The low-cost carrier Wizz Air has indicated its intentions to expand operations in Scandinavia with new flights from Copenhagen. The airline currently operates 1,428 weekly flights to 60 destinations with its five largest bases summarised below:

Source: Flightbase September 14-20, 2010

Wizz Air's strategy is underpinned by the desire to fly east to west in Europe, which the four new routes fit into nicely. Plus, importantly, it will be the budget carrier's first service into Denmark, although it currently serves seven cities in Scandinavia: Bergen, Goteburg (City), Malmo, Stockholm Skavsta, Turku, Tampere and Sandefjord.

With its largest Scandinavian operations at Malmo and Stockholm Skavsta, Wizz will look to replicate its Swedish network in Copenhagen.

The carrier has five links from Malmo to Warsaw, Gdansk, Katowice and Prague (all of which will also be served at CPH) and Budapest. From Skavsta it also serves Gdansk, Katowice and Warsaw as well as Budapest and Poznan.

The new routes from Copenhagen could potentially prove a threat to Wizz's Malmo operations as four of its five Wizz Air destinations are earmarked for Copenhagen. The only route at Malmo which will not be served from Copenhagen, Budapest, would be a natural extension to the CPH operation for Wizz.

With its lower costs Malmo has been a natural secondary gateway for Copenhagen, which is only a short distance across the Øresund Bridge. The view may be that there is a large enough Polish community to sustain both Copenhagen and Malmo. However, it is likely that there will be a reduction in traffic at Malmo as Wizz will move to focus its attention on Copenhagen, particularly with Ryanair also seeking to establish operations there.

WHAT WILL WIZZ'S ENTRANCE MEAN FOR COPENHAGEN?

The opening of Copenhagen's new SWIFT terminal later this year means that there is much more opportunity for growth in the low-cost sector at the gateway. The table below summarises the top 10 carriers in Copenhagen in terms of seat capacity:

Source Flightbase September 14-20, 2010

A big airline failure in Denmark was the demise of low-cost operator Sterling in October 2008 but that actually had little impact on low-cost traffic at CPH as Norwegian and Transavia quickly established bases to replace the routes, plus easyJet increased its presence there. Additionally, the now defunct Sterling Airlines was reborn as Cimber Sterling and is now the second largest operator in Copenhagen.

Five of the top 10 carriers at Copenhagen are now low-cost: Cimber Sterling, Norwegian, easyJet, transavia and Air Berlin.

Seat capacity for these carriers has also been consistently growing. This is illustrated by comparing the current network with the same time period as 2005, which shows that Norwegian has increased seat capacity by 85% and easyJet by 50%. Meanwhile, Air Berlin and transavia did not operate to Copenhagen.

HOW WILL THE MARKET REACT?

The table below illustrates where carrier competition will come from:

Source Flightbase September 14-20, 2010

It should be fascinating to watch activity at Copenhagen over the coming months as the incumbent low-cost airlines react to Wizz's entry into the market, while the gateway itself will need to support increasing volume in the low-cost market.

Looking at the existing airlines at CPH, Cimber and Norwegian will not be duly concerned by Wizz's arrival into the market place. This is because Norwegian is not focused on the Polish market, despite at one stage having three based aircraft in Warsaw. The airline has since discontinued the Warsaw base and now serves Krakow in Poland from Copenhagen. Wizz Air does not operate into Krakow. Norwegian has also moved away from its low-cost core and now operates a model that serves the business market as well as the leisure routes.

Another competitor, Cimber also mainly serves the city break and sunshine routes, rather than the ethnic flows on which Wizz focuses. The same is true of transavia's operation in Copenhagen, which does not target business traffic as its network is made up of sunshine routes that will not be of interest to Wizz.

SAS will be one airline keeping a close eye on developments with Wizz, as it serves three markets in Poland from Copenhagen. Two of these, Gdansk and Warsaw, are routes on which Wizz will compete directly, plus SAS also serves Poznan. That city could be one of the next destinations on Wizz's wish list, judging by the success of SAS's regional Polish services. To Gdansk SAS has 97% of all traffic, while to Poznan it holds 76%. Yields on both routes are also high, at over US$200 one-way according to IATA BSP data (Airport IS). Wizz will be sure to target this traffic and offer a low-cost alternative targeting the ethnic flows between Scandinavia and Eastern Europe.

The next 12 months are shaping up to be a fascinating time for route development at CPH.