WizzAir SWOT Analysis and Airline Industry

This assignment delves into a comprehensive SWOT analysis of WizzAir, a prominent low-cost airline. It explores the company's internal strengths and weaknesses, as well as external opportunities and threats within the global airline industry. The report analyzes factors such as cost per available seat kilometre (CASK), passenger trip length, market competition, and supplier power to provide insights into WizzAir's current position and future prospects.

Extended business
project

Table of Contents
INTRODUCTION...........................................................................................................................1
Background of WizzAir ..................................................................................................................1
Strategic Position of WizzAir .........................................................................................................1
Internal analysis – SWOT ..........................................................................................................2
External analysis of WizzAir .....................................................................................................4
Recommendations and Conclusions ...............................................................................................6
REFERENCES ...............................................................................................................................8
Books and Journals ....................................................................................................................8

INTRODUCTION
Airline industry is one of the fastest growing sectors in present business environment or
in global market. The present report is in context of WizzAir which is a Hungarian low cost
airline headquartered at Budapest. The purpose of this report is to understand various factors
such as external and internal factors that affect overall functioning and performance of the airline
company. The study will also focus on methods used by WizzAir to develop effective strategy
for gaining competitive advantages in the market. Furthermore, the report will also provide
beneficial recommendations in order to achieve success and to sustain in competitive global
market.
BACKGROUND OF WIZZAIR
WizzAir was launched in June 2003 when six individuals with a high airline experience
and track records joined Jozsef Varadi who is the chief executive officer of company. It became
a registered airline company all ready to fly. WizzAit is a low cost Hunagarian airline which is
also known as WizzAir Hungary ltd. presently it is offering more than 500 routes from almost 27
bases in various regions such as Lublin, Poznan, Katowice in Poland, Debrecen and Budapest in
Hungary, Varna and Sofia in Bulgaria, etc. Company is a value oriented airline that focuses on
innovation throughout the way of a customer's journey. WizzAir is endlessly looks for potential
opportunities in order to provide low cost air transport and expand its network of destinations.
Company offers flights to a mix of primary, secondary and regional airports providing fast and
friendly customer services at low cost.
STRATEGIC POSITION OF WIZZAIR
In order to determine the current strategic position of WizzAir, both internal and external
environment will be analyzed. Competitive advantage has been considered in relation to the
business strategies. Number of strategies are applied by WizzAir in order to gain competitive
advantages in the market. These strategies are affected by many types of elements in the internal
as well as external business environment. It is essential for each and every organization to gain
competitive advantages as it helps in sustaining an impressive position in the market.
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Internal analysis – SWOT
In order to analyze the internal business environment and factors inside the company
SWOT analysis can be used. These factors are affecting or influencing overall functioning as
well as performance of WizzAir
Strengths
1. It has very low unit cost -According to CAPA CASK database WizzAir has the second
lowest unit cost among all European airlines. Along with Pegasus and Ryanair, WizzAir
is categorized as one of the three low cost airline in Europe. The main element behind
this low level of cost per available seat kilometer is a very effective business model
focusing on high labor productivity, secondary airports and high average aircraft
utilization.
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Illustration 1: Cost per available seat kilometre (CASK, USc) versus average passenger trip
length (km)
(Source: CAPA - Centre for Aviation analysis of company reports, 2014)
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2. Low fares – Due to the low cost unit, WizzAir is easily able to offer low fare air transport
to their customers along with maintaining their profitability.
3. Leading market share in the chosen market – In the year 2014, WizzAIr was the fifth
largest LCC by passenger numbers and 4th largest by ASKs in Europe. According to
OAG statistics of the week of October 2015, the company is the biggest airline regarding
seats between Western Europe and Central or Eastern Europe ahead of Ryanair airlines.
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Illustration 2: Leading airlines between Central/Eastern Europe and Western Europe week of 19-
Oct-2015
(Source: CAPA - Centre for Aviation, OAG, 2015)
Weaknesses
1. Seasonal earning – WizzAir is highly dependent on the months of summers, the company
is earning high profit in summer season as more passengers travel in summer vacations to
meet their friends and family.
2. WizzAir is operating with lower frequencies as compared to its competitors.
Opportunities
1. WizzAir has high opportunities to grow in Central or Eastern Europe, this target market
of the company offers potential growth opportunities for many reasons. The first region is
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that Eastern Europe is less developed as compared to Western region and hence, its GDP
growth rate is high. Secondly, the growth in the economy and transportation links with
Western Europe are increasing because of the expansion of the European Union in order
to include various countries in Eastern Europe in recent years.
 Threats
1. Ryanair is a great competitor for WizzAir, although the airline is leading by seats overall
in the target market Ryanair often leads in nations where they both operate or compete.
Therefore, it is a major threat for WizzAir as competitors can minimise the profit or
market share.
2. External events – The airline company can get negatively affected by various external
activities or event occurring in the environment such as volcanic ash disruption and
earthquakes. These natural and geopolitical events can affect overall functioning or
performance of the airline company.
External analysis of WizzAir
Each and every organisation is also influenced by various elements outside its internal
business environment, these elements are known as the External factors. The external factors are
highly affecting WizzAir's business functions or activities which can be identified by effective
external analysis tool such as Porter's five forces analysis as mentioned below -
1. The threats of new entrants – The companies requires a high investment in order to
enter on airline industry, WizzAir remarkably brought huge capital while entering into
business (Williams and et.al, 2017) But airline industry is a highly profitable sector in
present market therefore a high number of new companies are entering into airline
industry which is a great threat for WizzAir, In order to ensure the profitability and
sustainability it is important for the company to develop effective strategies for gaining
competitive advantages in the market.
2. Bargaining power of the Buyers – Customers are observed to the most competitive
forces as they have the power to decrease the prices with regards to demanding high
quality and more services, customer also have the tendency to increase market
competition. The power of every group of buyer is dependent highly on various
characteristic of the market position and situation. Passengers in business class are
playing a vital role in strategic decisions die to the amount of money they spend, they are
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potential customers for the airline company thus they can highly affect the strategies,
functioning and prices of the company. The buyers are responsible for business success in
each and every sector, it customers can switch to various other options in the market or
industry.
3. Bargaining power of suppliers – Suppliers also plays an important role in the overall
functioning or performance of an organisation. They highly affect the pricing strategy of
the company as suppliers influence cost of production. WizzAir's major suppliers are
Airbus and Boing which are providing various resources as well as high quality aircraft to
the company. Therefore, they can highly influence cost of the company and can affect the
profitability of airlines. Various other suppliers in the industry can also affect WizzAir
strategic decisions by changing the price of supplied goods or services. This changes in
the resources or supplied good highly influence quality of the services, fares and profit
generation of the company. WizzAir needs to consider the types of suppliers it has and
try to find out effective alternative for reducing power of suppliers and its impact on the
airline's performance.
4. Threat of substitutes - This factor is additionally an important element as it can change
the choice of purchasers to change to another supplier with comparable items and
services. Despite the fact that, air travel is one of the effective, fast and modern methods
for transportation, individuals can likewise utilize prepare, transport or auto keeping in
mind the end goal to achieve the want goal. The level of this quality is specifically
dependent of substantial variables that included cash, time, or individual taste and
inclination. A key component is viewed as the exchanging taken a toll as customers can
without much of a stretch utilized diverse sort of transplantation. WizzAir comprehended
the need of travellers to have in excess of one option and is putting forth unique services,
for example, lease, auto rentals, visit bundles, perspective that it bolster its development
and notoriety.
5. Rivalry between existing contenders - In airline business, each and every company
utilizes distinctive strategy with a specific end goal to pick up fame, to fortify the
situation in the market and to build customer's loyalty (Belobaba and et.al, 2015). Other
techniques are utilized, value, methodologies, advertising efforts, or including services
for customers are the most utilized once. Carrier industry can end up unstable in the
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circumstance of activity in a market that has a high number of air-crafts. WizzAir chose
to forfeit benefit keeping in mind the end goal to ceaselessly extend. The business is
continually set apart from the container in the middle of players as each carrier tends to
pick up piece of the overall industry from each other. For purchasers, it is anything but
difficult to switch contingent upon cost and comfort. For this reason, the level of
competition increments consistently.
Recommendations and Conclusions
The above report analysed that although airline industry is highly growing and
developing in the present market, it has a huge competition or rivalry. Many companies are
entering in the airline industry with new and innovative techniques or strategies but with the help
of low cost strategy WizzAir has successfully achieved an impressive position in the European
airline industry. The company needs to ensure that it sustain the lading position and profitability
of the market, competition is increasing with a huge rate. Therefore, the company needs to
develop more effective and beneficial strategies for competing in the market, the most beneficial
method to sustain an impressive position in the market is to focus on expanding the market share.
The airlines should invest on increasing is market reach or enter into new markets which can
help in gaining more customers which can lead to increased profitability. The other improvement
should be made in the quality of services provide to the customers, high quality services are very
important for obtaining customer's satisfaction. In order to satisfy the changing needs and
demand of customers or passengers it is essential for WizzAir to bring innovative and creative
changes in the services offered to them. The company should introduce various new services
such as free luggage carrier, entertainment elements at the airports etc. This will help the airline
company to attract more customers and build a strong position in the airline industry. The report
identified that the airline company also has a major threat by the power of suppliers. In order to
deal with this threat or issue WizzAir needs to ensure that it finds and connect with wide range of
suppliers in the global market for supplying goods or services so that the company can switch
their suppliers when they increase their cost or prices. The suppliers can greatly influence cost of
production, importing good from a supplier with low prices can directly reduce the cost of
production for the airline company. WizzAir needs to consider all the above factors for
sustaining its position in the airline industry as well as achieving further growth and
development.
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REFERENCES
Books and Journals
Belobaba, P., Odoni, A. and Barnhart, C. eds., 2015. The global airline industry. John Wiley &
Sons.
Williams, G., 2017. The airline industry and the impact of deregulation. Routledge.
Smits, R., 2018. A research to the influence of failure severity on customer satisfaction and
loyalty. Does failure type influence the impact on the customer in the airline
industry(Master's thesis, Open Universiteit Nederland).
Ford, J.B., Paparoidamis, N. and Chumpitaz, R., 2015. Service quality, customer satisfaction,
value and loyalty: An empirical investigation of the airline services industry. In The
Sustainable Global Marketplace (pp. 187-187). Springer, Cham.
Mellat-Parast, M., Golmohammadi, D., McFadden, K.L. and Miller, J.W., 2015. Linking
business strategy to service failures and financial performance: Empirical evidence from
the US domestic airline industry. Journal of Operations Management,38, pp.14-24.
Online
CAPA - Centre for Aviation, OAG. 2015 , 2015. [Online].Available through:
<https://centreforaviation.com/insights/analysis/wizz-air-swot-ultra-low-costs-drive-high-
growth-and-margins-in-spite-of-ryanair-competition-251605>
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