It's like a low-cost airline version of "Game of Thrones," but with more fees and less legroom.
Ryanair is aiming to double its business in the fast-growing Polish market and expand across eastern Europe over the next decade, executives said, taking on rival Wizz Air and opening a new front in the battle of the budget airlines.
As part of its strategy, Ryanair, whose low fares have helped it dominate markets in Ireland, Italy and much of western Europe, aims to beef up its presence at eastern European airports.
It already operates from more than a dozen Polish airports, including nine bases, CEO Michael O’Leary told Reuters, often negotiating special deals to secure lower fees – crucial in the contest to keep costs down, and fares too.
“Whenever we come up against Wizz, we tend to have significantly lower fares and have much lower costs,” he said.
As an example of the strategy, he cited Albania, where Ryanair plans to open 25 new routes this winter to take on Wizz in its eastern European heartland.
But Hungary-based Wizz is not standing still.
It plans to operate at least twice as many planes as it currently has in central and eastern Europe by 2038 and is shortly set to announce 35 new aircraft in Poland alone, Chief Executive Jozsef Varadi told Reuters.
“We’re looking at double-digit growth year-on-year, over the next seven or eight years” in the region, Varadi said.
With nearly 40 million people, Poland is by far emerging Europe’s biggest country, where rising disposable incomes have fuelled a demand for travel that makes the region an attractive prospect as western European markets mature.
“All these people are getting richer. And when you get richer, you fly more, especially if you start from a base of not flying very much,” said Jamie Lindsay, an investor at Artemis Investment Management LLP, whose funds own Ryanair shares.
According to data analysis firm IBA, low-cost carriers have over 59% of the aviation market in Poland, up from 31% in 2021.
That figure is expected to continue growing as more Poles travel for tourism and work rather than migration, said Michal Kaczmarzyk, the CEO of Buzz, Ryanair’s low-cost charter and budget subsidiary based in Warsaw.
He added that Buzz and Ryanair were mainly focused on regional airports, like Modlin outside Warsaw or Katowice near Krakow.
That contrasts with Wizz, which mostly flies from Warsaw’s main Chopin airport and, according to Kaczmarzyk, means no one “could replace Ryanair’s offer in Poland”.
Ryanair’s Polish push comes as the Irish-based company faces headwinds in Italy, where it is the largest airline in the market, and France, as regulators seek to impose minimum ticket prices to curb short-haul flights – whether due to environmental reasons or to protect bus and train companies.
Poland and eastern Europe’s lighter regulatory requirements, lower environmental scrutiny and poor rail connections make them appealing markets by comparison.
“Regional airports play a vital role in passenger traffic in Poland, with the top 10 Polish regional airports having almost 50% of the market share and noting a strong post-pandemic recovery,” said Dan Taylor, head of consulting at IBA Insight.
For both Ryanair and Wizz, new planes are also driving their expansion, with Ryanair set to put a sizable chunk of a 300 plane order announced earlier this year in Poland and neighbouring countries, Kaczmarzyk said.
“Today we have 64 planes in the region,” he said. “We assume that in 10 years we will at least double the fleet. If today in the region here we have about 30 million passengers, we assume that there will be 60 million.”
O’Leary also said around 180 of the 400 new aircraft the company plans to deploy over the next eight years would operate in central and eastern Europe.
Varadi, meanwhile, is just as confident in prospects for Polish and neighbouring markets, and in the ability of budget carriers like Wizz to take share from national airlines such as Poland’s LOT or Romania’s TAROM.
He noted that the war in Ukraine on Poland’s border had not dented travel.
“At the end of the day … so long as economies are growing, GDP is up, that creates more disposable income for the consumer and airlines continue to benefit,” he said. “This is what we are seeing and what we will continue to see.”
(Additional reporting by Tim Hepher; Editing by Mark Potter)
This article was written by Michael Kahn and Joanna Plucinska from Reuters and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to [email protected].
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Photo credit: Buzz airline CEO Michal Kaczmarzyk poses in Warsaw. Reuters