Why one low-cost airline is expanding in the UK despite the pandemic

Aug 27, 2020

This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. For an explanation of our Advertising Policy, visit this page.

The coronavirus pandemic has impacted the aviation industry and the airlines that operate within it in potentially irreversible ways.

Most airlines are making drastic changes to save money and save themselves for going into the red. This includes reducing route network size, retiring older, less fuel efficient aircraft early and in some unfortunate cases, letting go of hundreds, and sometimes thousands of staff.

However, there’s an anomaly to the rule. Despite everything negative occurring in the travel and aviation industries this year, ultra low-cost airline Wizz Air announced last week that it would be opening a second U.K. base at Doncaster Sheffield airport, followed this week by the announcement of a third base at Gatwick.

Elsewhere in the low-cost sphere, European rival, low-cost giant Ryanair has already announced that it will be reducing its capacity by 20% for September and October in the wake of the reduced demand, so, how does Wizz Air manage to open two new bases and launching 14 routes?

We spoke to Airline, Hotel and Travel industry analyst Henry Harteveldt to get his thoughts on the Wizz Air’s bold expansion plans.

Wizz Air: a brief history

Wizz Air is a Hungarian ultra low-cost airline based in Budapest (BUD) and first took to the skies in 2004 with its inaugural flight from Katowice (KTW) to London Luton (LTN). Since then, it has expanded rapidly across Eastern Europe by tapping into several unique markets and routes meaning it was able to go from strength to strength by avoiding the tough competition of the incumbent European low-cost giants — EasyJet and Ryanair.

Fast forward to 2017, and Wizz Air opened its first base in the U.K. at Luton (LTN) (meaning it based aircraft and cabin crew there rather than just operating flights there) and quickly became Luton Airport’s largest airline in 2018, after knocking EasyJet off the top spot. The airline’s routes from Luton were to destinations unknown to even the most well-travelled Brit like Debrecen (DEB), Palanga (PLQ) and Timisoara (TSR).They served a small but untapped market connecting the U.K.’s largest city with non-stop services to small cities in Eastern Europe.

Then, at the end of 2019, it was announced that Wizz Air had plans to tackle an entirely new market in the Middle East by launching a new airline in Abu Dhabi (AUH).

2020 saw a spate of announcements by Wizz Air earlier in the year. It would be also adding popular tourist destinations in Spain and Greece to its route network from Luton, in direct competition with EasyJet. And finally, in a bold move during the pandemic, Wizz Air announces a second U.K. base at Doncaster Sheffield followed swiftly by a third in none other than Gatwick (LGW), another of EasyJet’s strong-holds.

Related: A guide to getting to Gatwick Airport

The new bases

It goes without saying, that what Wizz Air is doing, is being very opportunistic at a time when doing so carries a lot of risk.

Let’s explore in a little more detail each of the new bases.

Doncaster Sheffield (DSA)

At just over 1.4 million passenger movements in 2019, Doncaster Sheffield Airport was the 22 busiest airport with TUI and Wizz Air being the only airlines offering flights. As TUI operate mainly package holiday travel, Wizz Air is the primary low-cost airline operating from the airport.

Of the new routes that Wizz Air will add when it bases an aircraft at DSA, four of them will be to popular tourist destinations such as Alicante (ALC), Faro (FAO), Larnaca (LCA) and Málaga (AGP) and as such it will be the only dedicated low cost airline operating to these destinations. However, TUI does operate to Alicante (ALC) and Malága (AGP) and to Cyrpus, but to Paphos (PFO), not Larnaca (LCA).

Related: 15 of the most beautiful beaches in Spain

Doncaster Sheffield Airport. Photo by Neil Mitchell / Shutterstock
Doncaster Sheffield Airport. Photo by Neil Mitchell / Shutterstock

London Gatwick (LGW)

Wizz has ambitious plans to secure enough slots to eventually base a huge 20 aircraft London’s second busiest airport.

In total, with the additions of the new routes, Wizz Air will initially operate 9 routes from Gatwick to the following destinations: Athens (ATH), Budapest (BUD), Bucharest (OTP), Gdansk (GDN), Kraków (KRK), Lanzarote (ACE), Malta (MLA), Naples (NAP), and Sofia (SOF).

As for four of Wizz Air’s new routes from Gatwick (ACE, ATH, MLA, NAP), EasyJet already flies them all. Time will only tell how Wizz Air’s ultra low-cost pricing will come up against EasyJet’s, but for now, it’s looking like the fare war could be about to start with Wizz Air significantly undercutting EasyJet.

However, Harteveldt suggests that pricing alone will not be the key to Wizz Air’s survival at Gatwick.

“There are a number of things that Wizz Air will have to watch out for when it walks into the lion’s mouth that is Gatwick. Price is not going to be a longterm successful strategy for them” — Harteveltd.

Ryanair has a very small footprint at Gatwick because, thanks to lower costs to the airline at Stansted (STN), the airline chose to make the Essex airport it’s largest U.K. base. At Gatwick, Ryanair only operates flights to Alicante (ALC), Cork (ORK), Dublin (DUB) and Shannon (SNN) so will in no way be competition to Wizz Air’s Gatwick expansion.

Could this be an opportunity for Wizz Air to gain a bigger presence than EasyJet at Gatwick, just as it did at Luton?

“One thing Wizz Air can do, is be the un-Ryanair if you will”, said Harteveldt. This suggests that Wizz Air might become the a newer, better version of Ryanair with its super low fares, but filling the gaps where Ryanair falls, like in the area of customer service, for example.

LONDON, ENGLAND - DECEMBER 21: Passengers wait in the South Terminal building at London Gatwick Airport after flights resumed today on December 21, 2018 in London, England. Authorities at Gatwick have reopened the runway after drones were spotted over the airport on the night of December 19. The shutdown sparked a succession of delays and diversions in the run up to the Christmas getaway, in what authorities have called a "deliberate act" to disrupt the airport. Police continue their search for the drone operators responsible. (Photo by Jack Taylor/Getty Images)
Gatwick Airport.  Photo by Jack Taylor/Getty Images

Is the growth sustainable?

Harteveltd was sure that the incumbent airlines at Wizz Air’s new base airports will up their ante with marketing to keep their customers engaged, and possibly come in with promotional airfares in an attempt to match the ultra low fares of Wizz.

“No airline”, he said, “will voluntarily give up a single passenger now or in the future without a fight”.

What the airline has in its favour is that its entry into these markets provides more choice to the consumer at a time when choice was suddenly taken away by schedule cuts and base closures due to the pandemic.

Additionally, if Wizz Air can continually offer the lowest fares to the destinations at its new hub airports, particularly at Gatwick, will passenger loyalty be enough to keep passengers flying with EasyJet on the same routes?

“When your fares are not the least expensive, will people buy your product if a competitor is available at a lower price point?”, said Hartevelt. However, he continued by reminding us that some passengers take more than just price into consideration before booking a flight: “If they have a good experience and go back to them for their next journey then Wizz Air has succeeded”. So, if Wizz Air can do both offer the lowest air fares on certain routes and provide passengers with an experience that means they’ll want to come back for more, then EasyJet might have a problem.

Harteveltd couldn’t be sure enough of either outcome. “If it works”, he said, “Great. They [Wizz Air] got a toehold in one of the most important aviation markets in Europe”. And on the other hand, “If it doesn’t work, I presume they have assessed the financial risk and they will exit”.

Photo by Neil Mitchell via Shutterstock
Photo by Neil Mitchell via Shutterstock

Is it safe to book the new routes?

As long as the routes are available to book, there should be no reason passengers should refrain from booking them. Passengers who might have their flights cancelled if Wizz Air had to pull out of its new bases would be protected under European regulation EU261.

While other airlines like Virgin Atlantic warn they may not survive more than a few months without significant government assistance, Wizz is in a much better financial position. It has already claimed this year it can survive a full 18 months even with no new revenue.

Bottom line

In the midst of a global pandemic, Wizz Air’s expansion within the U.K. is unconventional, to say the least. However, being disruptive at time when its competitors are erring on the side of caution, might just go in their favour — only time will tell.

Harteveldt used a great example: “Apple and Tesla have been disruptors. If Wizz Air win they will be heralded as this savvy airline and if they lose, it didn’t work out, let’s move onto the next thing, it won’t be the end of the road”.

Featured image by Sean Gallup/Getty Images 

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.