe will witness a surge in low-cost airline activity from May as eight states in the region join the European Union.
There are already five eastern European low-cost carriers operating or about to start flying in the summer season. The largest of these is likely to be Wizz Air, which will begin services in May from bases in Budapest, Hungary and Katowice, Poland.
The carrier will start with three aircraft in each base, and has selected the Airbus A320 for its fleet needs with a 180-seat configuration. Another three A320s will arrive by the end of the year. The carrier aims to add one or two bases a year, and achieve what chief executive József Váradi describes as a "critical mass" of 25-30 aircraft.
Váradi is the former head of Hungarian flag carrier - and soon to be competitor - Malev, but in contrast to most recent and current chief executives in the region, he comes from a private sector background, having been eastern European sales director for US consumer goods giant Procter & Gamble before he joined Malev in 2001.
"I am not really an airline animal," he says, "although I do seem to have spent half my life in them." He left Malev in March last year after a dispute with the government, but almost immediately turned his attention to the low-cost sector. He is now in the final stages of raising €30 million ($38.5 million) from venture capitalists.
Váradi says Wizz will have a cost base closer to that of Ryanair rather than middle market low-cost carriers such as easyJet, and will be flying to secondary airports. The route network will definitely include Brussels Charleroi in Belgium, for instance. A key advantage will be the lower labour costs available in eastern Europe, with Váradi estimating pilot costs to be about a third of those of their western European counterparts. He also believes that Wizz is getting good rates on its A320s from leasing companies, given current market conditions.
Váradi says the target markets will be a mixture of leisure, visiting friends and relatives (VFR) and small business customers. He believes there is plenty of pent-up demand in the region, noting that many travellers now make long distance journeys by coach. He also points out that there is a large population of east Europeans dispersed throughout western Europe.
Váradi is well aware that competition is likely to heat up. Former employer Malev is launching flights from Budapest to London Stansted - a likely target for Wizz - while easyJet is also launching new services to Budapest from London Luton and Berlin Schonefeld.
Váradi acknowledges that Ryanair and easyJet will be looking to set up bases in eastern Europe, but believes this may take some time, and that Wizz has the advantage of local knowledge.
Wizz already has a competitor at Budapest - Bratislava-based SkyEurope Airlines set up a base there earlier this year. The low-cost carrier now has two Boeing 737s and four 30-seat Embraer Brasilia turboprops, but is looking to expand to 16 narrowbodies.
Start-up Air Polonia, meanwhile, will offer competition at Katowice, and will also operate out of Warsaw. It has just two 737s at present, and is looking to add three more.
Another start-up - GetJet - is looking to wet-lease one or two A320s out of Warsaw, while in Prague, charter operator Travel Servis plans to launch Smart Wings with a pair of 737s.
COLIN BAKER LONDON
Source: Airline Business
