Since 2002 the Eastern Europe region has experienced massive growth in Low Cost Carrier (LCC) online gross bookings, increasing from €2 million to €526 million according to recent EyeforTravel research.
Since 2002 the Eastern Europe region has experienced massive growth in Low Cost Carrier (LCC) online gross bookings, increasing from €2 million to €526 million according to recent EyeforTravel research. Through their lean cost structures, strong business models and competitive pricing, many LCCs are successfully winning the battle with traditional carriers to gain their share of the rapidly growing online travel market in Eastern Europe. (9/13/2007)
Indeed, the growth of Eastern European low cost carriers is in turn fuelling online travel growth in the region. Internet penetration is expected to reach 46% overall by 2010 and there are signs that the LCC’s are now playing their e-education role in this region, as they did in Western Europe a few years ago.
The LCCs monopolise their own domestic markets, generally sell their seats using both online and offline channels but are seeing impressive growth in the proportion of bookings made online. In 2006, Wizz Air, with its headquarters in Hungary, sold almost 75% of its seats online, followed by SkyEurope (Slovakia) and Centralwings (Poland), which sold 65% and 60% of seats online respectively.
The Eastern European e-travellers have reacted positively to the introduction of online booking channels but one of the main reasons behind them not reaching even higher rates are mainly due to infrastructural problems which are ever-improving. So much so that Eastern European LCC gross online booking expenditure is forecast to grow by 38% to €864 million by 2010.
In line with this trend, the Eastern European travellers’ spend on LCC bookings is expected to grow by 25% by 2010 whilst their spend on traditional airline tickets is expected to grow by a 6% CAGR 2006- 2010. In the New EU member countries, current market share stands at 80% traditional carriers, 20% LCCs, and by 2010 it is predicted that LCC market share will grow by 8% to 28%. This figure is similar to the UK (currently 79%:21%, to increase to 72%:28% in 2010) where the LCC market is the most developed in Europe.
Among the Eastern European countries, Poland maintains strong growth and now has the 4th highest low-cost market share with 21%. Slovakia remains dominated by low cost carriers, according to recent Eurocontrol figures with SkyEurope their flagship low cost carrier. But high fuel prices and tough competition have put pressure on low-cost carriers around Europe, and analysts predict Eastern European LCCs need strong balance sheets to compete with deeper-pocketed rivals such as Ryanair and EasyJet.