Wizz Air: Pricing Models & Route Defensibility
Former Senior Network Development Manager at Wizz Air
inpractise.com/articles/wizz-air-pricing-models-and-route-defensibility
Former Senior Network Development Manager at Wizz Air
Interview Transcript
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Since a big chunk of your costs are fixed, you need to leverage them eventually. As a low-cost airline, you compete on ticket prices. The main lever to surpass your cost basis is volume. You need to develop a certain volume on a route to become profitable. Am I thinking about this correctly?
I need more capacity, seats, and flights in the market. For example, on the Budapest to Barcelona route, Wizz Air operates 14 flights a week, and Ryanair also flies. The more seats and flights I have, the better my pricing position against my competitor. If I have 14 frequencies a week and my competitor has only three, I can schedule flights at the same times or close to theirs, offering discounts to attract customers. The remaining 11 flights not covered by my competition can be sold at full fare without discounts. I'm competing on only three out of 14 flights, while my competitor competes on 100% of their capacity. This is the pricing position versus relative market share.
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