The launch of Wizz Ukraine adds some spice to one of the world's fastest growing air transport markets
The launch of the first low-cost carrier in the Ukraine should further accelerate growth in one of the world's fastest growing airline markets.
Hungary's Wizz Air launched in July a wholly-owned subsidiary in the Ukraine with one Airbus A320 operating four domestic routes. The carrier aims to quickly expand, with plans to begin international services in September, despite record high fuel prices and infrastructure bottlenecks which the country's other carriers say make the low-cost model unsustainable in the Ukraine.
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"The Ukrainian market is not yet ready for low-cost. It's not yet free enough, it's not yet big enough"
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"The Ukrainian market is not yet ready for low-cost. It's not yet big enough, it's not yet free enough and there are too many infrastructure bottlenecks," says Ukraine International Airlines president Yuri Miroshnikov. "Ukrainian operations are very costly, the fuel prices are higher than Europe and the airport charges are higher than Europe."
Miroshnikov adds monopolies for most airport services mean charges are unlikely to go down any time soon. He claims it is also not feasible to quickly turn around aircraft at any Ukrainian airport.
The bottlenecks, however, have not kept Ukraine's two main carriers, UIA and AeroSvit, from quickly expanding and turning healthy profits. Last year the Ukrainian market grew 23% to 9 million passengers. UIA's traffic grew 42% to 1.5 million while AeroSvit grew 29% to 2 million.
Both carriers have ambitious growth plans. UIA will add its 16th Boeing 737 Classic in October and plans to order 30 to 36 new narrowbodies by year-end. AeroSvit, which operates about 20 aircraft and last year ordered seven 737-800s, is now looking to buy 10 large regional jets.
Miroshnikov expects growth will slow down this year but will still be 16% to 17% as demand remains strong. "For the Ukraine, the market is not yet softening," he says. "What we're seeing is a reduction in the pace of growth."
He adds UIA, which has been profitable for eight consecutive years, "definitely" will remain profitable in 2008 despite the new competition and higher fuel costs. While the country has never seen a low-cost carrier, competition is not new for UIA. There are now about 50 carriers in the country, although Miroshnikov says only four to six are "serious players".
For more on UIA, read our web chief executive interview with Yuri Miroshinkov at: flightglobal.com/uia
Source: Airline Business
