New Central European LCCs Expand Rapidly, But Profits Are Still Far Off

GROWTH MODE

Wizz Air and Sky Europe are emerging as Central and Eastern Europe's fastest-growing low-fare carriers, but doubts remain whether both can survive independently in the longer term.

Both airlines have been taking advantage of the European Union's eastward expansion that added 10 countries to the EU common aviation market. Growth rates are impressive in the largely uncharted territory, but profit appears a long way off, particularly for Sky Europe.

Wizz Air and Sky Europe are the business model's largest proponents in Central and Eastern Europe, followed by LOT Polish Airlines subsidiary Centralwings. But Eastern Europe has also been a key target for Ryanair and Germanwings, in particular. According to data collected by GCW Consulting's Executive Vice President Anita Mosner, low-fare carriers combined achieve a 41% market share in Poland, 24% in Hungary and 14% in the Czech Republic. This compares to negligible exposure in the three countries three years ago.

In key Central and Eastern European markets, "capacity has skyrocketed," Mosner says. Slovakia's Bratislava Airport, the main base for Sky Europe, has seen seat capacity grow by 424% in three years. Budapest capacity is up 72%; Prague, 62%; Vienna, 35%; and Warsaw, 75%. But growth at regional airports that have had little air service in the past is even outstripping the impressive growth rates at the region's major airports.

Set up in 2001, Sky Europe was the first new entrant to the market.