Competition forces Air Polonia to leave thousands stranded

Poland's one and only budget airline Air Polonia has been grounded due to financial problems, leaving thousands of passengers stranded across Europe. It's only recently that Poland has allowed foreign competition for its domestic carrier - LOT - and Polonia's failure is a disappointment to many. But it faced tough competition from other cut price carriers such as Slovak-owned SkyEurope, Hungarian WizzAir, Britain's EasyJet and Cologne-based Germanwings.

The grounding of Air Polonia, Poland's first low cost airline came as shock to over 53,000 stranded passengers who for the first time ever opted to fly from Warsaw to London rather than go by coach.

PASSENGER: 'I guess I am going to have to sleep on the floor at the airport tonight.'

But then there are those who bought tickets in advance. Ela Bateman, a Polish-born teacher who lives with her English husband in Birmingham, was planning to spend a very Merry Christmas in Poland with family and friends.

TICKET HOLDER: 'Well I don't know what I am going to do because the phone number that we found yesterday on the Internet was basically not answered by anybody. We are just desperate to go. We tried to rebook but we couldn't do it either because the tickets are very expensive, we would have to pay on top of what we have already paid about three hundred pounds for the two of us. We have to change our plans drastically, we don't know what we are going to do. I have lost confidence. I will probably never ever buy any cheap tickets from any low cost travel.'

Air Polonia has been operating out of Warsaw and Krakow for the past three years. Reports suggest that the company was financially strapped and in need of 800,000 dollars to pay its debts. Air Polonia's principal investor reportedly bailed out earlier this year leaving no room for the company to manoeuvre. The Polish carrier also signed a partnership agreement with Italy's Volare Group in March. But Volare was forced to shut down in November. Air Polonia President Jan Litwinski:

'I don't know what has happened. Our two leased Boeing planes have been seized. We're trying to sort out the problems, but for now we needed to halt all flights.'

Slovak-owned Sky Europe is yet another low cost airline operating in Poland. It has pledged to carry the load and help passengers who for the time being have nowhere to turn. Eric Klopotowski from Sky Europe:

'Air Polonia had no more money to run their operations and this lead to a situation where, although not declared, they're in a situation of basically bankruptcy. Sky Europe is the strongest low cost in this region. I just want to stress one thing: we want to help the passengers of Air Polonia - not Air Polonia.'

Air travel analyst Robert Strybel argues that Air Polonia's downfall is just a sign of how volatile this market really is.

'Probably a causality of excessive competition. Polonia was Poland's only Polish based budget airline but others flew in and out of Poland.'

So can the sudden departure of Poland's first low cost air carrier bruise the reputation of the remaining 5 operators who are counting on high returns during the peak holiday season. Eric Klopotowski from Sky Europe thinks not:

'One bankruptcy of one small airline should not influence the entire sector and the entire industry of low cost airlines.'

But observers don't share the same optimism.

'If one fails then there is a lack of confidence in the whole niche, in the whole industry.'

Budget airlines have taken advantage of European Union's eastward expansion. Until now, deregulation and a more affluent lifestyle for many of the EU's newcomers has proven to be advantageous. But those Poles with the money to fly found out the hard way that it sometimes takes more to fly than book tickets.