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- Wizz Air Hungary Airlines Ltd.
BUD International Airport Building 221
- Main hub
- Budapest Ferenc Liszt International Airport
- Business model
- Low Cost Carrier
- Airline Group
- Part of Wizz Air Group
- Association Membership
Established in May-2004, Wizz Air is a low-cost carrier headquartered in Budapest Airport, with secondary hubs at Gdańsk, Katowice and Belgrade as well as bases in 18 other airports across Europe. Wizz Air operates on over 380 routes across Europe, using predominantly secondary airports, and is continuously looking at opportunities to expand its network of destinations and provide low-cost air transport to and from Central and Eastern Europe.
Location of Wizz Air main hub (Budapest Ferenc Liszt International Airport)
Wizz Air Holdings Plc share price
LCCs will continue to evolve into hybrids of the original core model. CAPA and OAG consider Wizz Air fits the LCC profile and it is included in our reporting on this basis. Please note: when reporting for an airline is changed from or to LCC the historical data is not affected and it can lead to a distortion in the current reported data. Contact us if you have any queries.
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Budapest Ferenc Liszt Airport is Hungary’s largest international airport and, after Prague, the second biggest airport in the countries that joined the European Union in 2004. It is also the largest airport to have been privatised in Central and Eastern Europe.
It has been involved in constant skirmishing with neighbouring airports in Central Europe over a period of many years, as they attempt to establish themselves as the pre-eminent gateways to the region, and as collection and distribution hubs. Those other airports comprise Vienna and Prague, both of which lie north of Budapest, possibly Warsaw, and to a lesser degree Belgrade to the south, which although growing rapidly is still some way behind the others. (Bratislava Airport in Slovakia is excluded only because 95% of its passenger capacity is on low cost airlines).
This report looks at present and future growth trends at Budapest, at construction activities, ownership and profitability, and how it matches up to that competition now, across a range of metrics.
In late Oct-2015, ultra-LCC Wizz Air carried its 100 millionth passenger, just 12 years after its 2003 launch. In a further sign that it has joined the ranks of Europe's well established airlines, this year also saw its Feb-2015 floating of its shares on the London Stock Exchange. Wizz Air's 1H results for FY2016 confirmed the ongoing strength of its performance in its first full financial year after its share listing. Wizz Air's underlying net profit grew by 34% and its operating profit increased by 28%. Revenues grew by 15%, with passenger numbers up 20%, and the operating margin gained 2.6 ppts to reach 25.4%.
Wizz Air's success has been built organically and with a largely stable management team under founding CEO Josef Varadi. In this respect, the recent departure of long-serving CFO Mike Powell creates some uncertainty pending his replacement.
Nevertheless, as CAPA's analysis of Wizz Air's strengths, weaknesses, opportunities and threats highlights, the airline is strongly placed to drive further profit growth, provided that it can continue to live with competition from Ryanair.
There are few countries where an outright charter carrier is the de facto national flag carrier.
But that is the case in Lithuania where a succession of failed scheduled carriers contrasts with a relatively new airline that sells seats exclusively to tour operators, in several countries across continents, is expanding almost exponentially, has one of the lowest CASKs in Europe, isn't highly leveraged, and is profitable.
That is far from the only surprising thing about Lithuania though, a country that is privatising its airports without really privatising them and which, is only just beginning to wake up to its tourism potential.
Eastern/Central Europe offers significant opportunities to LCCs. The region's faster-growing, lower-wage economies are relatively under-penetrated by the low cost model, and by air travel in general, compared with Western Europe. Furthermore, outside Russia, Turkey and Greece, the region contains very few sizeable legacy airlines and even fewer in strong financial health.
Wizz Air and Ryanair, already established as the two leading airlines in Eastern/Central Europe (ex Russia, Turkey and Greece), look well placed to build further here. According to OAG data for the week of 13-Jul-2015, number one ranked Wizz Air is growing seat capacity by 25% year on year, while number two Ryanair's seat numbers in Eastern/Central Europe are up 22% from their level a year ago.
Wizz Air's recent aircraft order demonstrates its resolve to stay in pole position. However, breaking the region into its component markets, Ryanair often comes out ahead of Wizz Air in countries where they both compete. Whichever one of Europe's two lowest unit cost airlines can win the fight for cost leadership will likely be the long term winner in Eastern/Central Europe.
The Italian market continues in a state of flux. It looks like 2015 will join 2014 as a growth year, following contraction in 2012 and 2013. Alitalia has stabilised its total seat capacity after years of decline, but continues to lose market share to fast-growing rivals. Europe's three biggest LCCs - Ryanair, easyJet and Vueling - are pursuing what seems like relentless expansion across Italy, but Wizz Air is also building a presence.
Furthermore, the leading airlines in Italy continue to jostle for places in difference parts of the market. This is illustrated by easyJet's recent decision to close its Rome Fiumicino base from Apr-2016 and to redeploy aircraft through the expansion of bases at Milan Malpensa and Naples and at a new base at Venice Marco Polo.
Ryanair overtook Alitalia as the biggest airline in Italy by seats in 2013 and offers far more destinations. As it continues to improve customer service quality and to increase the proportion of primary airports in its pan-European network, Ryanair's position as market leader in Italy and the lowest cost producer in Europe will make it hard to beat.
LOT Polish Airlines' plan to more than double passenger numbers to 10 million in 2020 will bring significant growth to its base airport, Warsaw Chopin. LOT's aspirations to be the hub carrier for the "New Europe" will elevate Chopin airport to competing with Budapest, Prague and Vienna to be a hub for Central Europe.
LOT's growth is important to Warsaw Chopin, but is not the sole story. Chopin grew traffic while LOT restructured, while passenger numbers declined and then stayed flat. Second largest carrier Wizz Air is growing its presence and could introduce connections. Ryanair meanwhile is at Warsaw's LCC airport, Modlin, contributing 60% growth in the first five months of 2015.
Although Warsaw Chopin finished an expansion programme in May-2015, further works are needed to support LOT's growth, especially with widebodies. Emirates will up-gauge its existing daily service before presumably later considering a second daily flight. The bigger challenge to LOT and Warsaw is Lufthansa and its German hubs, which have grown as LOT shrank, especially in secondary Polish cities.