Travel industry risks over-steering
Customers previously kept out of the travel market because of price (kept high by dominant flag carriers) or quality (the grueling minimum 24-hour bus trip to Western Europe) are being brought in. But the question remains: is the surge in supply and reduction in price of this travel product sustainable?
In June, Bratislava-based SkyEurope will start seven flights a week from Warsaw to London, while Wizz Air will start a daily Katowice-London route in May. Air Polonia already has a total of 14 flights per week to London from four Polish cities. With between 160 and 180 seats available on each flight starting this summer, this entails an availability of twenty thousand more flight travel tickets per month on the Warsaw-London route than was so during the same period last year.
And these seemingly massive numbers are set to be multiplied several times over: the three new airlines service other popular destinations, such as Paris and Cologne, and will soon be joined by other low-fare start-ups such as German Wings and Volarweb from Italy.
Peter Digger, a spokesman for Wizz Air, says that this is a moment of truth for the airline. "The market has not been tested," says Digger, "...while there still is more demand than capacity, it remains to be seen if travelers are as insatiable as everyone says."
"Our market research tells us that Katowice-London will be a profitable route for us. It will primarily be Poles visiting the UK, and, in both directions, it will be mostly tourism rather than business or migrant worker traffic."
The movement of migrant labor, currently an issue of major public concern in the UK, where the tabloid press in particular has tended to inflate the danger of Britain being swamped by - often illegal - workers from new EU accession nations, especially Poland, is not seen as a business opportunity by Wizz Air. "We have never intended to become a shuttle for Poles seeking work in the UK," he says. "Wizz Air is aware of its responsibilities in this respect and everyone is monitoring the movement of labor."
"May is already looking good," says Marek Sławatiniec, sales manger of Air Polonia. "We have already sold up to 80 percent of tickets on each flight on some routes. To the UK, a significant amount of travel is thanks to Poles seeking work there."
As its name suggests, Air Polonia is set apart from low-fare rivals Wizz and Sky Europe by operating from a single country. While this incurs the risk of overspecialization and the threat of a low-cost giants, such as Ryanair, squeezing the airline out of its only market, it also provides for a head start on new Polish routes.
Pre-empting low-fare competition on the Warsaw-London route (from SkyEurope as of June), and the Katowice-London route (from Wizz Air flying to London Luton as opposed to Air Polonia's London Stansted), Air Polonia has moved into Poznań and Gdańsk ahead of the competition.
"Our strategy is to avoid competition by moving into regional Polish cities," says Sławatiniec. "The Warsaw route in particular will be subject to fierce competition." Nevertheless, competitors are catching up with this strategy fast.
Wizz Air is currently in advanced negotiations to service Gdańsk Airport. József Váradi, CEO and founder of Wizz Air, says, "The signing of the deal with Gdańsk Airport is an important milestone for Wizz Air, enabling us to provide millions of customers in Poland with a choice to fly with us from airports in either the North or the South of the country. The airports form a strong platform from which we can offer services at affordable prices to a wide range of European destinations."
"The market for air travel in Poland is under-developed," added Váradi, "...and the Gdańsk deal will help bring about further economic benefits to the country and the region, especially in the fields of business travel and tourism."
As Poland's premier international tourist destination, Kraków, still lacks a low-cost base, Wizz Air has had to come up with a clever marketing move for British tourists. Its tickets to Katowice are billed as "Katowice-Kraków", with the intention of introducing the British traveler to Katowice airport, at least 90 minutes away from Kraków by bus, a less direct but far cheaper route to Poland's medieval capital. Air Polonia, by contrast, is competing on precisely the same route but is trying to sell tickets to travelers from Britain marked as "Katowice" - a place that many of them have never even heard of.
Ryanair's airport developer, Morrison and Infratil, was in Poland this quarter to scout investment opportunities outside Kraków precisely because of its lack of a secondary airport, although no concrete plans have been revealed yet.
One casualty of the possibly over-supplied market may be those airlines that have missed out on the opportunity to enter the market at all. GetJet, the low-fare airline planned as an offshoot of Silesian Air, is trying to start its operations after one year of delays. Although TSB Holdings has agreed to a partial buy-up of the Silesian Air parent company, GetJet is still recruiting the necessary staff for its operation.
"SkyEurope is entering the Polish market through its first base in Warsaw, but we are negotiating with more airports for additional bases," said Christian Mandl of SkyEurope. According to SkyEurope, they will start operating direct low-fare flights from Warsaw to Vienna-Bratislava and Budapest on May 2, 2004. From June 14, 2004, SkyEurope will add new flights from Warsaw to London seven days a week, as well as to Paris and Amsterdam. On October 8, 2004, SkyEurope will expand its Warsaw offer to include Rome, Milan and Zurich.
SkyEurope Airlines' shareholders include the European Bank for Reconstruction and Development (EBRD) and the Dutch bank ABN-Amro. 'We are glad that these renowned financial institutions are supporting our ambitious growth plans,' Christian Mandl said in a press statement. SkyEurope Airlines is set to base several aircraft in Poland, and expects to put zł.80.5 million ($20 million) into its Polish activity.
In June, Bratislava-based SkyEurope will start seven flights a week from Warsaw to London, while Wizz Air will start a daily Katowice-London route in May. Air Polonia already has a total of 14 flights per week to London from four Polish cities. With between 160 and 180 seats available on each flight starting this summer, this entails an availability of twenty thousand more flight travel tickets per month on the Warsaw-London route than was so during the same period last year.
And these seemingly massive numbers are set to be multiplied several times over: the three new airlines service other popular destinations, such as Paris and Cologne, and will soon be joined by other low-fare start-ups such as German Wings and Volarweb from Italy.
Peter Digger, a spokesman for Wizz Air, says that this is a moment of truth for the airline. "The market has not been tested," says Digger, "...while there still is more demand than capacity, it remains to be seen if travelers are as insatiable as everyone says."
"Our market research tells us that Katowice-London will be a profitable route for us. It will primarily be Poles visiting the UK, and, in both directions, it will be mostly tourism rather than business or migrant worker traffic."
The movement of migrant labor, currently an issue of major public concern in the UK, where the tabloid press in particular has tended to inflate the danger of Britain being swamped by - often illegal - workers from new EU accession nations, especially Poland, is not seen as a business opportunity by Wizz Air. "We have never intended to become a shuttle for Poles seeking work in the UK," he says. "Wizz Air is aware of its responsibilities in this respect and everyone is monitoring the movement of labor."
"May is already looking good," says Marek Sławatiniec, sales manger of Air Polonia. "We have already sold up to 80 percent of tickets on each flight on some routes. To the UK, a significant amount of travel is thanks to Poles seeking work there."
As its name suggests, Air Polonia is set apart from low-fare rivals Wizz and Sky Europe by operating from a single country. While this incurs the risk of overspecialization and the threat of a low-cost giants, such as Ryanair, squeezing the airline out of its only market, it also provides for a head start on new Polish routes.
Pre-empting low-fare competition on the Warsaw-London route (from SkyEurope as of June), and the Katowice-London route (from Wizz Air flying to London Luton as opposed to Air Polonia's London Stansted), Air Polonia has moved into Poznań and Gdańsk ahead of the competition.
"Our strategy is to avoid competition by moving into regional Polish cities," says Sławatiniec. "The Warsaw route in particular will be subject to fierce competition." Nevertheless, competitors are catching up with this strategy fast.
Wizz Air is currently in advanced negotiations to service Gdańsk Airport. József Váradi, CEO and founder of Wizz Air, says, "The signing of the deal with Gdańsk Airport is an important milestone for Wizz Air, enabling us to provide millions of customers in Poland with a choice to fly with us from airports in either the North or the South of the country. The airports form a strong platform from which we can offer services at affordable prices to a wide range of European destinations."
"The market for air travel in Poland is under-developed," added Váradi, "...and the Gdańsk deal will help bring about further economic benefits to the country and the region, especially in the fields of business travel and tourism."
As Poland's premier international tourist destination, Kraków, still lacks a low-cost base, Wizz Air has had to come up with a clever marketing move for British tourists. Its tickets to Katowice are billed as "Katowice-Kraków", with the intention of introducing the British traveler to Katowice airport, at least 90 minutes away from Kraków by bus, a less direct but far cheaper route to Poland's medieval capital. Air Polonia, by contrast, is competing on precisely the same route but is trying to sell tickets to travelers from Britain marked as "Katowice" - a place that many of them have never even heard of.
Ryanair's airport developer, Morrison and Infratil, was in Poland this quarter to scout investment opportunities outside Kraków precisely because of its lack of a secondary airport, although no concrete plans have been revealed yet.
One casualty of the possibly over-supplied market may be those airlines that have missed out on the opportunity to enter the market at all. GetJet, the low-fare airline planned as an offshoot of Silesian Air, is trying to start its operations after one year of delays. Although TSB Holdings has agreed to a partial buy-up of the Silesian Air parent company, GetJet is still recruiting the necessary staff for its operation.
"SkyEurope is entering the Polish market through its first base in Warsaw, but we are negotiating with more airports for additional bases," said Christian Mandl of SkyEurope. According to SkyEurope, they will start operating direct low-fare flights from Warsaw to Vienna-Bratislava and Budapest on May 2, 2004. From June 14, 2004, SkyEurope will add new flights from Warsaw to London seven days a week, as well as to Paris and Amsterdam. On October 8, 2004, SkyEurope will expand its Warsaw offer to include Rome, Milan and Zurich.
SkyEurope Airlines' shareholders include the European Bank for Reconstruction and Development (EBRD) and the Dutch bank ABN-Amro. 'We are glad that these renowned financial institutions are supporting our ambitious growth plans,' Christian Mandl said in a press statement. SkyEurope Airlines is set to base several aircraft in Poland, and expects to put zł.80.5 million ($20 million) into its Polish activity.
