By Bjorn Fehrm
March 29, 2017, ©. Leeham Co: Wizz Air was formed in Hungary 2003 but its largest market is in Poland since operations began. Today, the airline is Europe’s fifth largest LCC, flying to 125 destinations spanning 39 countries.
The airline was established as a private company in Budapest with main investor, Indigo Partners, from USA. Operations started in Poland 2004. Wizz Air, financially registered in Jersey, lost money at first. Gradually, traffic and load factors improved and the airline has posted profits since 2012.
Annual average growth of traffic and revenue in recent years has been around 20%. Wizz Air is listed on the London stock exchange since March 2015.
The airline’s strategy is to expand fast in Central and Eastern Europe, a region under-penetrated with low cost airlines. The region offers long-term growth opportunities as it has the fastest GDP growth in Europe and has a growing middle class with an appetite for air travel.
The strategy has delivered high growth and increasing profits since 2012, Figure 1.
Traffic growth allowed Wizz Air to be the first LCC to introduce the Airbus A321 at the end of 2015. The fleet is now up to 16 aircraft, equipped with 230 seats, Figure 2.
Introducing the A321 allowed Wizz Air to lower the CASK (Cost per Available Seat Kilometer) while increasing capacity, Figure 3.
With a route network which spans most of Europe down to Dubai and Tenerife in the East, the larger aircraft could be filled on the routes with higher traffic, Figure 4.
The larger capacity, with 20% of the fleet now being the 230-seat A321, has not affected the airline’s average load factor, Figure 5. An 88% load factor is normal for an LCC.
The CASK (Cost per Available Seat Kilometer) of Euro 3.43 cents is slightly higher than Ryanair’s but lower than all other LCC’s, Figure 6.
Airport and handling charges are the highest operational costs after fuel, despite a strategy to fly to secondary airports, Figure 7. Staff costs are low at 8.5% of total operating expenses.
With a young, expanding fleet, the Ownership and Maintenance costs are higher than Ryanair, Figure 6 and 7.
The profits in recent years have built up a strong balance sheet, with 52% owners equity of the total balance, Figure 8
Wizz Air’s strategy is to continue the growth in Central and East Europe, with a focus on low seat-mile cost A321 aircraft. The airline placed an order for 110 A321neos during 2016 with options for 90 more. Wizz Air has the right to change the A321neo to the A320neo should traffic development require a slower capacity growth.
The appetite for A321 in largely uncongested airports may indicate that even larger aircraft could be useful on such routes. EasyJet started with A319.
Although frequency is important, most city pairs have two most useful most profitable slot (morning and evening).
Rightly or wrongly I have always viewed Wizz as the Central/East European copy of Ryanair. Same operation but different coloured planes. If they can fill those A321s I reckon they are onto a winner, especially when they receive the NEOs. They seem to have a clear advantage in terms of potential future growth due to the positioning of their hub network and the demographics of their primary market. There must be substantial scope for more medium range pairs that will really take the bread and butter from the flag carriers in the region
This airline is carving out a market for themselves and the future looks promising.
See there are fair size Hungarian and Polish communities in NY, Chicago and Toronto. Maybe they are considering to join the Transatlantic LCC airlines and fly to these from Belfast, one of the cities they are serving.
My personal view will be is to stay out of it and take the passengers flying from the US to Belfast (for example/code sharing) and then fly them to their own destinations which they specialize in!
See WIZZ’s potential for the East as being LCC’s from India, China and other areas (Air Asia X) for example flying into Budapest. Even Middle East Airlines could be feeding into Budapest for WIZZ?
So they absorb incoming traffic from the US and East which they fly to their destinations.
As they seem not to go for 320NEO’s but 321NEO’s WIZZ must in the long term be a potential customer for BBD CS100/300’s to do a balancing act looking at their routes/target markets?
Wow! Started in Hungary with US funding, registered in Jersey and floated on the London exchange, main market is Poland…
I honestly never knew it was such an incredible mish-mash of national interests – I’d always assumed it was all Polish.
Its gotten to be that kind of a World
They have to change their luggage policy – it is by far the least friendliest to customers of all the EU LCCs
Interesting to see that Indigo Partners was founded by William Franke, who was CEO of America West from 1993 to 2001.
At the time I wasn’t sure he was doing a great job, but apparently he now knows what to invest in !
Nobody beats the Wiz, nobody!
See SeatGuru put their seat pitch at 30-32″, better than most LCC’s, and BA’s new 29″.
SeatGuru uses a rubber metering band to measure seat pitch. 30″-32″ and 230 seats cannot co-exist in an A321. Mathematical proof is coming :
From door 1L rhs doorsill to door 4L lhs doorsill (= practical cabin length for seats in the A321) there is exactly 1176″ or 56 fuselage frames of 21″ each. Remove footroom up front at row nº 1 (= 20″), then remove compulsory cross-aisle passageways at emergency exit doors 2L/R and 3L/R (= 2 x 36″) and you have free length of cabin space left of 1084″ (I’m supposing WizzAir did not suppress EE door 2L/R and replaced it by a double Type III EE ?).
Now 230 pax that’s 38 rows of 6 plus 2 seats … divide 1084 by 38″ and you get 29″ per row … and you still have those 2 additional pax to fit into the puzzle ? No way ?!