When conditions are right, consumers will come back to the air, the conditions are really the sense of safety.Passengers who are vaccinated, will likely feel safe to fly again as long as there are no government-imposed restrictions on travel.While some countries are easing restrictions, some are actually hardening restrictions on travel, so it is still a very unpredictable and very volatile situation.
Peter Harbison began the interview by welcoming József Váradi, who’s the CEO of Wizz Air. Peter suggested they kick off their discussion with big picture stuff.
The interview started with Wizz CEO offering an overview of Europe and of the whole COVID-19 pandemic in general. He discussed the big issues with Peter of CAPA – Centre for Aviation as he sees it coming up in the next 3 months that Wizz Air will have to face.
Very warm welcome. Haven’t spoken to you for quite a while, József, but a lot happened in the meantime. Let’s kick off with big picture stuff, and what are the big issues that you see coming up in the next three months?
Thank you, Peter, for inviting me your show. Looking at life today, I think it’s very complicated. You certainly need to look at a consumer, whether 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] is really catching up. I think at the moment it is performing around 80% of its 2019 capacity levels. It’s expected to exceed a big summer capacity relative to 2019. I think what it really tells you is that when the conditions are right, the consumers come back to the air, to the franchise of flying very, very quickly and the conditions are really, the sense of safety. If you are vaccinated, I think you feel safe to fly again and two, there are no government-imposed restrictions on travel, so you can easily go.
But that doesn’t really apply to Europe at this point in time. I think the consumer’s willingness to fly is totally there, it has remained intact. Actually, many of the people are just fed up with being locked down and they want to go, they want to breathe fresh air but at the same time, they are highly restricted by government-imposed restrictions.
And in certain cases it’s just almost impossible to travel. Now it is slowly changing, but it is not a straight line. It is more like a roller coaster. You see some countries easing restrictions, but still today you are seeing some countries actually hardening restrictions on travel, so I think it is still a very unpredictable, very volatile and we will see how that’s going to go. We definitely got, I don’t think Europe at the level of the US, certainly not from a domestic perspective. It is still complicated.
Yeah. I think comparisons with the US are probably a bit difficult because it’s probably the only market that has got back to that level, China excepted. But one of the things, József, even in the US where they’re getting back to fairly full flights and obviously there’s a lot of demand there, getting back to close to 2019 levels, yields are still very well down. They’re still down 20, 30 percent average economy yields. What is driving that? Is it just too much capacity coming in too quickly or is it just uncertainty in terms of revenue management?
Well, I think the history of the industry is that, especially when it comes to recovery from difficult situations that is over capacity and as I said it’s hard because of the imbalance between supply and demand, you’ve seen the yield environment dragging and I think this is what you should be expecting. Pretty much everybody in the world that in the recovery phase, that will be too much capacity coming out to the market, which is probably the right thing for stimulating traffic and encouraging the consumers to come back into flying. But at the same time, from a financial, former standpoint, obviously this is going to put pressure on the industry.