Central Transportation Port (CPK) – Market Analysis

Abstract

The Project of Polish Central Transportation Port (CPK), which has already started, will be of the utmost importance for the whole Polish Transportation System. In addition, the cost of this investment is unprecedented. According to the current estimates the cost will surpass 100 billion Zlotys which means around 23.5 billion EUR. The success of CPK will depend on one condition that it becomes a great international hub. This is possible only if LOT Polish Airlines grows into one of the very few European and then global leaders in intercontinental air traffic. Such growth would, however, be against current strong and stable market trends. The most important is a consolidation trend. The effect of this trend is a growing market power of giants and marginalization or even bankruptcy of small and medium size airlines. Smaller carriers have good chances of survival - or even growth - if they find a stable market niche, which gives them protection from the competitors and market crises. In the process of consolidation an important role is played by Joint Venture Agreements. The parties to them suspend competition and behave in the markets as if they had the same owner. For the medium size network carriers the new and very dangerous market trend has already started. The low cost carriers are developing their intercontinental networks. According to the authors of the Project the great chances of market success of LOT Polish Airlines and CPK are created by the fact that in Central and Eastern Europe there is no dominating network carrier and this market is waiting for a leader. In our report we prove that according to the strong and reliable market data the Lufthansa Group is a dominant network carrier in CEE. To be successful LOT would have to take a large part of their market share. But even that will not be enough. LOT would have to dramatically increase its market share in Western Europe for transit traffic between Asia and Europe.