Wizz Air might not have declared "checkmate" with its decision to move into Bratislava, base of troubled rival SkyEurope Airlines, but there is an increasing sense it marks an endgame over the battle to dominate the East European budget sector.

The decision coincided with Wizz firming an order for another 50 Airbus A320s, a show of confidence following the dramatic disintegration of SkyEurope and the demise of LOT's troubled Centralwings."It clearly demonstrates that Wizz Air is well-placed to win not only 'battles' but the 'war'," the airline says. Wizz suggests Europe's low-cost market is likely to be split between no more than five carriers in the mid-term. "Competition is less and less defined on a sub-regional basis. It is more and more European."

Wizz aircraft 
 
While Wizz began operating two years after SkyEurope, it quickly established itself in the well-populated Polish market. LOT attempted to defend its market by turning its charter division into budget carrier Centralwings but conceded defeat in May by reverting to a charter operation.

SkyEurope began as a modest turboprop service in Bratislava, gradually expanding before starting an ambitious fleet expansion by ordering Boeing 737-700s. But within months it was retreating from bases in Hungary and Poland, and turning its attention to taking on the nearby Vienna hub. Despite attracting traffic SkyEurope has struggled to attain profitability and, as its financial position became more precarious during last year's fuel crisis, creditor patience and confidence diminished. Lessors began withdrawing aircraft, starting a domino-chain of operating problems which led SkyEurope to file for creditor protection in June.

"The problem in the past was that there was too much trial and error on the routings," says Focus Equity, an investor poised to rescue SkyEurope if it manages to restructure. "We think the airline reached stability about half a year ago, without our help."

Wizz's finances are harder to assess as it does not release any details, but it believes its competitors have been unable to remove enough cost from their operations. "By having the lowest cost, we win when it comes to head-to-head competition," it says.

While SkyEurope waits to exit protection, not expected before October, Wizz continues to reinforce its position, setting up new bases in Ukraine, Romania and the Czech Republic. The carrier says it will remain focused on Central and Eastern Europe, but hints at expansion eastwards "should the regulatory environment allow it" - although it has not clarified whether this could mean services to Russia.

Source: Airline Business

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