Ryanair's decision to morph into a group airline has opened up plenty of opportunities, with the individual carriers able to operate differently. But is there a downside? For Wizz Air, it's all about keeping things simple.
For a long time, Ryanair was out on its own as the only true ultra-low-cost airline in Europe but then along came Wizz Air.
Backed by Indigo Partners, which is also invested in Frontier and Volaris, Wizz Air has expanded across much of eastern and central Europe, mopping up the routes previously served by old flag carriers.
Ryanair and Wizz Air are now fierce competitors and according to Skift Airline Weekly the pair went head to head on about 100 city-pairs throughout Europe during the summer.
In the last year the relationship has changed slightly with Ryanair introducing a new group structure — similar to IAG — with the newly renamed Buzz airline taking on Wizz Air more directly in countries like Poland.
“We used to be competing with one operating model called Ryanair. Now we are competing with four operating models called: Ryanair, Buzz, Lauda and Malta Air. And I’ve seen each of them in our territories in central and eastern Europe,” said CEO József Váradi on an earnings call on Wednesday.
“I mean, on the one hand, it may achieve lower operating costs in certain areas, especially on labor, I guess, that’s the primary driver. But at the same time, that creates significant complexities as well.”
Váradi said Wizz Air benefited from the larger number fo seats in its Airbus A321 aircraft — 202 — versus the 189 on Ryanair’s fleet of Boring 737s (although this number will go up to when it gets its hands on the currently-grounded Max).
On Ryanair’s own first-half earnings call last week, group CEO Michael O’Leary specifically talked up Buzz (formerly known as Ryanair Sun) as a competitor to Wizz.
“I think Buzz to be very competitive on the labor side against Wizz, taking advantage of local taxation,” he said.
So who’s right? Interestingly, Wizz Air and Ryanair both argue that they are the lowest cost airlines in Europe, depending on the metric used.
Ryanair reports it on a euro per passenger basis, Wizz Air talk about being the lowest on an available seat kilometer basis.
While the wider aviation environment might be in a state of flux, Wizz Air is coping remarkably well. The company reported a 91.3 percent rise in pre-tax profit to $427.1 million (€ 387.9) in the six months to the end of September. Revenue in the period rose 21.7 percent to $1.8 billion (€1.7 billion).
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Tags: earnings, ryanair, wizz air
Photo credit: A Wizz Air aircraft. The airline reported a rise in pre-tax profit during the first-half of its 2020 financial year. Wizz Air