Wizz Air CEO Jozsef Varadi: we are striving to be a significant player on the Ukrainian market
An exclusive interview of Wizz Air CEO Jozsef Varadi with the Interfax-Ukraine News Agency.
Wizz Air performed well in Ukraine in 2017 - the number of passengers carried increased by 65%. The company has also announced doubling the number of passenger seats in Ukraine. Could you please elaborate about your midterm plans about Ukraine? What other steps may be taken to support this let's say hawkish announcement?
Obviously we have been having a long-term interest in Ukraine. Previously we had a separate Ukrainian subsidiary but now we have forwarded our Ukrainian operations to the other platform due to the issues we had in the country. We are, however, a committed airline, we are increasing our presence in Kyiv, but we also have presence in other places. In particular, we are building up our route network in Lviv, we have opened flights to Kharkiv. We continue to look for opportunities to expand our network in the country in the form of more airports, more aircraft, and more bases. We are always looking forward to bring more positive news in the future which we will announce in due course.
Maybe you could specify some numbers about 2018 year?
We have already made an announcement that we are going to nearly double capacity in 2018. Besides, we are going to carry more than 1 million passengers this year. That is significant, but we think we can accomplish a lot more going forward. We are increasing the amount of aircraft in the country, and the third aircraft will join the Kyiv fleet. We have already announced eight new routes in 2018, routes from Kyiv, routes from Kharkiv and routes from Lviv. Obviously there will be further news in the future and we will announce them very soon.
Could you list main conditions for Wizz Air to resume operations in Ukraine through the local entity?
I think the single biggest issue what we had back in those days, and I think that issue will still prevail, is that we were not able to convert our hrivnya into hard currency. As you know, the most of costs of airlines incur in hard currency. So that situation posed a serious threat to our operations and the mother company had to pay for the operations of the entity in Ukraine because it simply was not able to use its hrivnya, it was not allowed to convert it into hard currency. We discussed that issue with the government and the NBU, but essentially nothing changed. That is why we decided to change the platform of the operations in Ukraine.
The NBU is actively lifting its currency restrictions introduced since 2014. So, is it possible that you move your operations back to Ukrainian division, let’s say this or next year?
No, I don't think so. Based on the conditions of the market today and the regulatory system, we are looking to expend our current operating platform.
In general what are your expectations about further development of the low-cost market in Ukraine? It is also interesting for us to know your view about improvement of competition on the market. What share do you see for Wizz Air?
We are striving to be a significant player on the Ukrainian market. We have time constrains at this point. We would love to fly to more countries, but for various reasons we are not able to do that. We would love to fly, for example, to Italy or Spain and this is less of an issue on the Ukrainian side but more on the Spanish and Italian regulators. There are some restrictions due to our route licenses and route permissions and that is why we are not able to expend the market.
But within those constrains we are still very eager to develop our business. We certainly are one of three significant players on the Ukrainian market and I believe that once Ukraine will liberalize in terms of aviation system, access to market, we will see faster airport development, more competition on the marketplace and the country will benefit from local development, both from Wizz Air and possibly new airlines.
Wizz Air is actively developing in other countries delivery of adjacent services, including tourism, financial services and car rental services, etc. Do you see any opportunities for the company about developing such services in Ukraine?
Yes, of course. For example we are looking at sourcing IT development to some company, and we are looking at a number of countries and at a number of opportunities, and Ukraine is included. The other businesses are also developing, we acquire more services and we are looking at sourcing options and Ukraine is certainly one of the sourcing opportunities.
Could you provide your commentaries about such factors as oil price, FX fluctuations? How such factors may influence the company's development plans in general and in Ukraine in particular?
I don’t think those factors profoundly influence our development plans overall or in Ukraine. To some extent fuel and FX offset each other. Also we think that over a long term, input costs whether they go up or down they tend to return to the fair environment over the period from five to 18 months so structurally I think there is going to be capacity for adjustment.
We are very focused on trying to run this business at the lowest possible costs and we are pretty much there – we are well below costs of other low-cost operators in Europe.
Besides, I think our business model is very robust in terms of growth potential: every single year we have been increasing operational business and since 2004 we have experienced double digit growth every year. So I think we have the capacity, we have the capability and we have the robustness of the business model to continue to do that.