Low-cost airlines Reaching for the Skies

In an attempt to stimulate flagging growth, operators of major German hub airports are vying to attract low-cost airlines, which usually fly from cheaper, out-of-the-way locations. Hungarian carrier Wizz Air is hoping to cash in.
Wizz Air passengers in Germany will no longer have to head out to the sticks to get a flight.

They are the new beacon of hope for managers of large airports, a guarantor of continued growth: Low-frills airlines. The carriers, more often found at out-of-the-way airports or in smaller cities, are currently being wooed by the owners of almost every major airport in Germany.

Fraport, owner of Germany’s largest airport, Frankfurt, is one of them. According to CEO Stefan Schulte, the firm is having some success: Following the announcement last year that Irish discounter Ryanair would start flying from Frankfurt this summer, Hungarian carrier Wizz Air is now following suit. Its first flights will be to the Bulgarian capital Sofia.

Wizz Air has embarked on a vigorous course of expansion. According to current calculations by the German Aerospace Center (DLR), the company is growing quicker than any other airline, measured in terms of summer take-offs. For July, the DLR is predicting a plus of 28.5 percent to 919 take-offs.

Wizz Air was founded in London in 2003 by Jozsef Varadi, the former head of Malev, Hungary’s now bankrupt national airline. After Malev’s demise, Wizz Air became the largest Hungarian flight provider and is now headquartered in Budapest. It currently operates 75 aircraft, with around 140 more planes on order.

We can’t afford to ignore this trend. Stefan Schulte, Head of airport operator Fraport

There are several reasons for the push towards large airports, which up to now have been avoided by budget airlines because of fees and complexity. First, companies such as Ryanair and Wizz Air can no longer expand solely through smaller airports. Second, large airports such as Frankfurt can no longer achieve the growth they seek with only the established network airlines, which have slashed their number of flights because of low margins and are now barely growing at all. Third, the bosses of hub airports are registering rising demand for cheap tickets.

“We can’t afford to ignore this trend,” says Mr. Schulte. He intends to raise the presence of low-fare airlines from 4 to 10 percent at Frankfurt. This will be facilitated through a new fees schedule that will be offered to the low-budget firms.

The move has encountered fierce criticism from Lufthansa, Germany’s flag carrier and Europe’s largest traditional airline. But it can’t complain too much: it intends to station its own low-fare platform Eurowings in Frankfurt starting next year.

It remains to be seen whether the low-cost plan will work. Success is far from guaranteed, as shown by the example of Vueling. The low-cost subsidiary of the IAG Group, which owns British Airways and Iberia, began offering flights between Frankfurt and Barcelona in the summer of 2013. Due to low demand, it is canceling the route as of 6 March.

 

Jens Koenen leads Handelsblatt's coverage of the aviation and space industry. To contact the author: [email protected]