On August 31, SkyEurope went belly-up. After months and months of confidence-stripping events—bridge loans, terminated airplane leases, postponed financial statements, the granting of protection from creditors by a Slovak court, the refusal of several airports to service SkyEurope planes in light of unpaid fees—the airline finally called it quits.
For those of us following the ups and downs of European aviation, the airline's demise was no surprise. Most observers of Europe's low-cost airline scene have been predicting
a wave of bankruptcies and mergers for a while now. SkyEurope's weaknesses were well documented, and were only exacerbated in
the face of terrible market conditions. What was most remarkable was that the airline stuck around for as long as it did.
The bankruptcy comes at a generally really bad time for European low-cost carriers, and there are plenty of commentaries that interpret SkyEurope's fall as the first paragraph of the next chapter of European LCC history—a chapter that will end with three or four big budget airlines battling for the euros, kronor, lei, and hryvni of budget-minded travelers across Europe, with a handful of much smaller specialist budget carriers accommodating underserved regions. (A side-question here, though one not unrelated to the issue at hand: which are the three or four big LCCs that will be left standing? Norwegian, Ryanair, easyJet, Germanwings, Vueling, Wizz Air, and Air Berlin all have either sheer size, customer loyalty, or underserved destinations going for them. But a changed terrain consisting of three to four big players would mean that several of these airlines would be absorbed.)
If only the biggest will survive, then the question of what will happen to SkyEurope's abandoned routes becomes the most crucial one. Who will benefit most from SkyEurope's demise? The buzz so far seems to be that financial gain is Ryanair's for the taking, but Wizz Air has strong links in Central Europe as well.
The most distinctive dimension of SkyEurope's route map was its inclusion of Bratislava, Kosice, and Poprad-Tatry on its route map. Several of the routes the airline flew before folding remain unduplicated.
The biggest gap has opened up at Bratislava, where over two dozen destinations were previously served by SkyEurope. Ryanair has three new routes scheduled for autumn inauguration: Bratislava-Bologna, Bratislava-Rome Ciampino, and Bratislava-Liverpool, while WizzAir has just one, scheduled to take off later this month, a Bratislava-Rome Fiumicino link. Ryanair already flies many routes in and out of Bratislava, and is doubtlessly best placed to expand.
Kosice, a much lower-volume airport, has truly been left in the lurch by the departure of SkyEurope. The airline flew between Kosice and Istanbul, Rome, Manchester, Paris Orly and London Luton. SkyEurope also flew a London Luton-Poprad-Tatry route.
Thus far, an airline called Danube Wings has announced a number of new routes into both Kosice and Poprad-Tatry, though the ground opened up by the disappearance of SkyEurope is still wide open. The biggest and most likely budget airlines have thus far failed to bite. The next few weeks should be interesting.
A very interesting article by Sean Carney and Leos Rousek in the Wall Street Journal yesterday argues that Wizz Air is very adeptly taking advantage of what has become a weak Central/Eastern European budget airline market. As SkyEurope stumbles—the airline successfully applied for bankruptcy protection last week—and the effort to privatize CSA Czech Airways is postponed, Wizz Air is moving forward in the region as a serious player.
Carney and Rousek point out that Wizz Air will fly to all but two of SkyEurope's destinations by the end of the summer, leaving the beleaguered SkyEurope little room to argue for a distinctive route map. Wizz Air is also developing Prague as an additional hub, which will bring it into further—and in some cases direct—challenge with Czech Airways.
Wizz Air is known among LCC followers as a bare bones operation. The perks are few and far between. If the budget airline comfort scale has Ryanair at 1 and Air Berlin at 5, Wizz Air is damn close to 1. But all this will cease to matter if Wizz Air effectively becomes the biggest player in Central and Eastern Europe and keeps its fares dirt cheap in the process. For the airline to capitalize on its growth, I have the following six recommendations:
1. Oppose the fee and surcharge madness afflicting budget airlines in Europe by branding and publicizing an outright refusal to tack such costs onto fares.
2. Expand routes from Bulgaria and Romania into Germany, Scandinavia, the UK, Germany, Spain, and Italy.
3. Develop routes between Turkey and Germany, Scandinavia, and the UK. Target these expansions to family and business travelers, not holiday travelers.
4. Develop routes to the former Yugoslavia and Albania. No budget airline has aggressively moved into the Western Balkans, and there is much room for maneuver here. Target migrant and holiday travel streams alike.
5. Give us something exciting. Baku? Tbilisi? Trabzon? Minsk? Budget European explorers want new corners of continent to explore. Become our new favorite airline.
On Wednesday, Wizz Air announced a Kyiv-London Luton route from December on; today, the airline announced a slew of routes in and out of Ukraine: Kyiv-Cologne, Kyiv-Dortmund, Lviv-Dortmund, and Lviv-London Luton.
Back in December, I forecasted the discovery of Ukraine by LCCs in 2008. I'm just surprised that it's taken so long to happen, and that the development of routes has been restricted to a trickle. I guess there is the whole aviation-industry-in-trouble thing to contend with.
Now when will Ryanair and Wizz Air start flying into Chisinau? That's the question.
Back at the end of December, I predicted that 2008 would see further low-cost carrier expansion in Eastern Europe, with more routes into Romania and Bulgaria and the tentative development of routes into Ukraine and Moldova. I thought that we might see SkyEurope and even Ryanair beginning some routes to Kyiv by the end of the year.
But the first serious move comes from Hungarian Wizz Air, who will be launching seven Ukrainian domestic routes in July. Wizz Air's Ukraine hub will be Kyiv; they'll fly between the capital and L'viv, Kharkiv, Odessa, Simferopol, and Zaporizhia, and will also fly routes between Simferopol and both L'viv and Kharkiv. Details are here. The airline is not running any international routes in or out of Ukraine.