An Airbus A321 in the Wizz Air livery
“People are booking and the numbers are very good,” comments József Váradi at Milan Malpensa airport. The CEO of Wizz Air – Europe’s second ultra-low-cost airline after Ryanair – is preparing for a summer with pre-Covid volumes. Indeed, even better. But in the background the recovery after the pandemic presents more than one challenge for the sector, starting with the cost of kerosene which has soared in recent weeks, to which has been added the invasion of Ukraine. Between 2020 and 2021, while almost all carriers had hibernated due to the health emergency, Wizz Air and Ryanair took advantage of this to expand, snatching away from airports – also Italians – very advantageous agreements both in terms of costs and incentives.
In 2021, Wizz Air transported 5.1 million people to Italy – according to the ENAC budget – becoming the fourth airline in the country after Ryanair, Alitalia-Ita Airways and easyJet. Here the ultra low cost has opened seven bases, brought 21 planes and flies to 25 national airports. The challenges are not lacking. The last financial year (April 1, 2021 – March 31, 2022) closed with a net loss ranging between 632 and 652 million eurosworsening compared to the previous twelve months (-576 million). “We are seeing strong demand for our products”says Váradi during an interview with the Courier. “If the sector expects this summer to offer 10% fewer places in the same period of 2019, we will reach + 40%”. And he speaks, for the first time, of the long-term goal already suggested by rival Michael O’Leary, CEO of Ryanair: tickets at no cost compensated by the payment of the other extra servicessuch as seat selection, priority boarding, hand luggage on board.
What have you been doing in the past two years?
«We have invested in the fleet, taking 45 new aircraft, we have opened many bases, also in Italy. Today we are a much larger organization: we had 5,000 employees in 2019 and now we are 6,700 ».
Last April you carried more passengers than the same month in 2019 (3.62 million versus 3.29 million), but the flight load rate was lower (83.4% versus 91.9%). Your direct competitor, Ryanair, flew fuller planes. Does this mean that you need to rebalance supply in some markets or do you need to reduce it?
«We have to see this in the right perspective. We have increased the offer more than any other company and this is an investment that takes some time to pay off. It’s a matter of time, a few months, in the summer we will go back to the load factors of the past. And let’s not forget that some markets, such as Italy, up until a few weeks ago had restrictions on travel ».
Which countries are driving the recovery?
“We fly to 54 states and have a very extensive network of connections. I can say that all of these are supporting the recovery ».
And for Italy which market segment is doing better, that of domestic or international flights?
“During Covid, domestic routes had better results also because moving abroad was made difficult by border restrictions due to the pandemic. Now, as soon as the government has lifted the restrictions, international traffic begins to record solid data ».
The leaders of European airlines argue that fares will increase, also due to the increase in the cost of kerosene. Is this the same for you?
«Honestly, I don’t think our rates will be very different from those of summer 2019. The base price is in fact identical, what we see is an increase in revenues from the purchase of extra products. Unlike others, we have a younger fleet, more capacious passing from the A320 to A321, which consumes less per seat, which allows us to be more aggressive on fares to stimulate demand and to be more attractive ».
Speaking of fares, you were among the first in Europe to have more revenue from the sale of extras than from the sale of seats. According to the latest published data, “ancillaries” accounted for 60% of passenger revenues.
“Now every additional percentage point of revenue from extras is harder and harder to get. However, there is no better way to allow everyone to fly than by “unpacking” the ticket so people really pay for what they use and consume. It would be nice if one day the seat was free or almost free and the revenues for the companies came from the various extra services / products. But there is still a long way to go ».
Is it Wizz Air’s goal to aim for the free basic fare?
“Our goal is to sell tickets at the lowest possible price and compensate with ancillaries.”
Is there still room for extras?
“Yup. This is why we are constantly working on how to increase ancillary revenues ».
What is the impact of the war in Ukraine?
“We no longer fly there or even to Russia. We have moved planes and people to other parts of Europe: we had 200 employees in Ukraine and three quarters of these have now been re-employed elsewhere. I remember that we also gave 100,000 free seats to Ukrainians fleeing the country. Four planes still remain between Kiev and Lviv, they are intact as far as we know, but we can’t get them back yet. I don’t see a significant impact on bookings, not even in the states close to Ukraine ».
And how important is the increase in kerosene?
“Obviously this has a certain impact on costs, but it is the same for the whole sector. We believe it is a surge that will not last long ».
For this reason, for the first time, you have made “fuel hedging”, that is, you have purchased a quantity of fuel at a certain price that remains blocked for the duration of the agreement …
«It is so. For the next six months we have agreed this on 60% of the fuel needed for our operations to be sure of being protected in case the cost of kerosene were to skyrocket ».
Let’s talk about Ita Airways. She has always told us that Wizz Air is not interested. But Indigo Partners, a US fund that is also your investor, has sent an expression of interest for the Italian company. What does it mean for you?
«I don’t see how Wizz Air can have an interest in investing in Ita. We have an interest in investing in Italy and in increasing our presence in the country regardless of whether or not Ita exists “.
Don’t you see any form of synergy with the tricolor carrier?
«There could be some sort of collaboration between a short-medium range company like ours with an Ita that deals with the long range. We could therefore try to understand how to support an efficient carrier that offers intercontinental flights but following our business model, that of an ultra-low cost one “.
But if Indigo Partners wins Ita Airways at that point you will have to decide how to work together.
“Well we’ll take care of it when the time is right.”
He’s been on a tour of Italian airports these days. Because?
«I think that aviation in Italy is in a transition period. As Wizz Air we have always seen your country more as a destination than as the origin of the main flows, but Covid has changed things. It has become clear to the Italian airports that they serve more solid companies like ours ».
Don’t you think there are too many airports in Italy?
«I don’t agree. More airports bring more competition and it is good for all players: consumers, companies, airports themselves. What we are noticing is that people like to be able to travel through an airport near their home: short and medium flights are now a commodity and it becomes more and more important when an airport is far from home, a bit like with clothing or clothing stores. food “.
This summer everyone expects a return to the values of 2019. But this also brings the issue of flight punctuality.
«I would say that the issue concerns the entire air transport chain, from aircraft manufacturers to flight controllers to ground personnel. Quite a few of the delays are likely to be caused by what’s going on around the airlines. As far as we are concerned, we have learned from the past and for this reason we have prepared ourselves and are ready to face any critical eventualities ».
However, there is also a theme of shortage of personnel among pilots and flight attendants in the companies. In the US it is already evident, but also in Europe it is starting to emerge.
“I think it is a risk that we also run on our continent. But as far as Wizz Air is concerned, we think we have the right number of pilots and flight attendants to deal with any operational critical issues ».
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Wizz Air CEO: «It will be a record summer. The goal is to let you fly for free ”
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