After picking up another 15 slots at Gatwick due to Norwegian Air’s bankruptcy in 2020, Wizz Air is closing in on Europe’s leading budget carriers as the airline industry prepares to progress into an unpredictable 2022.
Wizz Air’s expansion demonstrates its financial resilience
While many airlines have looked to scale-back operations, Wizz Air has attempted to expand routes and develop new markets. Since 2020, according to its website, the low-cost airline has developed routes to the Middle East, Italy, Ukraine, Spain, and the UK from airports all over Europe. The budget carrier has been ruthless in its expansion, taking advantage of pandemic-related bankruptcies to Alitalia, Flybe and Norwegian Air, amongst many others. All in all, 220 new routes were added in 2020, highlighting the ambition of Wizz Air.
Wizz Air has not shied away from possible M&A activity either, after a failed takeover bid of Europe’s second-largest low-cost airline, easyJet. Furthermore, in October 2021, Wizz Air CEO József Váradi said that the airline was open to acquisitions. This announcement provides insight into the carrier’s future strategic direction. During times of financial hardship, consolidation is expected in the travel industry. Therefore, we will likely see developments in this area over the next few years. M&A activity in the airline industry after the 2009 global recession is a recent example of this, where US carriers such as United and Continental Airlines merged in order to strengthen their presence in the market.
Wizz has proven itself to be one of the few financially robust aviation companies throughout the pandemic, allowing it to lay the foundations for future growth. In June 2020, József Váradi, highlighted that the airline was one of the strongest in the world in terms of liquidity. As a result, it had a large amount of free-flowing capital to tackle the pandemic, enabling it to respond quickly to changes in demand.
The low-cost market is still in high demand
Low-cost travel will be a major trend in travel and tourism as the pandemic eases. According to GlobalData’s Q3 2021 Global Consumer survey, 53% of respondents said affordability was the biggest influencing factor when choosing a holiday, while 51% said that accessibility was the most important. Wizz Air’s low-cost product and expansive route network are well-positioned to capture future demand.
However, while its future looks positive, it must battle with easyJet and Ryanair, two more experienced players when it comes to weathering unpredictable markets. Furthermore, the launch of new Icelandic budget carrier PLAY Airline, the relaunch of Flybe and the creation of BA’s new low-cost airline, Euroflyer (due to begin operations in March 2022) will create a challenging environment for Wizz Air, which could drive down fares even further.
Nevertheless, if Wizz Air continues on its current path and maintains its positive growth strategy, it could emerge as Europe’s leading low-cost airline in years to come.