Mathew Youkee, Editorial director for Bulgaria, Oxford Business Group

Sofia Airport has reported strong passenger growth for the first half of 2008, as international and particularly domestic flights grew in frequency and popularity. While the other two main Black Sea airports, in Bourgas and Varna, reported less stellar performances, demand is strong enough for budget carriers to plan and open new routes and increase the frequency of existing ones.

The airport announced on August 8 that about 1.54 million passengers passed through Sofia Airport in the first half of this year, an increase of 19 per cent on the same period in 2007. Meanwhile, aircraft movements increased by 3000 to 23 370 and cargo volumes grew by two per cent to 9077 tons.

At the end of 2006, Sofia Airport opened a second terminal with a capacity of 2.6 million passengers a year, which took the airport's overall capacity to between 4.2 and 4.4 million.

The first half results show that more passengers - 198 500 - flew to and from London than any other city, an increase of 45 per cent on the first half of 2007. The figure has been considerably boosted by UK-based budget carrier easyJet, which launched flights from Sofia to London's Gatwick Airport in November, carrying 59 000 passengers on the route by the end of June. The high volume of traffic reflects both the significant number of Bulgarians who have settled in the UK since their country joined the European Union in January 2007 as well as Bulgaria's appeal as a holiday and investment destination for Britons.

The second busiest route is to and from Vienna, with about 158 800 passengers in the first half, and the third to and from Frankfurt am Main, Germany's financial capital, with 96 000 passengers. This reflected passenger volume growth of 41 per cent and 17 per cent respectively. Vienna is the hub for Austrian Airlines, which is aiming to position itself as the leading airline in Eastern Europe by offering a wider range of destinations than any of its competitors or partners. Frankfurt, for its part, is the base for fellow Star Alliance member Lufthansa, Germany's flag carrier.

While these airlines pride themselves on offering good connectivity between Sofia and the rest of Europe (and the world) through their hubs, domestic carrier Bulgaria Air is still the leading airline in terms of passenger volumes - it carried 398 290 people to and from Sofia Airport in the first six months of the year. According to the airline, this represents a 30 per cent growth on 2007.

Bulgaria Air has been experiencing particularly strong demand on its flights to the coastal cities of Varna (the de facto second city in economic terms) and Bourgas (the fourth city). Both municipalities include major ports, and lie at the centre of a collection of coastal resorts. The Bulgarian flagship carrier transported 48 660 passengers between Sofia and Bourgas and Varna in the first half of 2008 - compared to 16 563 in the same period last year.

German firm Fraport, which runs the airport, announced on August 7 that Bourgas Airport serviced about 485 530 passengers in the first six months of this year, while 444 070 passed through Varna. This represented significantly lower passenger growth rates than that of Sofia. Bourgas' figure was up only 0.6 per cent on the year, and Varna's 2.7 per cent. The modest performance is probably due to both an overhaul of the two airports curtailing a rapid expansion in the number of flights, and a slowing in the growth of tourism arrivals on the coast due to tighter economic circumstances in some of Bulgaria's major tourist markets, including the UK and Germany.

Nonetheless, the rise in passenger numbers to Sofia, and the flourishing of internal flights seem to indicate that Bulgaria's main airports can ride through the rough patch and continue to grow in the medium term, despite rising fuel costs.

While there are reports in the local press that conventional airlines are scaling back plans to increase flight frequency to the coast, or even contemplating cutting flights, low-cost carriers show confidence in the market. This is particularly welcome because for several years they mostly avoided Bulgaria, preferring to wait for its accession to the EU. In July, easyJet announced that it would be starting flights between Sofia and Madrid in November and between the Bulgarian capital and Manchester, in the north of England, in December. Both routes will run three times a week.

Perhaps more significantly, on July 25, Budapest-based low cost airline Wizz Air, which already serves eight European cities from Sofia, commenced the first internal budget flight in Bulgaria's history, between Sofia and Varna. With tickets starting at 19.99 leva ($15.10) one way, all charges included (cheaper than most bus tickets), Wizz will be offering sharp competition on the increasingly popular route. While it is too early to tell what the effects on the market will be, and whether other low-cost carriers will follow suit, an intriguing precedent has been set.