The FINANCIAL — According to The FINANCIAL following the introduction of budget airlines to Georgia, airplane fares will drop.
Negotiations are underway with Ryanair and other low cost airlines. Europe’s budget airlines Easyjet and Wizzair say they are interested in expanding business to Georgia, adding new routes to the Black Sea destination. This could help passengers from Europe fly to Georgia for as little as 50 EUR. Low cost airplanes should attract more European tourists also.
As The FINANCIAL was told at the Ministry of Economic and Sustainable Development, they are intensively working on bringing low cost airlines to Georgia which will guarantee a decrease in flight fares, in comparison to the already existing companies in Georgia whose international flight fares are skyrocketing. “That could be one of the main reasons why tourists don’t come to Georgia. However that is all set to change if such companies do enter the Georgian market,” said Irma Jalagonia, head of the press centre.
Ryanair, possible low cost airline partner for Georgia, is Europe’s largest low-cost carrier Irish airline with its head office at Dublin Airport, Ireland, and with primary operational bases at Dublin Airport and London Stansted Airport.
Ryanair operates almost 250 Boeing 737-800 aircraft on over 1,100 routes.
As Maksim Ryzhov, Director at Aerosvit told The FINANCIAL, fares could really fall if such a budget airline was brought to Georgia but it all depends on the pricing policies, meaning it all comes down to the competition between the fares of different airlines. Therefore if a low cost airline enters Georgia then others will follow suit and decrease their already-set prices.
“However I can’t approve this yet, not until they actually enter the Georgian market. As for our airline, we offer a Tbilisi-Kiev return ticket for 650 GEL, which is set to decrease if the scenario does arise.”
A different view was taken by the head of the supervisory board at SkyGeorgia, Giorgi Kodua.
“Low-cost airlines will not enter Georgia due to the fact that the potential market is very limited and the majority of passengers take indirect flights. Generally low budget airlines make new routes when there are already several flights going to and from one direction,” said Kodua.
Irina Manjgaladze, Director of Inter-Tour, one of the largest travel companies in Tbilisi, told The FINANCIAL that several years ago they had a similar attempt by offering 10-15 seats with special cheap fares ranging from 180-280 EUR. The concept eventually failed, not as a result of failure on its part, but because the company was dismantled at the time.
“Regarding the current situation I can say that the prices offered by travel agencies mirror what airlines charge. Therefore if this was the case, and bringing low cost airlines to the country became a reality, then we would naturally follow suit. However I don’t think the idea is viable largely due to the fact that there is little demand as well as low numbers of passengers willing to take direct flights,” said Manjgaladze.
The FINANCIAL contacted two other budget airlines, one of them Wizzair, in order to identify whether the airline coming to Georgia is at all likely.
“We welcome the initiative of starting new flight routes including Georgia, and are considering a potential plan, however at this stage it is not decided. The process needs to develop further before we can reach a definite conclusive.
“As for the necessary conditions: the most important thing is to ensure that the airport costs become significantly lower. Only low airport charges will be able to stimulate airlines to add capacity and generate new market demand,” said Natasa Kázmér from Wizzair.
“Regarding the ‘secret’ of our low fares there are a number of factors affecting our business model: First we operate the only brand new Airbus A320 (currently 33) that ensures low maintenance costs and much higher reliability versus an older fleet, we fly from regional or secondary airports where possible to ensure higher operational flexibility, fast turnaround times and lower costs. Then we sell tickets via the internet. 85% of our customers buy their ticket on wizzair.com (in Ukraine 75% do). This is the single cheapest and fastest way to book tickets for the passengers but also saves money for the company because we do not have to maintain and staff expensive customer offices,” said Natasa Kázmér.
“As I mentioned, cost efficiency is our number one focus and this is what makes us capable of offering low fares at all times,” said Natasa Kázmér, Head of Corporate Communications & Public Affairs.
Today Wizzair has 12 operating bases in the region: Gdansk, Poznan, Katowice, Warsaw and Wroclaw in Poland, Budapest in Hungary, Sofia in Bulgaria, Bucharest, Cluj-Napoca and Timisoara in Romania, Kyiv in Ukraine, and Prague in the Czech Republic, offering flights on over 150 routes.
Easyjet, one of the largest budget airlines in the world told The FINANCIAL that the company recently added relatively smaller countries like Kosovo and Israel as destinations and are not excluding Georgia as a possible new route.
“Our aircraft is always full of passengers when we fly, at the same time we charge very low prices. On average Easyjet charges passengers 1,100 km for just 45 GBP/50 EUR. There are many aspects to keeping our operating costs down. The most important being our young airbus A319 fleet with an average age of 3.5 years which is also helping to keep costs down. Our airplane carried over 46 million passengers in 2009 and we plan to expand even more this year establishing new routes to more than 50 of Europe’s largest airports and we plan to grow 7.5% this year,” said Aurelija from Easyjet.
AirBerlin was the third lowest cost airline contacted by The FINANCIAL. As Deputy Director of Corporate Communications declared, so far there have been no plans to start flights to Georgia.
“AirBerlin is flexible and increasing its services and route network constantly. We are very close to the markets and needs of our passengers. If we see a potential market in a new location like Georgia, then we start flights there,” said Yasmin Born.
“Our flight prices are of a mixed model. We offer a kind of Early Bird ticket – which means very low starting prices for flights for those who book in advance. Higher prices when you book at short notice. The higher the demand for tickets, the higher the price. So as the date of the flight approaches, the ticket prices rise. With this mix of high and low prices, an airline can manage its needed yields. With our “hybrid” strategy, i.e. offering high quality service at favourable prices, we are very attractive for both business and leisure travellers. We have been voted Best Airline so many times – due to our outstanding value in terms of lower fares and premium service,” said Yasmin Born.
Many budget airlines are found across the world among them Easyjet in the UK, Corendon in Turkey, Sky Express in Russia, Wizzair in Romania, etc. And of course the abovementioned AirBerlin and Wizzair Ukraine as well.
