The commercial director of Wizz Air Ukraine discusses liberalization of the aviation market with Europe, the advantages of low-cost airlines, and the concept of a flagship carrier in an exclusive column for CTS.
Classic carriers believe that it is too early for Ukraine to join the European Common Aviation Area. They attribute this to the lack of the necessary conditions: high purchasing power of the population, visa-free travel, and attractiveness of Ukraine to tourists and businesspeople. In addition, according to them, foreign carriers are not fully using the routes that have already been allotted. Do you share their opinion?
Accession to the European Common Aviation Area now can create a situation in which supply on the market will exceed demand and competition among air carriers will toughen. Of course, passengers can only benefit from this. However, such a situation will be corrected and stabilized because some carriers will cancel the capacity originally proposed. Undoubtedly, the visa regime limits the potential of the market. However, we are waiting impatiently for the signing of the "open skies" agreement because it will open up new horizons for carriers and offer more opportunities compared with the current situation in which the market is limited by increased regulation. This increased regulation even reaches the exclusively commercial aviation business and does little to facilitate development of the market.
Ukraine International Airlines’ President Yurii Miroshnikov has also said that mass flying, which is the basis for the operations of low-cost airlines, does not exist in Ukraine and that budget carriers therefore occupy classic carriers’ long-established routes and offer slightly lower prices. How true is this?
Earlier we talked about the fact that flights between Ukraine and other countries are regulated by bilateral agreements. Moreover, it was possible for a long time to carefully protect a certain carrier’s exclusive right to perform the majority of flights. No other carriers had the chance to develop flights on these routes, even if they had the desire, the capacity, and the operational capabilities to perform such flights.
Look at Wizz Air Ukraine’s route map and note those destinations that we have taken away from other carriers - Cologne, Dortmund, Memmingen, Lubeck, Treviso, Bergamo, Girona, Valencia, Katowice, and Kutaisi. These are all destinations that were developed from scratch. We plan to expand our route network in the future.
The low-cost business is very dependent on the level of costs, and we are making every effort to keep them low (at the same time, we will never compromise safety or proper maintenance). Only thanks to this are we able to offer such low prices for air travel. With such an offer on the market (low prices), we create demand and passenger traffic. I would say that we are attracting completely new passengers that previously did not travel at all or used other forms of transport for traveling.
I believe that the traditional carriers have their share in this business because they have their own target audience and they offer a type of service that is different from the one offered by low-cost airlines.
Does Ukraine Need A Flagship Carrier?
I am sure that it will be impossible to adhere forever to the tendency to oppose the creation of a competitive environment in Ukraine. What should be done when a foreign carrier plans to operate flights in the same direction from the other side - and not from the Ukrainian side - from where a Ukrainian carrier already flies: support this airline company or block its flights to ensure preferences for the Ukrainian operator? Recently, we have heard from our officials a lot of talk about negotiations being held with foreign airline companies on commencement of flights to Ukraine. This means that the government supports the competition. However, at the same time, we hear that representatives of the aviation authorities want to support a certain airline company in Ukraine. What exactly is their strategy?
In my opinion, Ukraine does not have enough competition in the aviation market. I agree that having a flagship airline company on the market is a winning position from the viewpoint of a carrier. However, this leads to the carrier losing the sense of competition and the sense of someone breathing down your neck, thus stimulating the use of resources in the most effective way. With time, it becomes more and more difficult to grasp the situation. From the point of view of the passenger, this amounts to defeat because he has no choice.
We are making every effort to provide the best price/quality combination, and passengers themselves are already making their own choices.