Budapest continues to enjoy life after losing Malév, but US route remains a wish

It is now just over five years since Malév Hungarian Airlines closed its doors as the economic crisis prevalent in Europe at that time, combined with the volatility in the price of fuel, made the environment one of the toughest in aviation history.

As had been the case with Spanair just a month earlier, the collapse of Malév was no real surprise.  The airline had been suffering financial problems for a number of years and a ruling at the start of January 2012 that the carrier had to repay the nearly Ft100 billion ($406 million) it received from Hungarian Government in loans during a three year period between 2007 and 2010 represented the final nail in its coffin.

Therefore after 66 years of operations the decision was taken to suspend all commercial operations from 06:00 on February 3, 2012. Despite this not being a shock to the management team at Budapest Airport, it dealt them a hefty blow, after all a long-standing major investment in the Terminal building driven by Malév’s model of providing flight connections had just been completed.

Even anticipated, the collapse of a flag carrier would naturally have a significant expansion on any country, given the high level of traffic that they fly in and out. According to its planned February 2012 schedule, Malév was due to operate 329 weekly flights from Budapest to 42 destinations, offering more than 35,000 weekly seats.  This represented a 39.1% share of the total international market from the Hungarian capital. Malév was the sole operator on 21 of the routes that it operated from Budapest at this time.

Historically, when a national carrier has failed in Europe it tends to be replaced by a more streamlined successor – for Swissair read Swiss International Air Lines, for Sabena read Brussels Airlines, for Olympic Airways read Aegean Airlines. But in the case of Malév and owing to the continued evolution of airline business models, it has actually been Europe’s low-cost carriers that have benefited and helped to back-fill capacity.

This almost started overnight with Ryanair moving grounded aircraft capacity to Budapest to open a new four aircraft base within a week of the flag carrier’s closure as the airport launched a special route recovery incentive programme to attract the most appropriate operators. Wizz Air, which already held a presence in the Hungarian capital also boosted its own offering adding two aircraft to its Budapest operation as it positioned itself to become Hungary de facto national carrier.

What followed over the subsequent five years has been a remarkable story. The once famous Malév name has almost been forgotten, bar for the classic Soviet era airliners that are exhibits at an aviation museum adjacent to Budapest’s Ferenc Liszt International Airport, which is consistently performing as one of the fastest growing airports of its size in Europe.

The gateway to Hungary, Budapest Airport, welcomed 11.4 million passengers by the end of 2016, a second successive year of double-digit annual increases in passenger traffic.

Following its 40th consecutive month of growth, Budapest recorded an impressive 17.5% year-on-year increase in passenger traffic in April, more than double the EU gross average of 7%. This has resulted in the Hungarian gateway breaking the monthly one million passenger mark in April, a month earlier than it did last year. As one of Europe’s fastest growing major airports, early forecasts show Hungary’s capital city airport will welcome more than 12 million passengers in 2017, breaking yet another record.

Growth in passenger figures has been driven primarily by multiple new routes being added to Budapest’s schedule in the first months of 2017 –24 already started or confirmed for the calendar year. “We will offer close to 800,000 more seats this summer than in 2016, a considerable 8% increase in the height of our peak season,” says Jost Lammers, CEO, Budapest Airport. This has resulted in passenger records being beaten on a monthly basis, but also a significant reduction in seasonality.

But, despite its spectacular success, one key market remains unserved and it has been unable to secure another scheduled link to the United States since American Airlines ended its New York service in December 2011. Malev had also served the Budapest – New York market up until 2008 and Delta Air Lines until September 2011. Latest annual data shows that almost 450,000 passengers a year in and out of Budapest are indirect travellers from the US, with New York alone showing an 180,000 potential passenger market.

In fact, according to Balázs Bogáts, head of airline development, Budapest Airport, Hungary is “the biggest country market unserved from the US” with country pairs with similar sized demand having at least ten weekly flights. The airport has taken heart from the new Emirates Airline Athens – Newark flight using fifth freedom traffic rights as an extension of its existing service from Dubai, and believes a similar arrangement could help it in its ongoing push to resurrect non-stop connectivity with the US.

The relevant Ministries in Hungary deem the USA, and in particular New York, a route of strategic national importance, and are evaluating ways to legally and feasibly financially support the first mover. The airport is confident that flights could be introduced from 2018, but until then its record growth is driving a €160 million investment into its infrastructure over the next three years to ensure it can meet the requirements of its future growth and continuous route network expansion. Its bud:2020 plan includes the construction of a 145-room airport hotel opening later this year, a new pier in the non-Schengen area due to be completed by summer 2018, check-in extensions opening this summer, and several new facilities for cargo integrators and handlers.