Messing up on costs mean ‘you’re going to be losing your shirt’: Wizz Air CEO

Dubai: One route at a time – that’s how the UAE’s latest budget airline intends to build a network.

“We base the decision on the prospect of Wizz Air Abu Dhabi over the long run,” said Jozsef Varadi, Wizz Air’s CEO during an interview with Gulf News. “The pandemic is obviously a disturbing factor – but we consider it as a short-term phenomenon.”

Wizz Air Abu Dhabi – a joint venture between Europe’s Wizz Air and ADQ – flew to Greece for the first time last week from its UAE base. It now plans to add Tel Aviv as its third destination.

Operating out of Abu Dhabi means the airline has to constantly move its flights around to take advantage of regulations. “You have ‘green’ countries and you have ‘red’ countries – all these classifications affect consumer demand quite significantly,” said Varadi.

“We are moving capacity around in the system, depending on how we are seeing the short-term evolution of demand.”

Abu Dhabi also has another low-cost carrier that took to the skies recently – created via an alliance between Air Arabia and Etihad.

All in the negotiations

Eventually, Wizz Air hopes to have a network of flights to Europe, North Africa, and South Asia; but there’s plenty of work that needs doing first.

“We are continuously monitoring opportunities,” the CEO added. “It is a bilateral system, so we need to get designated as an airline from the UAE and we need to get acceptance from the receiving countries.

“This is an ongoing process. The moment we are able to confirm our designation and our market interest based on consumer demand, we are going to be making announcements on our routes.”

With four A321neo aircraft dedicated for its Abu Dhabi operations, the carrier can launch new flights at the first confirmation of a new route. According to the CEO, Wizz Air could be operating anywhere between 20 to 25 aircraft in Abu Dhabi five years down the line.

If you are a high cost carrier but want to operate with low fares, that can only mean one thing – you’re going to be losing your shirt

‘Fare’ fight?

The pandemic has led to regional airlines announcing steep rate cuts and eye-popping discounts – Wizz Air had launch rates of Dh129 a ticket to Athens. This is all relatively new to UAE’s airlines who over the years have flown uncontested to major destinations from Dubai and Abu Dhabi.

Wizz Air, on the other hand, has learnt to thrive in these situations. The company, which has taken lessons from its peers in the highly-competitive US domestic market, managed to bring a similar low-cost regime to its home market in Europe.

The same strategy is being applied in Abu Dhabi. “I think each of the airlines will be very eager to come back to the market, but at the end of day your ability to apply low fares depends on your cost performance,” said Varadi. “If you are a high cost carrier, but you want to operate with low fares, that can only mean one thing – that you’re going to be losing your shirt.”