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Watch the trailer and join the bloggin fun on the official website at http://www.clubdread.com \----------------------------------------------------------/ Low-Cost Airline Seeks Niche in Europe February 13, 2004 By MARK LANDLER BUDAPEST, Feb. 12 - With Hungary and Poland poised to enter the European Union, it makes sense that they should have what other highly developed countries have: a no-frills airline with a goofy name. Wizz Air, a low-fare carrier, will make its initial flight in May from Katowice, in southern Poland, to one of 10 destinations around Europe. It aspires to be the No. 1 airline in central Europe by 2005. If that sounds a bit optimistic, consider that Wizz has signed leases for nine 180-seat Airbus planes - a fleet that would daunt most start-up airlines, at least until they had demonstrated they could fill a single plane. Supporters of Wizz, however, are convinced that the eastward expansion of Europe will create a vast new market for air travel. On May 1, the European Union will phase out aviation treaties intended to protect national carriers - throwing the market open to any European upstart. "Seventy million people will join the European Union in a couple of months," said Jozsef Varadi, chairman of Wizz Air, who runs the airline from a suite of freshly painted offices in a Budapest suburb. "It's a huge market, with very little to serve these people right now." Never mind that many of the potential customers for Wizz Air have never flown, let alone had to choose between carriers. Or that the Internet, which 90 percent of the passengers of budget airlines use to book their flights, has only half the presence in central Europe that it does in the West. Mr. Varadi cited as likely passengers for Wizz the thousands of Polish immigrants who work in Paris and London. Today, they have to endure 24-hour train trips back to Poland to visit their families. Soon, he said, they will be able to fly home on Wizz for nearly the same cost. "Families were broken apart decades ago because of the underdevelopment of Eastern Europe," Mr. Varadi said. "They're now trying to reunite, and we are providing the infrastructure for that." That is as close as Mr. Varadi comes to a social rationale for Wizz. A former chief executive of the Hungarian state carrier, Malev, Mr. Varadi, 38, is a no-nonsense businessman who studied for this venture by visiting successful budget carriers, including Ryanair and EasyJet in Europe; JetBlue in the United States; and Virgin Blue in Australia. His conclusion was that no-frills airlines survive only if they grow large enough, quickly enough to make their operations efficient. The competition in the low-cost market, he said, is so cutthroat that a new entrant does not have the luxury of several years to build a franchise. "We think that in Europe, there will be a consolidation that will leave no more than three, four, maybe five big successful players," Mr. Varadi said. "We want to be a player in that premier league." Even the well-established players have taken their lumps, however. Ryanair, Europe's largest low-cost carrier, warned of lower profits recently, and was ordered by the European Commission to pay back at least 4 million euros ($5.1 million) in illegal subsidies it had received from Charleroi, the Belgian city south of Brussels, where Ryanair offers service. Wizz signed an agreement earlier this week with Charleroi's airport, but Mr. Varadi said it does not include subsidies. Like Ryanair, Wizz will generally fly to secondary airports outside major cities. It hopes, however, to establish a base at the international airport in Budapest. The popularity of cheap flights in Europe has crowded the skies with nearly 30 low-cost carriers. Even the east has other rivals: Air Polonia, which flies from Warsaw to London, and SkyEurope, which is based in the Slovakian capital of Bratislava and flies to London, Paris and Milan. "Most of them are two planes and a press release," said Damien Horth, an airline analyst with UBS in London. "Some of them are just a press release." Mr. Horth said he was skeptical that central Europe would be a bonanza, given the region's relatively low per capita income and the lack of airline traffic. While EasyJet offers service from London to Prague, the planes tend to be full of Londoners on weekend trips. Other experts, however, said Wizz could carve out a niche in southern Poland, which is populous and not heavily served by airlines. "In our studies, Poland comes up as the single most attractive market in central Europe," said Heiko Schulz, a consultant in the Munich office of the Monitor Group. Wizz has not yet published its fares, but Mr. Varadi said it would try to persuade people that flying was as economical as driving, or taking a train or bus. He said he expected three-quarters of his passengers to come from within the region. In addition to big cities, he plans to offer holiday destinations, like southern Europe in the summer and the Alps in winter. The comparatively low level of Internet users in central Europe could pose a hurdle, Mr. Varadi acknowledged. He said the airline would compensate by setting up call centers and working with travel agents. Fashioning an image to lift Wizz out of the crowd will be another challenge. Mr. Varadi said he chose the name because it was dynamic, easy to pronounce, and carried no cultural connotations - no small matter in this part of Europe. He has settled on a purple and pink color scheme for the planes. Within weeks, Wizz hopes to announce that it has raised $40 million to $60 million in venture capital. Mr. Varadi, who was ousted from Malev in 2003 after clashing with the Hungarian government, said he believed that people here would respond as enthusiastically to no-frills flying as their western neighbors. "The hype about low-cost airlines did not stop at the borders of the E.U.," he said. "People have been waiting for this." http://www.nytimes.com/2004/02/13/business/worldbusiness/13air.html?ex=1077681459&ei=1&en=b5f9e360befcc943 --------------------------------- Get Home Delivery of The New York Times Newspaper. Imagine reading The New York Times any time & anywhere you like! Leisurely catch up on events & expand your horizons. Enjoy now for 50% off Home Delivery! Click here: http://www.nytimes.com/ads/nytcirc/index.html HOW TO ADVERTISE --------------------------------- For information on advertising in e-mail newsletters or other creative advertising opportunities with The New York Times on the Web, please contact onlinesales@xxxxxxxxxxx or visit our online media kit at http://www.nytimes.com/adinfo For general information about NYTimes.com, write to help@xxxxxxxxxxxx Copyright 2004 The New York Times Company