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Saturday, July 6, 2013

A Hawk Is in the Air

As I have argued sixteen months or so ago (here, here and here), the devouring of the the erstwhile publicly owned "national" airline, Malév Hungarian Airlines, is underway.

As a result of Malév's collapse, thousands of highly qualified employees have been laid off. Budapest almost completely ceased to function as a stopover location. Because of the disappearance of transfer passengers, the business plan of Budapest Airport became suddenly invalid, forcing the closure of Terminal 1--a historic monument, on par with Berlin's Tempelhof Airport terminal in its architectural legacy. Direct flights to a huge number of important central, south-east and east European destinations disappeared, so, if you wished to fly from Budapest to Sarajevo, Dubrovnik, Tirana, Skopje or Sofia, you now have to go through hubs such as Vienna, Munich or Istanbul, with the attendant extra fares, airport taxes and time lost. Even in those central and east European destinations which enjoy direct air service with Budapest, competition has been reduced, resulting in fare increases. Obviously Vienna, Munich and Istanbul Airports, not to mention Austrian Airlines, Lufthansa and Turkish Airlines, have benefited from the increased revenues due to the absence of competition in these segments.

(Keep in mind that tourism is an enormous business in this part of the world; Hungary, with its population of 9.8 million, regularly gets in excess of 8 million foreign tourists annually. Bringing tourists here, and moving them to the tourism strongholds is a no-brainer; it takes real talent to lose money on this.)

A really interesting--and, hitherto only partly answered--part of the issue is what would happen with Malév's most important assets: its flight rights.

Wizz Air--a discount airline, owned by one of Malév's last CEOs--has taken up some of the most profitable routes. However, a number of slots have, for now, been abandoned. Even Lufthansa has stopped flying the Berlin-Budapest route, leaving that connection to Air Berlin and the discount company Easy Jet.

According to today's news, a significant step has been made. A new "national" airline has recently been registered under the name Sólyom International Airways Ltd, ('sólyom' means hawk in Magyar). A right-wing daily newspaper--often serving as a mouthpiece of the current government--carries a brief exclusive report on the news, suggesting that the company will be in the non-discount segment, and that it will rely partly on minority investment from the "middle east," whatever that means. The new company's representative named in the story is a former Aviation Director of the National Traffic Authority.

Of course.

UPDATE 1:

As a cursory online search indicates, there exist a number of enterprises by the name "Hawk Air" or "Falcon Air." Therefore it is unclear how ownership of the name will pan out: If the new company sticks to the Hungarian, it starts with an enormous marketing disadvantage (as its name is neither recognizable nor meaningful for non-Magyar-speaking passengers). If it wishes to use an English version of its name, it might run into law suits.

UPDATE 2:

In other news, the amount of capitalization mentioned in the news reports--4 thousand million EUR--is quite large for Hungary. This implies the presence of (a) major external partner(s), and very powerful domestic partners as well. Considering that, the entire story is introduced in a somewhat sloppy way--I'm starting to doubt some parts of it.

UPDATE 3:

The news reports are talking about "ticket sales for August." That is, let's just say, strikingly ambitious, considering that no permit applications have been filed yet, nor has there been any advertizing, market presence, or fleet. We don't even know what segments they are planning to fly.

UPDATE 4:

One day later, the leading Hungarian economic weekly pretty much treats the entire news story as a hoax. Way too late, way to indetereminate where the demand would come from, etc. I'm starting to think that the most interesting aspect of the story is the particular structure of the dream ("middle east" minority shareholder[s] will 'help' create successful airline in central Europe, etc.).

UPDATE 5:

According to the transparency portal atlatszo.hu, the holding that owns the registration of the new company and its various sister organizations has a total capitalization of half a million HUF (approximately, USD 23 thousand). According to another Hungarian source, the new holding has not approached the Hungarian authorities for the necessary permits yet, plans for August takeoffs might appear somewhat un-orthodox.

UPDATE 6: <6> On July 12, rumors are circulating that the airline is recruiting pilots. The aviation authority is skeptical about the possibility of putting all paperwork right by August though, and there is no record of any planes having been bought or leased by the holding.

2 comments:

  1. Meanwhile, a recent news, perhaps indirectly related: Lufthansa-Technik is expanding its Budapest facility.

    ReplyDelete
  2. This morning's news, as reported on atlatszo.hu: the planned, but as-yet not flying, new airline has signed strategic cooperation agreements with a couple of Hungarian companies, including the (state-owned) Magyar Posta (the national postal service), as well as a company whose owner, previously a very high ranking military officer, is currently facing corruption charges in a Hungarian court.

    ReplyDelete

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