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The world will have a smaller airline industry as a result of the coronavirus crisis with many privately funded carriers set to go under and governments throwing “good money after bad” to keep national champions afloat, Wizz Air’s CEO said.

Worst hit will be traditional carriers relying on a hub-and-spoke network and business traffic, but Wizz expects demand for its own cheap fares and direct routes to snap back quickly once the pandemic fades, the Hungarian airline’s co-founder said.

Wizz aims to widen a gap in unit costs compared to the rest of the airline industry thanks to regular deliveries of new Airbus AIR.PA aircraft, Chief Executive Jozsef Varadi added.

Co-founded in 2003 by Varadi, a former head of Hungary’s defunct national carrier Malev, Wizz Air is one of Europe’s largest budget carriers with a focus primarily on central and eastern parts of the continent.

Speaking in a webinar hosted by the UK-based Aviation Club, he bemoaned a lack of political coordination over travel restrictions and other measures to tackle the crisis and urged policymakers to pay more attention to the economic impact.

Dozens of countries worldwide, including France and Germany, have given various forms of public support or taken increased government stakes in their flag carriers to help them survive the crisis, which has sharply reduced travel demand.

But the industry has also faced a tangle of inconsistent travel and quarantine rules which airlines partially blame for putting people off taking the reduced number of flights.

“As far as Wizz is concerned, the moment COVID falls away I think we will be back to 2019 levels,” Varadi said.

“We can go very quickly, but the issue is not underlying consumer demand; the issue is restrictions imposed by governments.”

Wizz is operating on half normal traffic now, he said.

While aircraft deliveries are down sharply as airlines struggle to preserve cash, Wizz Air has continued to add to its Airbus fleet during the crisis. Together with India’s IndiGo INGL.NS it makes up about a quarter of Airbus deliveries.

Finance remains available for the small number of airlines like Wizz that have investment-grade status, Varadi said.

He also said Wizz was open to other foreign ventures after forming a startup in Abu Dhabi and expanding in the UK, where it would continue to invest after Brexit.

Wizz Air Abu Dhabi, a joint venture between the Hungarian budget airline and Abu Dhabi state holding company ADQ, has received an air operator certificate, though its launch has been hampered by a coronavirus ban on foreign visitors. [nL8N2H80C8]

Reporting by Tim Hepher; Editing by Jane Merriman

Our Standards: The Thomson Reuters Trust Principles.

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Tomorrow Tuesday (20 October) will see József Váradi, founder and CEO of Wizz Air live via Zoom at a virtual Aviation Club lunch 12:00 noon (BST).  There is no charge for members and their guests.

József Váradi, founder and CEO Wizz AirWizz Air was born in 2003 competing with the state-owned Malev Hungarian Airlines which finally collapsed in 2012.  Váradi, whose education included a spell at the University of London for a law degree, was for ten years with Proctor and Gamble rising to Sales Director for Central and Eastern Europe.  

In February 2015 Wizz Air Holdings Plc started trading on the London Stock Exchange (LSE) and in 2018 created Wizz Air UK with UK-registered aircraft and a British Managing Director.  It has in recent times joined Airlines UK.

Wizz Air currently has a fleet of 132 Airbus 320 series aircraft and Mr Váradi will bring us up to date on the current trading situation bearing in mind LSE regulations.  In 2019 Wizz Air transported 41.7m passengers.  He is expected to discuss Wizz Air Abu Dhabi now scheduled to launch 15 November.  

Chairman Karl Bruges will introduce Mr Váradi but he will accept questions after his discourse.  

Registrations close midday today (Monday 19 October).

For readers tuning in to the talk here is the airlines November UK programme.

Aviation Club Op-ed

Our industry has faced significant challenges over many decades, but never could I imagine a situation where virtually all flights around the world would be grounded for months on end.  This crisis is having a huge impact on our industry and businesses and economies across the globe.  We can only hope that governments will realise very shortly just how isolated and impoverished the world would be without air travel.    

At LCY, we made the decision to temporarily suspend operations in late March just after the lockdown was announced by Government and when we could see a real increase in infection rates across London. It certainly was not an easy decision, but we felt it was the right thing to do for the health & wellbeing of our staff and passengers, and to protect the local community in Newham.  This period has also allowed us to efficiently progress a number of airside projects as part of our major development programme.

The weeks since lockdown began in the UK have been like no other, and while there have been barely any aircraft in the sky, the demands placed on staff as we completely re-write the rules of air travel, and re-interpret the guidance in our airports and on-board planes, has meant we have all been working as hard as ever.

For us at London City, the challenges we have went through will be worth it on June 21^st when we restart services. It is something everyone is looking forward to and news which staff, as well as many of our stakeholders, have welcomed.

We anticipate a relatively slow build up as the market returns, and as passengers become more confident with the new health measures in place, and hopefully the new quarantine is lifted, partially or in full.

During this period, we have worked very closely with our airlines, concessionaires and other business partners to support their re-start plans, with all of us focussing on working together and taking a long-term, “one team” approach at LCY.

We are confident that by the start of July we will have more domestic services from the airport, including Dundee and Teeside which were announced pre lockdown but were yet to commence from the airport. We also expect to see our biggest airline, BA City Flyer, once again providing business and tourism connectivity across the UK and Europe and they will hopefully be joined by KLM and LuxAir.

As airlines look to make decisions about the future, it is my hope that some who do not currently operate from our airport, consider the economic advantages of flying regional and hub services on smaller, LCY approved aircraft. We also hope they will consider the more traditional benefits of the airport, which I believe are even more relevant in the world we are in  now, such as the fact we remain the quickest airport to get to and through from Central London and that we will not require passengers to be in the airport 2 hours before departure. We are certainly looking forward to having those conversations and working with them on an offer that will appeal to passengers as they start to make their travel choices again.

However, the 14 day quarantine ban has undoubtedly hampered and delayed the recovery of UK aviation and everything it delivers for the economy.

You all know the arguments against it, indeed I am sure many of you have made them publicly yourselves. What is important now is that we help the Government make sensible, not reactionary, policy which helps the industry, the economy and allows people the ability to explore the world again.

We urgently need to understand when it will be reviewed, who it will be reviewed by, what data will be considered and how this will be communicated to industry and passengers.

What we cannot have are any more surprises. There needs to be genuine collaboration between Government decision makers, industry and international partners to gradually remove the quarantine, first with air bridges at the end of June, and then, hopefully altogether by the end of July at the latest so we can get the economy moving by facilitating business, and in and outbound tourism.

Your data, your insight, whether it is on demand, country by country epidemiological data, or risks you face will be invaluable and I would encourage you to share them with Government as soon as possible.

Passenger confidence will completely underpin how we bounce back. I hope over the next few weeks, as UK consumers see Europeans taking to the sky again, and as Government health guidance for travel is approved, we will be able to communicate with passengers about why they can feel confident about booking flights again.

That is exactly what London City Airport will be doing in the build up to June 21^st. All of our communications will be underpinned by a focus on health and safety, and passengers knowing that we have their wellbeing at heart.

The airport will follow government guidance to the letter and  will go above and beyond it in some instances, for example by installing Temperature Checking Technology both on departure and arrival, providing staff with face masks and visors and providing clear instructional signage for every step of the journey. The airport will also deploy rigorous and thorough cleaning regiments, including the use of an anti-bacterial surface treatment which will begin to kill all germs upon contact and lasts for up to 12 months. 

We believe this is what passengers want. And, moving forward, we will stay in conversation with our customers so we consistently improve, adjust and make safer, the experience travelling through the airport.

But we should not underestimate the challenges ahead. Every single aspect of the passenger journey from origin to destination will change. And if all parties are not aligned that will undermine not only passenger confidence but confidence from government in our ability to withstand a similar crisis in the future and avoid another global shutdown. This is the greatest risk to us all and one that we must collaborate on to avoid.

Aviation has seldom had it easy. Our gains have been hard won and we will have to regroup to ensure we can grow again in a market where much more is expected of us in terms of health & safety, sustainability and being responsible employers.

But if ever you have doubt, just remind yourself how integral we are to how this island does business, for tourism and for simply enjoying a well-deserved holiday abroad. We are integral to the human experience and that, no matter how aggressively it is marketed, will never be possible by Zoom!

Long term Club Member, Chris Tarry, established CTAIRA in December 2002 to provide research consulting services and advice on and to the transport and aviation industries in the areas of business planning, including strategy and strategic development; industry and market forecasting ad performance measurement and evaluation.  His services are provided to a broad and still growing spectrum of clients drawn from airlines, manufacturing companies, airport owners, government bodies, banks and other financial institutions.  Chris has also acted as advisor to government departments, regulators and the UK Parliament on aviation issues and has also been, a member of a number of industry panels and advisory councils. 

Chris has generously provided a number of topical papers for circulation to members, the first of which – The CTAIRA Passenger Confidence Survey, is a survey which has drilled deep to understand which activities or requirements would be considered sufficient to give confidence to fly again once any restrictions are lifted, in a bid to answer how traveller confidence can be restored.  The Survey report can be read HERE.  

Unfortunately, our events programme remains suspended and last week we missed the April lunch, where we would have been joined by guest speaker John Holland-Kaye, CEO Heathrow Airport.  I know many of you were particularly looking forward to hearing from John and rest-assured, he will join us at a future date.

Stock markets have collapsed, businesses have had to close and public life is restricted due to the Covid-19 virus.  It’s a humanitarian crisis and there are drastic global restrictions in place to minimise the spread.  They may vary from continent to continent, but one thing they have caused already:  A large part of commercial air traffic has come to a standstill.  Travel bans and plummeting demand have darkened the future of the aviation industry.  Never before has it been hit by an incident of this magnitude, resulting in almost no passenger business.

Whilst John was unable to address Club members and guests last week, he has provided an insight into the current situation, which you can read below:

‘Prior to this outbreak, our sector thrived. Many of us had enjoyed record breaking years.  Airlines prepared to launch new routes to untapped markets, that would take British goods to more parts of the world and bring back tourists and inward investment to our beautiful isles. Many airports were progressing growth plans, be it in existing terminal buildings, emergency runways or building new ones.

This feels like a lifetime away, yet it was only a few months. It was only twelve weeks ago our industry felt the first warning ripples of the initial outbreak in China and we started working with health officials on enhanced monitoring measures. As the outbreak became a pandemic, travel bans and lock downs became the norm, crippling trade and tourism and mothballing planes and terminals.

While some commentators have questioned why airports remain open, there has been increasing realisation of the crucial role aviation plays in the fight against Covid-19.

I often talk about the critical economic role Heathrow plays as the UK’s biggest port.  Today, many of us are working around the clock to keep vital supply lines open, as ventilators and precious PPE equipment land at airports across the country supporting the battle against this pandemic.  If we were not open, tens of thousands of British citizens would be stranded across the world without the support of friends and family or even access to medical help.  So let us pay tribute to the hard working men and women of the aviation industry who have worked so hard on the front line to support the NHS and bring people home. 

But even as we serve the nation, the aviation sector is facing real financial distress.  Our revenues have disappeared, but our costs remain largely fixed. This is an existential threat to our supply chain, as well as all those who rely on aviation for their livelihoods. We will publicly support any business in our sector that needs Government help.  It is vital that we emerge from this crisis with a vibrant and competitive aviation industry.
The government can do more to help.  We have been pushing for deferral of Business Rates, which represent over 10% of our costs, and currently more than our revenues.  Only in Scotland has the government waived unaffordable rates to support aviation.  Now we need a level playing field.

Whilst we are consumed by this crisis, it is important that we think about how we can accelerate the recovery, and the critical issue will be the reopening of borders to international travellers, without the need for quarantine. The crisis came on so rapidly that each country set its own health screening standards, with little coordination.  Rightly or wrongly, those that require temperature checks, are perceived as being safer than others, such as the UK. 
 
As we come out of this crisis, each country will be cautious about reopening their borders to avoid the risk of reinfection.  Until there is a cure or a vaccination, it is likely that travel between countries will only happen if each considers the other to be low risk, and to have similar high standards.  So the aviation industry needs a common biosecurity standard for air travel, just as there is for airport security. 
 
And the UK needs to be at forefront of this.  We are an island nation and a trading nation, which is why we have one of the biggest aviation sectors in the world.  Millions of jobs in tourism, education, retail and exports rely on aviation.  Unless we can make it safe for people to visit Britain, the UK economy will be held back.  Let’s work together with the international aviation sector and governments to define and agree a common biosecurity standard. 
 
Leaving the middle seat empty on planes cannot be a long term solution.  It would take out a third of the world’s aviation capacity, drive up the cost of travel for marginal safety improvement and increase every passenger’s carbon footprint.   
 
Maybe it is better that, as with airport security, the test for whether someone is safe to fly should take place at the entrance to the airport or at airport security, so that we can minimise the need for social distancing on the plane or at the gate.  If there is a common international standard, we will know that any arriving passenger will be low risk and we can minimise the need social distancing in immigration or baggage reclaim also.  We have made good progress on automating the passenger journey, but the final steps have been held up by bureaucracy.  Now is the time to push ahead so that we minimise contact between aviation workers and passengers in check in, bag drop, security, boarding and immigration. 
 
If we can get this right, we will be more resilient to deal with any future pandemic.  And the aviation sector and all the industries that rely on us, can fly high into the future.’  John Holland-Kaye, CEO Heathrow Airport

#StaySafe

Issued by Aviation Club UK Chairman

Greetings everyone, hope all are well and are at least enjoying the Spring weather.

It appears things are moving fast….to slow things down!  The RAC have informed us that they are closing until 14 June and thus have to cancel our 10 June booking.  They are merely following what all Clubs in London seem to be doing, the closure covering the 12 week critical period that we have entered into as detailed by the Government, a period that is open for extension if deemed necessary, or subject to additional restrictive measures as seen by the Prime Minister’s announcement last night.

With the cancellation of Farnborough International we have cancelled the Summer Reception planned for Sunday 19 July, and our lunch scheduled for 10 June is now cancelled as well.  As with John Holland-Kaye, I see the cancellation of Ed Bastion, CEO of Delta, as merely a postponement, and we shall rearrange these lunches as soon as is convenient and workable.

As things stand the next Club events are the lunch on 17 September and then the Ball at the end of that month.  We shall keep these dates open at this stage and make final decisions once the way ahead is clearer.

As the Club is now forced into a period of unexpected hibernation, I sense everyone, Committee and Members alike, have far more on their minds at the moment than Club Elections, especially so for a Committee that will not meet again until September at the earliest.  These are uncharted and unprecedented times, and I believe it now makes pragmatic sense to put the Club Elections on hold for this year as well.   Three Committee members were up for re-election, and another was due to stand down having completed two successive terms.  I believe it makes sense that we essentially stop the Committee clock for this year for all those currently on the Committee, and thus all those up for re-election or due to stand down remain on the Committee for the coming year, namely until the Club Elections of April 2021.  Anyone who would have been due re-election or due to stand-down in April 2021 would remain on until April 2022 and so on, in effect just stopping the clock now and restarting it again in April 2021.  I believe this is a sensible way forward given the current circumstances and the uncertainly that still lies ahead.

On a brighter note, the Club has been receiving requests for assistance from Members covering a number of matters, I shall send out a separate note on this news shortly.

With best wishes

Karl

Karl Brünjes
Chairman

Issued by of Aviation Club Chairman

Firstly, and most importantly, I hope this note finds you and your family and friends well and managing to muddle through the current challenges facing us all.
 

The Club Committee has been monitoring the current coronavirus situation, and it’s now very clear that we need to postpone the Club lunch in April where John Holland-Kaye, CEO Heathrow Airport, was to be our guest speaker. Please be assured however that this is merely a postponement. What is happening at Heathrow is of huge importance and interest to the Club and we look forward to welcoming John along to speak at the Club at the earliest convenient date.
 

Cancelling the April lunch clearly effects the AGM that has traditionally been attached to this event.  The AGM will be re-arranged as an Extraordinary GM at the first sensible and convenient date.  If the June and July events go ahead, then clearly we could attach an EGM then; we will cross that bridge when it comes.
 

Whilst the AGM is delayed, the Committee elections will still go ahead, these now being conducted largely on-line.   This will allow the elections to be concluded in line with Club rules by 30 April and Philippa will be sending out the required notifications before the end of this week.
 

Charles Dickens wrote, “It was the best of times, it was the worst of times.”   This is undoubtedly the strangest of times, and timely communication going forward will be crucial.  We are keeping under review the June lunch and July reception, and should decisions need to be made, they will be taken well ahead of the events to avoid any confusion.

With very best wishes and stay well!

Karl

Karl Brunjes

Chairman

Whilst the Club events schedule is on hold for the foreseeable future, the Club has received several requests for assistance in recent weeks arising out of the coronavirus crisis. 

Our ever efficient Club Secretary, Philippa Ewart, has fielded requests for help as diverse as an overseas government seeking the support from a Member with extensive aviation sector crisis management experience, to connecting a Member with two other Members in companies operating in the air cargo sector, regarding the airlift of NHS purchased emergency medical supplies from China to the UK.  Philippa also receives requests from the media seeking input from aviation experts.  In recent weeks I’ve heard the dulcet and knowledgeable tones of some of our Members on the TV and radio commenting on the issues facing the aviation sector as a result of this crisis; no better listening over my breakfast!

Philippa continues to manage such requests for support.   Should any Member need some assistance, or has an idea regarding how the Club with its wide-ranging and experienced Members and their extensive and diverse industry contacts can be of help during the current situation, please liaise with Philippa and we’ll see what can be done.

All best

KGB

Chairman