Wizz Air Holdings PLC’s aggressive expansion is raising fresh concerns about overcapacity across western Europe’s short-haul market, according to Citi, which says the low-cost carrier is adding seats at a pace far above rivals.
Such rapid expansion risks putting pressure on fares and margins across the sector if demand fails to keep pace, analysts at the investment bank said.
Wizz has been driving a sharp acceleration in market capacity since mid-January, the analysts said.
While overall growth across Ryanair Holdings PLC and easyJet PLC routes remains broadly in line with historical European traffic growth of about 5-6%, Wizz’s expansion looks markedly different.
On Ryanair’s summer routes, market capacity measured in available seat kilometres is now scheduled to rise 6.3%, up 0.7 percentage points since January. Wizz accounts for 0.3 points of that increase.
EasyJet’s summer market capacity is set to grow 5.1%, 0.6 points higher than in January. Citi said Wizz is responsible for roughly two thirds of that uplift, effectively more than doubling its own growth rate on those routes to 24%.
The most striking change is on Wizz’s own network. Market capacity on its summer routes has risen by 2.4 percentage points since January, with Wizz itself contributing 1.8 points. Growth is now scheduled at 14.8%.
Credits: Wizz Air
