Low-cost take off

Much of the increase can be attributed to the explosion of budget airlines onto the market. However, experts say traditional carriers are in for a soft landing, since while the economy carriers attract new clients that have never flown, they don't hang onto them forever.

Within one year of their entrance onto the Polish scene, low-cost airlines snatched over 30 percent of the market and contributed significantly to a 22-percent growth in air traffic.

In 2005 Polish airports served over 11.5 million passengers, which represented a 31-percent increase on 2004's figure. The Polish airline industry is developing much faster than the remaining European markets, as the average passenger growth in Europe was just 6.3 percent last year. The Civil Aviation Office (ULC) also predicts that in 15 years the number of passengers serviced in Poland will grow more than threefold and could reach as much as 39 million. Although the office expects the growth rate to decrease steadily over the next few years, it should still be higher than the EU average. The International Air Transport Association estimates that within the next four years Poland will become the fastest-growing air market in the world.

Chopin's etude
Warsaw's Chopin Airport remains the leader among hubs in Poland with over seven million passengers served in 2005. This figure represents 61 percent of all passengers in Polish airports last year. However, the smaller, regional airports are gaining importance. At the end of 2004, Chopin's share of the Polish market was 68 percent. The ULC predicts that in the coming years this structure will undergo further changes, and around 2020 the regional airports will account for the majority of flights.

Kraków's Balice Airport is the second-largest hub in the country. It experienced a significant growth last year as the number of passengers served rose by nearly 100 percent year-on-year. Over 1.5 million travelers moved through the Kraków airport in 2005. Katowice's Pyrzowice also served more than one million passengers in 2005, and witnessed an 86-percent traffic increase over 2004. Gdańsk's Rębiechowo and Wrocław's Strachowice airports followed with some 678,000 and 454,000 passengers respectively.

Building momentum
The steadily growing traffic is becoming too heavy for Polish airports, many of which were built as small regional hubs for servicing domestic flights. To make way for the increase, there is construction under way at nearly every airport in Poland. According to a report published by PMR, in 2006 over zł.440 million will be spent on construction works at Polish airports. A new terminal is being completed at Warsaw's Chopin, while Wrocław and Katowice should have new ones by 2008 and 2007. "We can handle this year's expectations, we can handle 800,000 passengers, but the existing terminal is too small for larger numbers of passengers," vice-president of the Wrocław Airport Leszek Karwowski told WBJ. Kraków also intends to expand its hub with a new 2,800-sqm hall to better handle traffic.

The year 2005 was the first full year of low-cost airline activity in the Polish market. The first low cost carriers entered the market in fall of 2004 and within a year and a half they have established themselves as a force to be reckoned with in Poland's airline market. Budget airlines managed to snatch over 13 percent of the market in 2004, after just a few months of activity. Further expansion continued last year with Ryanair entering the arena, and new connections began springing up like mushrooms after the rain. As a result, by the end of 2005, low-cost carriers accounted for a 31-percent slice of the airline-market pie. What's more, according to ULC estimates, these carriers generated 95 percent of the passenger growth for 2005.

Lot on top
Lot Polish Airlines maintained its number-one position on the market, having carried 43 percent of all passengers served in Poland. However, among the top ten airlines in the country there are five low-cost carriers. Hungarian Wizz Air is ranked second on the list with a market share of 12 percent. Centralwings - Lot's low-cost subsidiary - was ranked fourth with 4.8 percent of the market, Sky Europe and Easy Jet followed with 4.5 percent and four percent of the market respectively.

Irish low cost giant Ryanair carried just over 260,000 passengers last year, which gave it a 2.5-percent share of the market, which it entered only at the end of March 2005 and until the end of October flew only one route. All the top national carriers witnessed a fall in market share. Some of them increased the number of passengers served in 2005 in comparison to the previous year, but the growth wasn't nearly as fast as that achieved by the budget airlines.

New attraction
"Low-cost carriers steal customers from the traditional airlines but their main merit lies in attracting new customers that have never flown," an independent aviation market analyst and editor of Skrzydlata Polska, Grzegorz Sobczak said. He added that in Western Europe, although low costs initially stole some of the traditional airlines' passengers, the giants managed to bounce back and poach some of the new passengers whom the low costs inspired to fly. Analysts claim that in order to maintain a strong position, the traditional carriers will have to reduce costs and prices and rework their offers and structures.

"Poland has a lot of potential and there is still a lot of space on the market both for low-cost airlines and traditional carriers," said Lufthansa's general manager for Poland, Thorsten Bohg.