Wizz Air "not concerned" with Macedonian subsidy tender


Wizz Air has said it is unconcerned over two botched tenders by the Macedonian government aimed at granting state aid for the development of new routes. The low cost airline was the only carrier to apply but was rejected on both occasions due to alleged shortcomings with its application. Speaking to EX-YU Aviation News, Wizz Air's CEO, Jozsef Varadi, said, "No, we are not concerned. This is a matter for the government to consider and decide on. We think that, strategically, it is important for the country to continue to develop its infrastructure and accessibility. Given the stage of development of Macedonia's market at the moment it looks like some government aid is important and it has been a successful recipe for building traffic from Skopje but it is a government decision".

The Macedonian government has adopted plans to launch a fresh tender but is yet to issue an open call. "If the government decides to launch a bid for a new process, we would certainly consider it and we would likely apply because we are the incumbent carrier. But this is really an issue for the government to come to grips with", Mr Varadi said. A similar three-year subsidy policy was enforced in both 2012 and 2015, with the no frills airline being the sole beneficiary. It resulted in Wizz Air basing four aircraft in the Macedonian capital and launching over a dozen new routes.

Asked whether Wizz will continue to grow its operations out of the country even without state subsidies, Mr Varadi noted, "We would look at the commercial opportunities on a constant basis and if we would find a new route opportunity that is totally justifiable, yes, we would do it on its own merit". The airline's CEO added that the recent launch of two new routes from Pristina (with the third to commence next month) will not hinder its operations from Skopje. "I think we are still trying to learn the [Kosovo] market. We have a limited presence in Pristina", Mr Varadi said. Asked whether the airline could base an aircraft in Pristina, the CEO concluded, "Not at the moment. Maybe at a later stage but at this point in time, no".

Comments

  1. Interesting points made by Varadi.

    Basically he says :
    1. the Macedonian market still needs subsidies in order for airlines to launch new flights
    2. It would be very very difficult for them to launch new routes without subsidies.

    Not great.

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    1. Well what did you expect from the CEO of the company which is interested into subsidies to say?
      There is no need of subsidies?!

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    2. Well let's wait an see what happens. Almost all of their routes from Skopje (except first couple) were launched under the subsidy program.

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    3. Market economy. People in these parts of the world should learn to deal with it

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    4. 09:08 +1
      He is a good business man, he knows what to say

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    5. @9.17 as if people in other parts of the world don't subsidize rail/airlines/airports and other infrastructure.

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    6. its funny how they launched 3 destinations without subsidies once they realised FR are in talks with the gov.

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    7. @09:43

      Funny, that ;-)

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  2. Well that ends rumors how they are going to open a base in PRN.

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    1. Pristina is too expensive for Wizz and unlike Germania, Wizz does not work with murky local tour operators.

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    2. PRN should focus more on lowering fees and attracting LCC if it wants to be competitive.

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    3. It's quite competitive as it is at the moment. Check their passenger growth and all the new Wizz routes ;)

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    4. There is a very weird system in Pristina. The concessionaire doesn't actually set the prices. The government does. The concessionaire is aware that the prices are high and that is why they made a huge incentives program.

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    5. And at the same time government pays for 35 million EUR runway reconstruction. What a concession deal.

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  3. Hmm I'm concerned about this part

    Asked whether Wizz will continue to grow its operations out of the country even without state subsidies, Mr Varadi noted, "We would look at the commercial opportunities on a constant basis and if we would find a new route opportunity that is totally justifiable, yes, we would do it on its own merit".

    Doesn't sound very convincing. So without subsidies we won't see many (if any) new routes from Wizz.

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    1. I agree. All of the "justifiable" opportunities have already been launched.

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    2. You can't justify something if you no longer have the know-how.

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    3. Why? What happened?

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    4. :)

      They no longer employ an exYu commercial manager..

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  4. Sounds like a reasonable person. Quite a refreshment compared to the other CEOs we normally read about here.

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  5. Government is obviously not interested or sincere with these tenders. They said more than a month ago how they would launch it straight away and it's already December!

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    1. If they were not interested, why did they launch them in the first place? No one forced them. It's not required by law.

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  6. I just don't understand why the government doesn't give it to W6. They are obviously the only ones interested and considering how much traffic they have generated in Macedonia it wouldn't be a bad decision.

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    Replies
    1. Maybe they are hoping that another airline will apply. Like Ryanair for example.

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    2. They had two chances to apply already and absolutely no one other than Wizz has. Don't think things will magically change the third time.

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    3. Agreee with anon 9.12. Wizz Air has become the de-facto national airline, and Macedonia and Macedonians are all much better for it.

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  7. Does anyone know how these tenders work? Does the government contact airlines to tell them that there is a tender going on.

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    1. Yes, they said they contact airlines of interest.

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    2. Ok thanks. I find it surprising that no one else is interested.

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    3. The tender rules are made in a way that it makes it difficult for anyone to apply other than Wizz Air.

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    4. Or easyJet. Or Ryanair. Or any other decent airline. Just not the local tricksters.

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    5. > Ryanair
      > Decent airline

      Pick one

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    6. Lol :)

      In a business sense anyways. In this context, I meant self-sustainable, properly profitable, has proven market presence and is able to finance further expansion out of their own pockets if need be.

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  8. Televisa presenta

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  9. Way too much money. Reducing handling/landing fees by SKP airport would be more than enough if you ask me.

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    Replies
    1. €5 million is nothing, when you consider the average spend of an incoming tourist that would otherwise go to some other place in Europe.

      Almost all tourist destinations or otherwise 'not so obvious' destinations in Europe have to compete when it comes to subsidies to attract low cost carriers. It is as simple as that.

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    2. If you seriously believe that the bulk of people travelling as a result of this incentive are genuine bona fide tourists that have decided to come to Skopje instead of going elsewhere, then you have been reading way too many fairy tales ...

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    3. Go to Skopje, Bitola and Ohrid to see that there are tourists in Macedonia!

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    4. 9:16 (OP)

      Bingo.

      That's what these 'subsidies' have been about all along. And would've been achievable by a 2-3 EUR volume-based tax reduction. However, somebody's not willing to play ball...

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    5. wow VIE gives 100% refund on landing fees during the first year for new destinations , 80% in the second ...

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    6. They are actually subsidising gastos coming back home for cheap. They land and go to Pristina. Don't tell me that tourist from Vaxjo flock to visit. Tourists are probably 5%-10% at most, which is still not bad. Then you have the locals travelling at affordable price and the local gastos coming home and spending money, the overal effect is for sure positiv.

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    7. Although actually going to Macedonia HAS become a thing in Växjö (I'm from a town nearby and know loads of people that have gone there and to Bosnia with Wizz). People get curious about the new cheap flights from their little Swedish hometown to "exotic" countries they don't know much about, and the last time I flew Växjö-Skopje there were a lot of Swedish tourists. Nowadays, apart for Turkish, Swedish is probably the most commonly heard foreign language in Skopje (counting Macedonian and Albanian as local languages). I'd call that the Wizz effect.

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  10. If INI was smart enough, it could offer the same subs package to W6/FR and get the routes instead

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    1. I doubt INI has 5 million euros in its bank account to give to any airline.

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    2. At least INI is competing with SKP and the 3€ tax proved to be extremely effecient. All the INI routes are basically matching the ones in SKP with the sole exception of Swiss, which SKP doesn´t fly to.

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    3. you sound like a broken record mate

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    4. What is the tax at SKP?
      maybe the discount in tax (3 eur compared to SKP) multiplied by the passengers sums up to 5 million?

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    5. INI's discount is much more than 3 EUR. 3 EUR is the actual tax per pax, in comparison to 15+ in SKP. So when you multiply, multiply for departing pax *12 at least. And you'll realize how much cheaper it is to operate from INI.. but it's not called a 'subsidy', just a discount by the airport operator, the government :D

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  11. Subsiding to LCC has proven very profitable for Macedonia. Passenger number at SKP increases every year, and besides Macedonian, Kosovar, Serbian, Bulgarian and Greek citizens (talking on a basis peronal encounters) you can also see many citizens of destination countries. I travel regularly to Stockholm-Skavsta and I see many Swedish people either with their Macedonian-emigrant friends, either on their own.

    Subsiding LLC is much more effective than maintaining loss-making national carrier. Many countries have already sold their flag carriers or don't sell them because there aren't eligible buyers. In meantime LLC expand and move to primary airports (Norwegian).
    Once lured to SKP by subsides, IMHO airlines will discover good business and stay at SKP, which is happening now with Wizz Air.
    I am happy that subsiding goes on.

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    1. I wish they did something similar in Sarajevo

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    2. I wish SJJ shared the enthusiasm.

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  12. I think they will ditch adding an additional a/c in SKP.
    They recently announced a base in KRK and stationed another A321 in OTP but only adding 2 new routes, both of which are gasto.
    I think the next bases might be BEG, SOF, KIV and CLJ.

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    1. I don't think they necessarily need another plane in Skopje. They already have 4 which is quite good and 2 of them are A321s.

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    2. I didn't understand the second part of your comment:

      "I think the next bases might be BEG, SOF, KIV and CLJ."

      You think they will be adding aircraft to these bases?

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    3. Usually it was almost always like this. When they base an aircraft they start with the bases generating more money.
      They expanded in BUD, KRK, OTP and the next logical bases are CLJ, SOF where they have more than 6 aircraft based.
      KIV and DEB also proved to be quite successful.

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    4. Interesting. How many planes are stationed now in Sofia?

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    5. There are 10+ a/c being delivered every year.

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    6. 7 in SOF and 1 in VAR.
      7 in CLJ
      2 in DEB.

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  13. Good interview. I really hope they stick around and open new routes even without incentives from the government.

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  14. Does Wizz Air also get incentives from TAV?

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    Replies
    1. I don't think there is additional support from TAV.

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    2. This is not true. Skopje/Ohrid like all other airport has an incentives program, to which Wizz can and does apply for.

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    3. The airport should give them additional incentives for handling so many passengers each year, starting new routes etc.

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    4. If they don't, TAV has one of the best concession deals ever.

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    5. 12:09

      Bingo.

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    6. TAV also supports airlines through its incentive scheme. Wizz is getting a lot of support due to its high passenger volüme.

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  15. It would be good to see companies like RyanAir or EasyJet despite Wizz. There are many more destinations in Europe we don't have flights to.

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    Replies
    1. I can see Ryanair starting some seasonal Ohrid flights from Poland in particular.

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    2. Aren't there flights already from Poland to Ohrid? I think Small Planet operates them over summer.

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  16. as long as there is no other airline seriously interested in basing an aircraft in Macedonia Wizz will never add additional aircraft without getting subsidies and why would they? They have the lcc-monopoly at SKP and even receive money for that

    regarding Wizz-plans for Macedonia lets not forget that in the first "envelope"-tender they applied for subsidies by declaring to base one aircraft in each SKP and OHD. In fact their plans for MK are stil big but they are not urgent... unless FR starts getting nosey about but i dont see it yet.

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    Replies
    1. Just one correction - '.. end even received money for that'. Past tense. The self-sustainable portion of the business went from ~80% to 100% earlier this year. De facto it was always sustainable, just needed the initial push for partially plugging the $M hole that's normal for first 2-3 years of operation.

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  17. I don't buy it that they are not concerned. Macedonia is a lucrative market for them under the current subsidy system. If they were unconcerned they wouldn't have reacted the way they did when Ryan said they were going to start Skopje flights a few years ago.

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  18. I hope the government gives out subs per route and not per based plane. Only with this you can attract new airlines which were shy to fly to Macedonia before

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  19. So that is the secret of Wizz success in Skopje. I am not surprised. Wizz likes nothing better than taxpayers money in their pockets.

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    Replies
    1. Shame that they are not like JU

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    2. Well I'm sorry but don't get why should Macedonian taxpayers invest millions of euros in a foreign company for years that can leave tomorrow with all their investments.

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    3. 10:51

      :)))))))))))

      I can't even..

      Don't feed the troll, kids.

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    4. But he is correct. What obligation does Wizz Air have to Macedonia? None. They are not registered there, they don't have an AOC there. I'm not saying it will happen but it is always a risk.

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    5. Let me put it this way - The main challenge was proving there is a viable market.

      That has been achieved. For good. In spite of numerous naysayers, both outside and within Wizz. But it's done. And that's what business development incentives are designed to do. And this notion of the market being saturated will continue ad nauseam until there is someone capable of making a difference and disproving it.

      There will always be candidates to jump in on a viable market. Just look what happened in Vienna, and prior to that in Budapest. For the nitpickers, I'm not comparing market sizes but scenarios.

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    6. +100 to 10:51 & 11:06
      -100 to 10:53

      In business darling, there is no room for emotions or trolls.
      W6 loves the money and the love stops when the money stops. Very easy.

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    7. You forgot to ask why Macedonian taxpayers sponsor people from Western Eruope to fly to Macedonia with such a low prices? :-))

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    8. 10:42 and 11:18 are the same person. Or bot. Those posts wouldn't pass the Turing test.

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  20. they should add new routes to SKP

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    Replies
    1. If you read the text, according to Varadi, they will be very cautious about adding new routes without government support.

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  21. I have a bit of mixed feeling about this policy. I am very happy that there are so many new routes from Skopje and this policy has revived the airport and increased connectivity. BUT I think they should stop at one point. Do we really need these subsidies anymore? A few legacy airlines have already left and while I fly LCC often it is good to have diversified offer on the market.

    ReplyDelete
    Replies
    1. "Do we really need these subsidies anymore? "

      According to Varadi yes:

      "Given the stage of development of Macedonia's market at the moment it looks like some government aid is important and it has been a successful recipe for building traffic from Skopje"

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  22. Governments should not be allowed to distort the market. If SKP wants to attract airlines then it should come from their own pockets. They were given up for concession for a reason.

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    Replies
    1. I don't think it distorts competition because these subsidies are only being offered for new routes, not for Wizz to keep its entire network in Macedonia.

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  23. They should pay financial subsidy to air navigation

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  24. I hope that easyJet uses this as an opportunity to start flights to SKP.

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    Replies
    1. If they saw it as an opportunity they would have applied for the tenders.

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    2. Absolutely no way, sorry. It would be a great risk for them to base a whole plane, given how poor the market is and that the main markets are already covered. Do not forget that W6 can afford to offer much lower prices and will attack them right away. And easyjet has no bases in the East, to my knowledge.

      If you mean to start 1 or 2 routes, then it could be possible but no base.
      And they can't participate in the tender then too.

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    3. @14:10

      So true :(

      I still hope they launch GVA one of these days.. and get proper support for it. If they can make PRN work @ daily they'd be fools to miss out on SKP like they did in BSL. The problem is there are not too many opportunities like that left, this is the only obvious one.

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  25. Still better then wasting money into a national airline. But I'm confused by government's actions regarding these tenders.

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  26. Wizz is unlikely to open a base in PRN until they have the planes to do so and can understand better the demand of Kosovo. It should be noted that there is a general move to have a 3 aircraft minimum to set up/keep a base - this was at least the reasoning why they have closed the base in LUZ for now (but will operate most flights "out of base"). There are many aircraft on order for next year, so let's see what happens!!

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  27. Najpametnije i najlogicno bi bilo da daju finansiske subvencije vazduhoplovnoj navigaciji i da povecaju nize place a njihov rad ima veoma pozitivan impact na razvoj sve aviokompanije u makedoniji

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  28. I think Macedonia should get the SSJs and start a new state airline. It is about the time.

    ReplyDelete

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