Thursday, 16 May 2013

Interview: József Váradi, Wizz Air CEO

Wizz Air to double operations outside Europe by 2015

Wizz Air expects to double its operational presence outside of Europe over the next 12 to 18 months, chief executive József Váradi said in a media briefing at the Routes Europe conference in Budapest this week.

The Hungarian low-cost carrier (LCC) has spread its reach beyond European borders during the past year, announcing new services to Kutaisi in Georgia, Baku in Azerbaijan, Tel Aviv in Israel and Dubai in the United Arab Emirates.

It also operates subsidiary Wizz Air Ukraine at Kiev Zhuliany airport, where it has based three Airbus A320s.

"Slowly but surely we have been moving towards the East," Váradi confirms, adding that Europe's economic difficulties have been "forcing us to look around and consider alternatives for growth in new markets".

"We think that those markets are under-penetrated, certainly by the LCC sector. We can stimulate those markets...What you see right now is probably half of what we are going to be doing in a year to 18 months from now."

Asked which countries are being targeted for expansion, Váradi says anywhere within five-hours flying time of a Wizz Air base will be considered.

"We need to keep in mind the physical range an A320 can perform," he notes. "You might get into places like Asia big-time, but not necessarily from a Hungarian perspective. More from a perspective of a closer neighbourhood, to serve the particular needs of that market."

Váradi suggests that countries which show willingness to liberalise their regulatory landscape and ease bilateral restrictions will be prioritised by the low-cost carrier.

Such challenges are still being encountered in existing markets, he admits, citing "genuine difficulty" by Wizz Air Ukraine in gaining market access.

"Ukraine is still the old-school system. A bilateral regulatory regime governs the airline industry there," Váradi explains. But he also points to evidence of reform, adding that the failure of Aerosvit in December 2012 has "changed the attitude of the regulator to some extent".

"I certainly wouldn't call the country an open market regime, but it is more flexible than it used to be," he says.

The Hungarian chief executive emphasises that Wizz Air will not alter its seat configuration for any upcoming eastern routes, though it will consider introducing unspecified new "service components" on longer flights.

Wizz Air tempers talk of Russian subsidiary

Wizz Air chief executive József Váradi says that plans to launch a domestic Russian subsidiary are "unlikely" to get off the ground this year, citing the slow pace of reform to the country's regulatory landscape.

"We have been contemplating various ways of starting service in that market, but we have not yet made any commitments given the uncertainties around the regulations," he says.

Wizz Air held talks with Sheremetyevo and Vnukovo airports in Moscow in April, with a view to obtaining an air operator's certificate this year and launching operations in summer 2014.

But Váradi says that Russia has yet to take meaningful strides towards deregulation, which will be necessary if domestic carriers are to emulate the pricing models and no-frills products of their European counterparts.

"We have been discussing a number of issues with ministry officials and regulators in Russia," he confirms. "The country is in transition to some extent, but so far we've heard more words than actions.

"Those words would need to be manifested in actions, and they are not there yet."

Váradi's scepticism is shared by Michael O'Leary, chief executive of Wizz Air's larger rival Ryanair. After holding "exploratory" talks with Russian authorities last year, O'Leary said: "Generally speaking, we haven't been too impressed with the deregulation plans".

Russian carrier Aeroflot has advanced further with its plans for a low-cost subsidiary, though it also insists that "several amendments" will be needed to the country's legislative landscape if the venture is to be successful.

There are currently no domestic low-cost carriers in Russia, with Avianova and Sky Express both ceasing operations in October 2011.

Váradi says that Wizz Air is meanwhile looking at establishing a subsidiary in Turkey, though he is "not yet convinced" the timing is right. He adds that regulatory reform in the former Yugoslav republic and Israel is creating further opportunities.

Wizz Air studying A321s: Váradi

Wizz Air is exploring the possible introduction of Airbus A321s to its all-A320 fleet, chief executive József Váradi says.

"The A321 is something we are considering," he confirms. "It wouldn't give a lot of [extra] range, but it would give more seat capacity."

The low-cost carrier operates a fleet of 40 A320s, according to Flightglobal's Ascend Online database, with orders for a further 71 units.

Váradi says that while he would consider introducing the A321 on high-demand routes, Wizz Air's "unified single-type fleet concept" is not up for review.

"We are committed to the A320 [family]," he insists. "We will not be deploying different types of aircraft to serve different types of markets."