Life right this moment may be very difficult
CAPA – Center for Aviation’s emeritus chairman Peter Harbison recently had the opportunity to meet and speak with Wizz Air CEO Jozsef Varadi. Together they took a look at the big picture and the immediate big problems.
- When the terms are right, consumers will get back into the air, the terms really are a feeling of security.
- Passengers who are vaccinated will likely feel safe again as long as there are no government-imposed travel restrictions.
- While some countries are relaxing the restrictions, some are even tightening the travel restrictions so it is still a very unpredictable and very volatile situation.
Peter Harbison started the interview by greeting József Váradi, CEO of Wizz Air. Peter suggested that they start their discussion with big pictures.
The interview started with the CEO of Wizz, who gave an overview of Europe and the entire COVID-19 pandemic in general. He discussed the big problems with Peter from the CAPA – Center for Aviation that he thinks Wizz Air will face in the next 3 months.
Peter Harbison:
Very warm welcome. Haven’t spoken to you in a while, József, but a lot has happened in the meantime. Let’s start with big pictures and what are the big topics that you are going to see over the next three months?
József Váradi:
Thank you Peter for inviting me to your show. When I look at life today, I find it very complicated. You surely need to look at a consumer to see if the consumer wants to fly or not. Obviously the consumer wants to fly, there is nothing wrong with the consumer. You can see some of the markets [inaudible 00:00:56] really catching up. I think right now it is doing about 80% of its 2019 capacity levels. It is expected to exceed a large summer capacity compared to 2019. I think what it really says is that when the conditions are right, consumers get back in the air very, very quickly to fly the franchise, and the conditions really are, the sense of security. If you are vaccinated, I think you will feel safe again, and second, there are no government-imposed travel restrictions so you can travel with no hassle.
But that doesn’t really apply to Europe right now. I think consumers’ willingness to fly is absolutely there, it has remained intact. Actually, a lot of people are just fed up with being locked up and want to go, they want to breathe fresh air, but at the same time they are severely restricted by government restrictions.
And in certain cases it is just next to impossible to travel. Now it’s slowly changing, but it’s not a straight line. It’s more like a roller coaster. You can see some countries easing the restrictions, but still today you see some countries actually tightening the travel restrictions so I think it’s still very unpredictable, very volatile and we’ll see how that goes. We definitely have, I think, Europe not at the level of the USA, least of all from a domestic political point of view. It’s still complicated.
Peter:
Yes. I think comparisons with the US are likely to be a little tricky as this is likely the only market that has hit this level again, with the exception of China. But one of the things, József, even in the US where they are returning to pretty full flights and there is obviously a lot of demand there, returns are still down very sharply. They are still down 20, 30 percent. What’s driving that? Is there just too much capacity coming in too quickly or is it just uncertainty about revenue management?
Joseph:
Well, I think the history of the industry is such that, especially when it comes to recovering from tough situations of overcapacity, and as I said before, it is difficult because of the imbalance between supply and demand, you have seen this work out Yield environment deteriorates and I think you should expect that. Pretty much everyone in the world that there will be too much capacity on the market during the recovery period, which is probably the right thing to do to get traffic going and consumers to fly again. But at the same time, from a financial, earlier point of view, this will of course put pressure on the industry.
