READERS OF A MORE EXCITABLE DISPOSITION ARE ADVISED TO LOOK AWAY NOW: from next March, Wizz Air will be stepping up its operations out of Cluj-Napoca international airport. If that hasn’t grabbed your attention, nothing will.
Cluj-Napoca is the second-largest city in Romania after Bucharest (despite having a population of barely 400,000 souls), is the unofficial capital of Transylvania – and is the childhood home of the Cheeky Girls. But more relevantly, at least as far as BBT is concerned, it is just one of the 21 central and eastern European bases from which Wizz now operates more than 380 routes.
In 2014, after just 11 years of operations, Wizz carried 15.8 million passengers. Easyjet, currently celebrating its 20th anniversary, last year carried over 65 million, while 30-year-old Ryanair carried more than 90 million in its last financial year.
The daddy of them all, Southwest Airlines, carried more than 127 million – but, based in the US, it serves a much larger, flight-orientated community, and has had more than 40 years to build its customer base.
GETTING IN ON THE ACT
Wizz isn’t the only new kid on the block, of course. Barcelona-headquartered Volotea, which now serves over 60 European destinations, started flying in the spring of 2012; British Airways’ IAG sister airline Vueling was founded in 2004; and Norwegian, a relative old-timer, dates back to 1993. Globally, there are plenty of others – Scoot in Singapore, Peach in Japan, Kulula and Mango in South Africa... the list goes on.
One London-based travel manager says she uses Southwest Airlines in the US, but only for about five per cent of flights within the country. Her company books some low-cost carrier (LCC) flights in South Africa, but the numbers are too small to register. She adds, however, that around 10 per cent of her air bookings are now with LCCs, against barely 2 per cent five years ago.
There is also a blurring of the boundaries between LCCs and their rivals, perhaps exemplified by the fact that both British Airways and Iberia are now members of the European Low Fares Airlines Association (ELFAA). Is Flybe an LCC? Aer Lingus? Icelandair? On some routes, certainly. Travel managers are quick to point out that ‘low-cost’ is not the same as ‘lowest-cost’.
Despite the profusion of options, barriers remain for UK corporates using them – partly, according to another travel manager, because of low levels of awareness of who is operating what routes in which markets, but largely because their point-to-point services limit their appeal. If your traveller happens regularly to be in Cluj-Napoca with a desperate need to fly to Munich Memmingen, then from next March, Wizz Air will be the obvious choice. If he or she isn’t and doesn’t, then it won’t be.
FULL OF POTENTIAL
From the intermediaries’ perspective, Guild of Travel Management Companies’ (GTMC) chief executive Paul Wait acknowledges that budget airlines have made big inroads into the business travel market – but insists there is potential for further growth. “Our research has shown that currently about one-third [30 per cent] of frequent business travellers fly with LCCs compared with about half [49 per cent] who typically fly with flag-carriers. More than 90 per cent are open to choosing a LCC, indicating there is growth potential for these carriers – just 9 per cent [of the GTMC’s 1,000 survey respondents] have said they would not fly with LCCs, irrespective of destination.”
Wait suggests: “One key factor for LCCs to consider when looking to increase custom from business travellers is the geographical location of the airports they are flying from – that is, the proximity to their homes. More than half of business travellers – 56 per cent – use the train, underground or their car to travel to the airport and 32 per cent take a taxi. So Gatwick will fare better than Stansted, for instance. Connectivity is key – according to our research 45 per cent of business travellers base their airport decision on the availability of direct flights, compared to 37 per cent more concerned about the frequency of flights available.”
The prospects are bright, however. “Eighty-five per cent of the business travellers we researched said they thought there would be growth of low-cost business travel,” Wait says. “Many LCCs have significantly increased their share in the business travel market, so we can expect to see continued growth in this area.”
DEVELOPING A VIABLE PRODUCT
For the UK’s corporate travel bosses, and despite Ryanair’s ‘always getting better’ efforts, Easyjet remains the darling of the low-cost community, and CEO Carolyn McCall is widely credited as being the brains behind the transformation.
“We are now seen as being a consistent airline that is predominantly corporate-centric, and that mountain-climb started when Carolyn joined [in 2010],” says Easyjet director of business, Anthony Drury. “Part of the strategy was to balance the load factors – corporate travellers fill off-peak seats – and allocated seating was the first big step towards that. We have since spent the past four or five years going out to the travel management company community, and developing a viable product.”
Drury now heads a 35-strong sales team spread across the UK and six key continental European markets, although he would probably object to the ‘sales team’ tag. They are now briefed to act in a more consultative capacity – “over the top of everything else, it’s about changing our image” – although he is quick to stress that using Easyjet can represent savings of 30- 40 per cent compared to legacy carriers.
Travel Counsellors business travel consultant Tim Fitzgerald has certainly been won over by the change of image. “They are just very proactive and helpful,” he says. “They are a pleasure to deal with. You don’t fear phoning them up – you know that they will do things quickly and efficiently.”
Buyers are equally effusive. “Easyjet leads the way from a corporate standpoint, with its flexible faring, Easycard, multi-hub routing, routes and timings, plus the on-time stats,” says one. “They are refreshing to deal with and assist us in marketing and return-on-investment.”
So where does that leave arch-rival Ryanair? “They have got an awful lot to claw back,” says Travel Counsellors’ Fitzgerald. “I think they will probably become more user-friendly – they have realised that the business market is a much higher-yield sector. Easyjet has never shunned that market – they have made themselves more appealing to the corporate community.”
LEGACY CARRIERS: LAGGING BEHIND?
In the face of the surge in corporate use of low-cost airlines, legacy carriers have by and large struggled to respond. Nevertheless, with memories of 2008’s economic meltdown fading fast, can they hope for a return to the good old days?
“Probably not,” says Easyjet’s Drury. “I think the world, and corporate travel policies, have changed dramatically. The world got squeezed, and I don’t think we will bounce back to those times again.”
“The problem with the legacy carriers is that they are going down the road of unbundling, whereas Easyjet is going down the road of bundled service,” Fitzgerald says. “I think they [the legacy carriers] should stick to what they know best – stay focused on service, and realise that their model is about transferring people between long-haul and short-haul, and making sure that process is as smooth as possible.”
Travel managers may applaud the LCCs’ ‘all-inclusive’ offerings, but Drury warns that ancillary charges will continue to be a fact of business travel life. “I see a real evolution there,” he says. “When I look at our longer-term vision, it’s about ‘what else can we sell?’ – it’s in the DNA of our business model. The way we manage our fares is based on supply and demand. We have to keep growing our capacity and our revenues.”
For Wizz Air though, perhaps Cluj-Napoca represents a missed ancillary trick. After all, after a visit to the source, who wouldn’t pay top dollar onboard for a copy of the Cheeky Girls’ greatest hits?