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The No-Frills Zone; Eastern Europe Is Fertile Turf for Discount Airlines

Newsweek, September 20, 2004 | Go to article overview

The No-Frills Zone; Eastern Europe Is Fertile Turf for Discount Airlines


Byline: William Underhill

Joszef Varadi flies near the front of what may be the world's thickest flock of new discount airlines. Four months ago his fledgling carrier, Wizz Air, took to the air with a single plane. Today five 180-seaters serve 11 destinations from bases in Hungary and Poland. The shocking pink livery of his Airbus 320s can be seen on runways from Stockholm to Athens. Wizz has flown 200,000 passengers so far, and expects a total of 1 million by the end of year one. By 2007 Varadi hopes to have as many as 30 aircraft, and Wizz is just one of a clutch of new budget carriers crisscrossing the skies of Eastern Europe this summer. "You can't afford to stand still," says Varadi, former boss of the Hungarian flag carrier, Malev. "This is a very competitive marketplace."

Too right. The expansion of the European Union this summer is transforming the air-travel market in Eastern and Central Europe. Membership in the Brussels club has forced eight new member states from the region to clear the clutter of national regulations that once grounded airline competition. No fewer than eight budget airlines, for example, now fly out of the Hungarian capital, Budapest. This year the city's Ferihegy airport expects 1 million cut-rate fliers, 10 times the 2003 figure. Airport spokesman Domokos Szollar reckons an annual growth rate of 25 percent for the next few years. "As we see it, flying is just going to get more and more common."

Some of the names on the departure board are familiar from Western Europe. The biggest of the British no-frills players, easyJet, this summer opened up new services both to Budapest and the Slovenian capital, Ljubljana, with Bratislava in Slovakia to follow in the fall. But others, like Wizz Air, are native fledglings, created or expanded to meet the new demand. Don't look for a lengthy corporate history when booking with the Czech Republic's SmartWings, Air Polonia of Poland, or Slovakia's SkyEurope, a Bratislava-based newcomer that boasts a 13-plane fleet.

What the newcomers share is a business model. They have studied budget pioneer Southwest Airlines in the United States and its West European imitators, and planned accordingly. In practice, that usually means Internet booking, bases at cheaper airports, outsourcing to keep operating costs low and service that puts price above comfort.

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