Low cost carrier Wizz Air recently posted a record first half profit for the 2020 financial year (April - September) amounting to 371.5 million euros. The Budapest-based company could soon take over from Ryanair as Europe's most profitable airline group by operating margin. However, while Wizz was profitable on all of the markets it served during the first half of the financial year, with exception to Morocco, it saw its profits decrease in six countries compared to H1 2018, with two of them being Serbia and Bosnia and Herzegovina. The biggest profit growth was recorded in Moldova, with margins increasing 72%, while the largest increase in profits was on routes to/from the United Kingdom, where they grew by eleven million euros. However, overall, Romania was the most profitable country market where route profits totalled 58 million euros.
According to the airline performance analysis platform Apex, Wizz registered an operating profit of some 3.6 million euros in Serbia between April and September, where it maintains a base in Belgrade. The figure represents a decrease from four million euros during the same period last year, or a decline of 8%. In Bosnia and Herzegovina, where it boasts a base in Tuzla, profits on routes totalled 2.4 million euros, down from 2.5 million euros or a decrease of 5%. During the said period, Wizz Air launched a new seasonal service from Belgrade to Lyon and increased frequencies and capacity on several routes from the Serbian capital. At the same time, it maintained a similar number of flights from Tuzla as last year.
Wizz Air’s CEO, Jozsef Varadi, previously said that high airport costs and government protectionism of Air Serbia are preventing the company from developing at its Belgrade base. “The significant issue in Belgrade that has hindered our development there is the cost of the airport relative to its peers. It is a high price airport and we need to see costs coming down. As we are bringing in more passengers and operations to the airport, we need to be at least in line with what we are paying at similar places”. He added, “I think the Serbian government has taken steps towards protecting Air Serbia's business and I think they are trying to put some pressure on competitors like ourselves. These two factors are really holding us back in Belgrade”. On the other hand, the carrier is in the process of renegotiating its contract with Tuzla Airport, which the latter hopes will result in new routes in 2020. “I think it is in the interest of Tuzla and the region to see our continuous operations and them improving their infrastructure. I'm pretty sure Tuzla Airport will be business-minded in that regard", Mr Varadi previously said.
Comments
Aside from total profit, revenue and expenses, which have to be issued for a public view and sake of investors, key performance indicators like the route performance in money and loadfactor are usually confidential information airlines won't share with anyone not bound to know them.
Good for general indication but not for making definite conclusions like this article does.
Reality is that the Serbian market is growing while Wizz Air is stagnating. What major thing have they done in the past two, three years? The most impressive thing I can think of is that they've switched BEG-LTN to Wizz Air UK and upgraded the equipment from A320 to A321. That seasonal LYS was launched only because JU passed on the opportunity and because Vinci encouraged them to do so...
Meanwhile, Transavia keeps on boosting their presence in BEG. From what I've seen in summer 2020 they will have six weekly flights. They have improved flexibility and brought down fares on flights from Amsterdam. This has impacted Wizz Air's operations to EIN. Since they launched BEG flights, passengers to AMS have exploded.
- easyJet launched Basel flights directly competing with Wizz Air. If anything they considerably affected their profits on the route.
- Air France launched CDG-BEG with daily, year-round flights. No carrier from PAR to BEG offers low fares so Wizz Air probably lost some customers there as well.
- Swedish market is shrinking for a while now, airports throughout the country are reporting weaker demand which probably affected their BEG operations as well.
- Lufthansa added a third daily flight from MUC, a market Wizz Air serves via Memmingen.
- This summer Eurowings is launching STR-BEG flights directly competing against both Wizz Air and Air Serbia. I think JU won't be as affected since EW revised their schedule so as not to clash/overlap with JU. Seems like they want to coexist with them.
How long have they ignored markets such as Barcelona, Madrid or Milan? They have been passive in Belgrade and now they are paying the price for it.
Like I said, all airlines in BEG seem to be doing rather well. On Monday I flew on Aegean's A320 from ATH to BEG and there were around 155 passengers on board. Another example is Lufthansa which seems to be sending more and more their A321 to BEG. Actually both flights to FRA today are operated by the A321. Why hasn't Wizz Air launched at least seasonal flights from Belgrade to Athens?
Like I said, the Serbian market seems to be growing quite nicely. If they don't feel like getting their own share and fighting for their own piece of the pie then they shouldn't attack those others who are trying.
As for high airport charges, if airlines such as easyJet, Norwegian, Vueling ... don't mind paying them then why should Wizz Air? After all, their obsession with low airport fees had resulted in BUD not reporting a profit for about ten years.
What matters is that the Serbian market is not suffering because of their passivity. If they don't want to, there are others who will.
Most probably because they fly 1-2 routes to BEG. Wizz Air flies 13 and they are right in saying that their volume of traffic should qualify them for more client pricing.
They could have launched BEG-BCN before Vueling and Air Serbia did it with 0% risk. They didn't and now mostly Air Serbia collect all the money there.
Instead of it they launched LYS that is only 150 km far from GVA and from there easyJet (as much better company) many years successfully flies to BEG.
".. If that was the case then those old Atrs and B733s would have been retired a long time ago and would have been replaced with new generation, state of the art aircraft"
Reality is that the Serbian market is growing while Wizz Air is stagnating
Find the mistake here. ==> Air Serbia is getting millions of Euros, and still cannot renew its old fleet. The thing is that subsidies would have to skyrocket if they had new aircraft that have not yet been depreciated.
Serbian market is growing yes = but the largest chunk of it is because of JU and transfers. In most other countries it is exactly the opposite => Growth is fuelled by LCCs not by subsidised national carriers that transport for instance Romanians from MAD to OTP via BEG. So Wizz is a much better mirror of the "Serbian market development" .
It means that Macedonian market is way better than Serbian :-))))
LOL
Well done JU!
However you spin it Nemjee, the numbers don't lie.
So no, Wizz Air is not an image of anything besides extreme passivity and indifference. To me it seems like they want unrealistic market conditions so that they can boost their already large profits while operating to secondary and tertiary airports.
And I'm pretty sure W6 will expect subsidies.
If you look at propensity to travel (number of passengers / total population), aside from BiH, Serbia is at the bottom in Europe. Montenegro, Kosovo, Macedonia, Slovenia, etc all beat it handily, even if you take into account the double-counted transfer pax in BEG. I dare you to take those away, it's actually much worse.
And on the other hand, 'passivity and indifference' is adding 20+ aircraft every year and achieving the best margin in Europe.
Somebody's got their narrative wrong.
Please, B remote stands are missing your presence.
Wtf?
Your argument makes no sense because you are trying to create some conspiracy theory where the Serbian market suffers because Wizz Air is not getting unrealistic subsidies like they do in places like Budapest. What is annoying Wizz Air is that they didn't manage to recreate the Malev scenario in Belgrade and Warsaw.
As for BEG, as I wrote in my post above, airlines are adding flights left and right to BEG. If Wizz Air is not doing the same then it means they are the problem, not the Serbian market. If they don't want to commit to Serbia then it doesn't matter, we have others among which is Air Serbia which can't just pack up and leave the moment someone refuses their extortionist policies.
If we look at the numbers and the overall trend, your argument makes absolutely no sense. Unless you work for Wizz Air, of course.
I think on one hand their argument about protectionism is true especially given how the subsidy contracts for INI and KVO which JU won were pretty much tailor made for Air Serbia but on the other hand they haven’t really done much themselves and have been very passive in BEG.
I’m sure they would find some success in targeting the city break market as well as the gastarbeiter market which is clearly their target group. BEG is not the worst place in the world to visit and is quite cheap so surely it could be a popular enough city break destination with the help of W6 and cheap fares from places such as London or Frankfurt. However they are too expensive on many BEG routes and their schedule often isn’t great.
Transavia vs Wizz vs JU to AMS/EIN
EasyJet / Swiss/ Wizz/ to ZRH/BSL/GVA/LYS
They serve markets where there is a huge serbian diaspora and the airline itself has a big operating hub.
Krasnodar is cetrainly not served for the Serbian public.
No way
Despite unlimited funds they still ask for subsidies from Hungary, N. Macedonia etc...
Also, I just checked online and this past October Russian arrivals to Serbia rose by 49% to 6.616 (01-10 55.763). Who knows, maybe KRR-BEG is becoming increasingly popular with tourists. There has to be a reason why JU kept it as three weekly.
I just don't understand what you are all losing from not having an absolute Wizz Air domination in BEG. I am genuinely curious especially now when JU has a sane pricing policy.
Thank you
See what happened with TAP
"So my narrative is wrong because I want BEG to have sustainable operations"
Pure spin. Your narrative is wrong because you are justifying market protectionism with minimal gains in comparison to a huge market boost enabled by open market supply and demand. Your extreme claims of subsidy expectations for LCCs are not only incorrect, they are projections of what's happening with Air Serbia.
And LCCs offer much higher volume of sustainable operations due to a lower cost base.
"What you seem to be forgetting is that Serbia is still among the poorest countries in Europe so comparing them to some others whose economy has been growing much faster is silly."
Outright lie by misquote. I compared them to Montenegro, Kosovo, Macedonia and Slovenia.
"On top of that, BEG and INI have been rapidly growing and expanding with the former most likely handling 6.2 million this year"
Rapid growth is PEANUTS compared to everyone else except BiH.
"Your argument makes no sense because you are trying to create some conspiracy theory where the Serbian market suffers because Wizz Air is not getting unrealistic subsidies like they do in places like Budapest."
A lie. Not a conspiracy theory. For those who know, and this has been repeated numerous times here, Wizz would have added aircraft up to Air Serbia's capacity a few years ago in order to have access to the same volume pricing and fuel discount as JU but the government didn't want to sign a contract and instead switched the airport taxes to an APD scheme where they can be changed at a moment's notice. Grow in a market like that where you know the gov't is just going to backstab you and protect the local carrier, as proven by this year's developments in Nish? No way.
Unrealistic subsidies in Budapest? A lie. Budapest gave huge discount for Ryanair to come in on top of Wizz Air once Malev collapsed and gave nothing to Wizz Air. Still remains like that to this day, minimal volume discounts for new traffic. Nothing like the exclusive 50% off for Air Serbia.
"If we look at the numbers and the overall trend, your argument makes absolutely no sense. Unless you work for Wizz Air, of course."
As I said above, propensity figures show a clear picture that Serbia is lagging behind all of Europe, entangled in its own schemes and sense of entitlement. And your last dig at 'unless I work at Wizz Air', typical political ad hominem. It's not a pleasure debating with you Nemjee, not at all. Spins and manipulations, straw men, smoke and mirrors. Despicable.
Sounds an awful lot like a Soros-like witch-hunt.
Classifying Wizz Airbus over Boeing order as "smart" implies that Wizz had advance knowledge of MCAS issues on MAX (and potential fallout) before they made the order. There are no facts to back up such an outrageous claim. Smart has nothing to do with Wizz order as they selected Airbus from the start. Talk about being "self-indulgent about their knowledge about the industry" NYC, LOL!
Also, since when do we worship at the altar of free market economy? We shouldn't go into extremes, either when it comes to protectionism or free market economy. Serbia has struck a fine balance thus preventing Wizz Air's predatory tactics while making sure all players can grow and efficiently serve the local market. Airlines are adding capacity based on realistic need for air travel, as it grows so will the number of flights and seats on the Serbian market. Not to mention that Air Serbia is not impossible to defeat and they have retreated from underperforming markets. If they are sticking around with the current network it means they are making money from those. Just because the airline is losing money overall, doesn't mean their flights are also loss-making.
As for Budapest, you keep on writing the same comment over and over again. I am speaking about the massive subsidies LCCs got later on and over the years. It took BUD a decade and 15 million passengers to come even remotely close to anything resembling a profit. So why should BEG follow in their footsteps when it lacks many things that enabled BUD to reach that volume. It only means BEG would suffer and lose money so that Varadi can boast and brag about his 'success.'
As someone pointed out earlier today, there was a time when Wizz Air paid considerably less than other airlines at BEG. Once circumstances changed they boycotted the airport by removing one A320 only to bring it back a few years later. This goes to show that money can be made under current market conditions otherwise they would have shut down their BEG base and have kept some destinations served by planes from other bases. After all, what we can see from today's article is that BEG knows very well what it can ask from airlines that fly there. If Wizz Air didn't have commercial reasons to fly from BEG then they would have packed their stuff and left years ago.
Furthermore, I do not know how much you expect Serbian airports to handle? 7 million? 15 million? 35 million? 70 million? Your level of disillusionment indicates you are either not from Serbia or you have left a long time ago. Serbia has had one of the toughest three decade period in Europe. It will take time for the country and the economy to recover. Things like that can't happen overnight. Growth in charter traffic is a positive trend that will hopefully continue in the future. A dose of realism would be much appreciated when writing about these things.
Also, don't you know BEG is nearing capacity? Situation is already getting tight as is. Why should the airport force artificial growth when it can't accommodate it?
Please, if you are going to write yet another Ode to Wizz Air please start by replying to my question, I would appreciate that very much.
They reduced Slovenia, Croatia, no presence in BiH nor ME. The sole golden market with margin remains NMK.
BEG can possibly be compared to TSR or KIV when it comes to pax served and number of destinations.
That said, yes....BEG must lower them airport charges otherwise neither W6 nor FR will step in, where the Serbs can enjoy lower fares.
please don't take it personally but "smart" in English refers to being quick-witted, intelligent or having a mental capability rather than being knowledgeable, informed and studied;) We even say a smart dog or a smart cat. And no, they didn't go to Harvard...Must be the language barrier;) It was just their corporate decision to continue their fleet expansion with Airbus and not backing it up with some Seattle-made aircrafts. For myriad of reasons, starting with logistics and order volume/loyalty discounts ending with servicing, training and maintenance cost savings. In no way, shape, form or manner I ever said they had a clairvoyant, pre-cognitive vision or some secret spy knowledge;) Although the last one could be a perfect idea for a conspiracy theory;)
And the time proved that their decision was ...smart. Now please relax and breathe... Life is too short. Please analyze what happen with the Norwegian and their problems not only with the 737-800 Max but also with their 787 "Drama" Liners
Cheers!
Let Wizz do their magic there.
TSR and KIV have 3 W6 planes based, just like BEG. So yes.
Sole issue is that they are much smaller cities.
Hilarious how many people are bitter. Belgrade grows from 5.6 to 6.2 and people still think it's somehow not enough.
SKP has Wizz mega hub but we all saw how bad its connectivity is.
Momko, SKP used to have a crappy airline and insane fares and figures as little as 600.000 pax per year. The difference in growth is remarkable.
Just because SKP has 5 W6 and BEG has only 3, doesn´t mean you have to say: "bad connectivity".
The topic is about W6 and not about the entire airport growth which in your case is 55% & belongs to 1 airline.
Also what airline has 55%? If you mean Air Serbia then you are wrong, their marketshare is 42%. Also, tell us, what's Wizz Air's percentage in SKP? ;)
https://www.exyuaviation.com/2019/07/ex-yu-airports-lagging-in-connectivity.html
https://www.exyuaviation.com/2018/12/wizz-air-zagreb-airport-and-coast-too.html
This is about Wizz. From former customer point of view, none of "being quick-witted, intelligent or having a mental capability rather than being knowledgeable, informed and studied" should be used to describe Wizz.
"The Balkans is not a geographic area, it's a state of mind and alleged self-importance"
W6 was blocked to expand to protect JU and becoz of high arpt tax in beg...
They are poisonly expensive from Belgrade and in some cases even more expensive than legacy carriers.
Just have a look on their BEG-BVA flights. Terrible
And they are far from being blocked in Belgrade...The other thing is that they are still dreaming about the times when they got special benefits (based on...nothing) and waited Jat Airways to go belly up so they could become official carrier of Serbia like in N.Macedonia additionally asking for money to fly to certian destination.
Thanks, but no thanks.
After all, INI is as from BEG as BVA is from Paris. ;)