Technology Can’t Save Your Business, But Your Business Will Fail Without It, Wizz Air CEO Says
Written by Marisa Garcia – Flightchic.com
Wizz Air CEO József Váradi believes that technology can revolutionize the airline industry, but technology alone will not keep an airline from failing. Instead, airlines must focus on perfecting their operating models and use technology in every way possible to improve the passenger experience and reduce their cost base.
“It is strategically important that airlines and aviation actors improve the passenger experience,” Váradi said during a recent speech at the CAPA World Aviation Summit in Berlin. “Despite all the changes around us, and the need to develop, we need to remain focused on the business we are in.”
Technology Is a Tool, Not A Panacea
Technology is a tool and not a panacea, Váradi emphasized, but it likewise cannot be ignored.
“Adopting technology is very important for the businesses, but I don’t think that it is a decisive for success. Certainly, it is a decisive factor for failure,” Váradi said. “But adopting technology will not make you successful in the future. It requires more than that. What I really mean by this is that we had a singular purpose in our mind when we started in business back in 2004. We said that we wanted to liberate flying for people through affordable travel. We wanted to make sure that people can access air travel and they can afford it. That simple purpose has not changed. Even today, we are going to back to that purpose every day. How can we best satisfy that purpose and the interests of consumers?”
Váradi believes technology is critical as a tool to help airlines keep pace with disruptive models in the marketplace.
“If you look at companies in the Fortune 500 in the year 2000 and you look at the Fortune 500 today, half of the companies have disappeared,” he said. “You need to stay relevant in the marketplace. You need to stay relevant to the consumer. You need to stay relevant to match your competitions. But at the same time you need to have a purpose and that purpose must be serving your consumer.”
Váradi added: “Talking technology, this is not a matter of being fashionable. It’s not the new buzzword—and we need to say this. It is a way of running the business. It is a way of doing business. We have to be cost sensitive, everything needs to be optimized. You need to deliver consistently. It’s not enough to be digital in the front end of the business but still writing papers in the other parts. We have to store data and use data on digital platforms to optimize everything that we are doing.”
World’s Sixth Largest Website
One way in which Wizz Air has been applying technology to gain a competitive edge has been to handle more sales through direct channels.
“Wizzair.com is the world’s sixth largest airline website,” Váradi said. “There are only five airlines attracting more visitors to their websites and those are the four big American Airlines and Ryanair. We are much bigger than Lufthansa and British Airways, for example.”
The airline touts the biggest discounts available through its website and has introduced fare tiers with creative packages that offer discounts to families traveling together. Beyond the Wizz Basic travel light, Wizz Go and Wizz Plus fares, the airline offers further discounted Wizz Go Family and Wizz Plus Family packages. The airline offers common ancillaries like added services, hotels, and ground transportation options but also offers airport parking discounts.
Wizz Air is also open to profitable partnerships and has collaborated with Budapest Airport and Heinemann to boost sales of Duty Free and Wizz Air’s Café onboard services. Flyers who make purchases of minimum 50€ or 75€ at Heinemann in Budapest can receive discount vouchers worth 4.5€ or 7.5€ which they can then use to purchase Wizz Air Café food and beverages onboard.
As detailed by Budapest Airport’s Chief Commercial Officer, Kam Jandu, at this year’s Aviation Festival in London, this first trial of this collaboration was a resounding success.
“Passengers liked it,” he said. “In terms of the commercial result—which is the biggest area of focus..we had targets for voucher redemption.”
The companies had targeted 1,000 vouchers per week. In March, 7,147 vouchers were redeemed, which means 7,147 of traveling Wizz Air passengers spent over 50€ in the Duty Free shop. In April, that number jumped to over 8,000. Onboard redemption was also higher than expected, with passengers redeeming over 80% of vouchers issued to apply to sales of food or beverage onboard.
Jandu said that the collaboration with Wizz Air helped get the message out about the promotion much more effectively.
“The airline will always be the first thought process for the passenger. We need to talk to an airline and get them to talk to us at the travel retail experience—it is achievable with flight bookings and pre-flight reminders,” he said. “Wizz Air..is the right airline to work with.Any dilution of their sales is a risk to them. It’s a low margin business. They make it easy. Commercially, they make it work.”
One technology which would help reduce costs is flight automation. Váradi believes that commercial single pilot operations, or perhaps even pilotless flights, will ultimately become a reality.
“This is not something that will happen overnight but I am sure that in, I don’t know, 30 years from now, we will have a very different discussion in terms of how we are flying an aircraft and how we are traveling in an aircraft,” he said. “We need to be ready for this and everyone will have to take a position of how we want to grow, but automation is coming.”
A more immediate priority is adopting a mobile-first approach to business, and Wizz Air is focused on moving more interactions to its mobile channel.
“We are getting 20% of our bookings on mobile phones and 40% of our international consumers on mobile phones,” Váradi said. “The mobile phone has become a key channel for interacting with the consumer and drive the commercial lines of the business.”
For Wizz, mobile will ultimately be the vehicle to support rapid growth.
“In ten years from now, we think we’ll be flying a fleet of 300 aircraft. We think the number of passengers will double in this period,” Váradi said. “A focus on mobile will be the primary distribution channel; and probably the only way that we will be interacting with consumers is by mobile phone. I know that there are challenging ideas that maybe the mobile phone is history, and that in a few years from now everyone is going to have a chip in his or her body—I am not sure that we will get there that quickly.”