Robert Carey, President of Wizz Air - Interview
On Tuesday, November 16th, I had the privilege to interview Robert Carey. Mr. Carey is the President at Wizz Air. He has been in the airline industry for over 20 years, working for American West, Delta Air Lines, easyJet, and Wizz Air. Previously he served as Chief Commercial Planning and Customer Officer with easyJet. This interview has been edited for length and clarity.
Joshua Kupietzky: How did you start your career in the aviation industry?
Robert Carey: I started actually as a travel agent, with my first job. Background—I lived in Chicago. My dad was a salesperson, and I started to book his trips, and then I started to book some of his friends’ trips, and then I got a summer job working for a travel agency locally. Basically, I biked to every travel agency that was within bicycle distance, and asked them if they needed someone. And I think they figured, what did they have to lose? So I got involved in that, then after that my first real job in airlines was when I was in college. I was out at Arizona State, which is in Tempe, where America West was headquartered at the time. I had sent a letter at the time to then-CEO Bill Frankie saying that he had a great college down the street, and he should hire some more people from there. It led to me getting an internship there, and then from that, I did another co-op internship, which is a full time position, with Delta Airlines in Atlanta. I did that for three years, and that's how I got started.
JK: Now is perhaps the most difficult time in the history of the aviation industry. What do you see as your current top challenges and opportunities? And how do you think Wizz Air has navigated out the COVID crisis?
RC: Definitely a challenging time in the airline industry right now. Nobody saw the pandemic for what it was going to become. I remember back when, almost two years ago now, I first started seeing it. At first it was a Chinese challenge, then it became an Asian challenge, then it became a global challenge. Historically, you can have economic downturns and you can have health-related downturns, and airlines have very different recoveries. This was an economic and health downturn, and that's where it's a challenge. Now, all that said, I think every time there's a challenge it is also a great time of opportunity. This has been our mantra throughout the pandemic. And some of the opportunities have been organizational flexibility, network changes, and picking up growth. You’ve kind of got two groups whenever you talk about airlines; you have got one group which is the frontline, which is key to delivering everything we've got to do. And they're seeing a reality which is, you know, you've got an insurgency in Europe; looking at the last 18 months, there was basically zero flying going on, and there were months where we were above our peak of pre-COVID. So, you know, that's huge variability you're dealing with, and emotionally we're all going through the same thing, which is you've got family members or friends who get affected. I've been talking to some of the crew here, who say it's been crazy and intense. It wasn't actually more intense than any other summer we've run, but the difference is it's a bit like trying to run a marathon having, you know, sat on a couch for the last year. You know, you haven't trained, you haven't built the endurance. Then the other group you’ve got is office staff, which is dealing with more variability— figuring out the challenges Wizz Air is trying to work out, and how we can take advantage of some of those opportunities and move fast for the industry to continue to grow. Can you invest in and build that position for when we come out?
JK: Wizz Air has been one of the most dominant airlines in Europe in terms of post-pandemic recovery, with adding new bases and routes. How did you manage to be so successful during the challenging time of the pandemic?
RC: I think if you look at it, as I said, downturns can be challenging, but there's opportunities to come out of it, and one of the bets that Wizz Air made early on was to say, look, this is going to be a downturn, but we have the cash position coming in to justify making investments and we have the order book planned, and let's keep investing. So that's where we said, number one: we invest in some new markets. Abu Dhabi was that new growth; Italy's been a big new growth; we've put in almost 20 aircraft into Italy from zero pre-pandemic, and we built our market position over there. We saw Alitalia, now ITA, pulling back, we saw easyJet pulling back, etc. It created an opportunity over there. And I think that's where the positions we had coming in allowed us to really step up and build some of the new positions and now we have the foothold in the markets going in afterwards. And to be fair, airports and other players saw that as an opportunity to work with us, and so we got a number of options and offers that we wouldn't have historically.
JK: Currently U.S. carriers are having major staff shortages. Has that also been the case for Europe and Wizz Air?
RC: I think Europe overall is a challenging labor market. It’s a little different than the U.S. In the U.S., the airlines own each part of the value chain. You have ground handlers, flight attendants, pilots, etc. In Europe, most of the ground handling tends to be outsourced so that we don't worry about it as much, but flight attendants and cockpit that is definitely experiencing staffing challenges. Interestingly, flight attendants have proven to be a bit more challenging than pilots lately. I think because pilots tend to stay as pilots—that's kind of their career choice. Whereas flight attendants have a very diverse set of skills and career opportunities they could go after, that are parallel job opportunity options. And so we see more challenges recruiting flight attendants right now than the actual pilots. This may change later. I think part of it is just where we're at in the growth cycle. It's definitely been a challenging market. But I don't think it's as challenging as it is in the U.S.
JK: Wizz Air announced that they're going to be requiring its flight crews to be vaccinated by December. Is their plan to eventually require all passengers to be vaccinated in the future?
RC: So at this point, we don't have any plan around that. I mean, I think regulation-wise, we don't think that's really our call to make. I think in some of our jurisdictions that call has been made so I believe Italy has a regulation that you have to be vaccinated to travel out. And maybe a few others. But no, I don't think we plan to go that far. But we felt with the staff at leas, our whole business is around providing safe travel to our customers, and we do everything we can to not only be safe to our customers, but also safe for our fellow employees.
JK: How has the spread of the Delta variant changed Wizz Air’s calculus for the rest of 2021? Have you scaled back flying to destinations, and when do you think you will see a full recovery for Wizz Air?
RC: Looking at 2021, I don't know; I think you can call it a change to the planned trajectory—I think the planned trajectory was probably fairly unknown coming in, probably just another variation. If you look at the summer, we did very well. We surpassed our 2019 levels over the summer. We're still basically operating at about 2019 levels. I think the big thing that the Delta variant brought is that we’re in the fourth outbreak now. The biggest variation is that while people are still traveling around peak seasons, we're seeing a big drop-off in demand in the in-between times. That makes it harder to keep your flying at a sustained level of profitability, to make sure you're generating cash. I think that's where that's probably the biggest variation versus what we had anticipated; the fall has been low, and off-peaks are more challenging.
JK: Wizz Air has retooled its network since the pandemic began. What has worked, and what hasn’t ? Do you see your network skewing more heavily toward leisure/visiting friends and relatives or business as the airline emerges from the crisis? What lessons has the pandemic taught Wizz Air about network planning and the mix of leisure and business flying?
RC: Let's start with geography. If you're talking about segments, and geographically what's worked, Italy has worked. We made a big investment that I talked about. Abu Dhabi is early but we're seeing success there too; that market really just opened up about six weeks ago, around the end of September. So I think we're seeing early good signs over there. Albania is a market we invested in that's worked, and in general, our investment in the Balkans have worked. What hasn't worked: Norway didn't work. You know, I think we made an assumption there about what was going to happen in the market. Germany hasn't really worked, so we closed a base in Dormond. That's kind of I think, geographically what's worked and what hasn't. I think if you look at segments, business travelers were never a big segment for Wizz. Our two biggest segments have been VFR [visiting family and relatives]. So you know, ethnic flow, visiting family or friends and relatives and then as well, leisure traffic. We probably played a bit more on the leisure, adding more leisure flying. The VFR has stayed really solid throughout. But with the restrictions, I think it was harder for people to travel, and especially crossing borders. So I don't think you'll see us shifting more to leisure because we are already pretty much already there.
JK: With Wizz Air opening up new bases such as Rome and Naples and St. Petersburg, is there a business strategy change under way, since Wizz Air has never flown from these airports before?
RC: I think we always had a decent position flying inbound to someplace like Italy. This was a chance where the airport saw us as an opportunity for growth. And so we got very attractive deals on some of this new growth. You had the combination of capacity coming down with an attractive cost to operate. And so we were very opportunistic in that sense. And strategically now, it'll be a focus going forward—I mean, Italy’s at 20 aircraft, I think in five years, we’ll increase the number to 50 aircraft, and we'll continue to keep growing at that rate. The UK we've invested all we can at this point—basically all the geographies we've invested in that are still there, we're pretty excited about.
JK: Wizz Air only operates the aircrafts from the Airbus A320 family. Are there plans to eventually get larger aircraft to fly long haul routes? Or will you stick with the A320 family?
BC: We want to stick with the 320. You know, I think if you look at it, the 320 is a remarkable aircraft, especially the 321 neo, which is our whole order book going forward. The cost position of the 321 NEO can’t be beat on a unit cost basis versus the MAX. We've got an extra 39 seats—29 seats depending on which variant you want to take. It's equally good fuel efficiency, better off gauging, and the crew size is the same, so the NEO wins down there. I think upgrading to bigger aircraft is not something we're looking at. I think we see the 321 NEO as a sweet spot. We get the XLR in 2023 in Q3, and I think we'll look at expanding a bit there where we'll get an extra hour or two of range, but we're not looking to really go into transatlantic, as an example. We see a lot of opportunities from our existing network,but transatlantic is a very different market.
JK: With JetBlue starting service across the Atlantic using a single aisle aircraft, are you also looking into flying across the Atlantic with a single aisle aircraft?
RC: The analogy I kind of like to use is it's like saying if you've ridden a bike, you can ride a motorcycle. Yes, they're both vehicles with two wheels on them, but they’re very different operations. The benefits a low-cost carrier holds on the short-haul, and medium-haul don't necessarily always translate in the long-haul, and especially in the transatlantic market, which essentially is controlled by a cartel with three big jayvees [joint ventures].
JK: How has the constant change of restrictions in Europe affected Wizz Air’s operations?
RC: I struggle to find many ways it has helped Wizz Air off the top of my head. I think it's been a challenge. It's challenging to adapt to the changing restrictions, of course, but we can do it and that's kind of our business. I think from a customer perspective is where it has been more challenging and more damaging, because customers just don't have confidence that regulations won’t change. I was still living in London this summer, and the UK, which was arguably ahead on vaccination rates, was basically behind the rest of Europe on easing restrictions, to the point that when they finally did ease them, new customers still felt uncertain about booking. Airfares were high. The hotels were expensive; they were full at that point, and basically no one could travel. I think you see this again, even now when they lifted the restrictions. Customers took a while to start booking because they just didn't have confidence that the government wasn’t going to change again. And I think that getting that customer confidence built back is one of the challenges we have in the industry.
JK: And how do you plan to build up that customer confidence?
RC: From what we can see, customers still want to travel. So that's a good thing. I think regulations at least for now in Europe kind of seem to stabilize a little bit; if you're vaccinated, you can travel with some variation, and I think the lower the barriers are, the better, and that's helping give confidence to customers. They know, if they got the vaccine, they can travel. Eventually, it's going to go back to offering good discounted fares, promos early on, getting people to book early and just, you know, reminding them about the excitement of travel. I think it's funny when you talk to everybody: you know when you talk to people who haven't flown for a year and a half now, potentially, they then take their first flight and everybody loves traveling.
JK: We started off by talking about your background in the aviation industry. What advice do you have for young people trying to start a career in the aviation industry?
RC: I have two pieces of advice. One is to go out and explore the world. One of the best parts of being in the aviation industry is that we bring all parts of the world together. At least for me, I find that super exciting—that gets me motivated and excited about what I do. I think anyone who has passion for that, make sure to feed that passion. And then the second one is, you know, don't be afraid to aim high. I said I got my first job by sending a letter to the CEO of the airline,back when I was probably about the same age as you. When I was a kid growing up, I loved Southwest Airlines. And I found the phone number at the time for the Southwest Airlines headquarters. So I called down one day, and Herb Kelleher was CEO at the time, and I just said, “Can I have Herb Kelleher’s office?” I got transferred, and I got his assistant and he said, “Who are you?” And I said, I'm just a fan, and I wanted to chat with Herb, and he said you need an appointment to talk to Herb. I said okay, and so they said you can fax in an invitation or request, and so I sent a fax over basically inviting Herb to dinner in Chicago if he came to town. I got a letter back from Colleen Barrett at the time who said, unfortunately, Herb’s not going to be in Chicago anytime soon. But we'd love to bring you down to Dallas for the day to see Southwest. And so I did that. And I think those kinds of moments really cement your passion for the industry. Go after your dreams to try to pursue them and don't give up.
