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Tuesday, March 3, 2015

Recent Destruction of Hungarian Airline Becoming a Point of Discussion Again

Thanks to a partly successful Freedom-of-Information request on part of TASZ, the Budapest-based Society for Liberal Rights, the collapse / gross mismanagement / (my hunch: systematic destruction in preparation for a takeover on the cheap by domestic capital groups) of Malév, the erstwhile Hungarian Airlines, is now subject to sporadic media reports in Hungary (e.g., here, here or here--thus far, only in Magyar 8(). For the benefit of those reading Magyar, TASZ has even published the entire batch of documents on the internet. Kudos!

Given the government's precipitous drops in the polls over the last few months, its loss of an recent by-election, not to mention a host of un-answered accusations of widespread corruption in Hungary made a few months ago by the then head of the US Embassy in Budapest, it is feasible that some meaningful, interpretable facts might come out in the open about the scandal of the disappearance of Malév, the airline that was, a little over one generation ago, one of the world's most profitable businesses in its size category.

Malév's case is remarkable for a number of reasons. First of all, tourism has been a major revenue source for the Hungarian economy for a long time, (even during much of the state socialist period, Hungary was right "up there" with Austria in turning incoming foreign tourism into major--in the case of Hungary, mainly informal-sector--revenues, if viewed as % of the GDP), and the existence of a "national" airline, with a hub in Budapest, is generally regarded as an excellent producer of revenue multiplier effects (see, e.g., here). A few years before Malév's bankruptcy, Budapest Airport was sold to foreign corporations under requirements that they invest majorly into a 21st-century infrastructure, which they did. The collapse of the national airline with a Budapest hub affected Budapest Airport's business in a very negative way.  It also forced the airport's owners to shut down Terminal 1, an architectural landmark building. Thanks to a jump in discount flights, last year's arrivals seem to have been up to pre-Malév-bankruptcy levels, suggesting that, conceivably, had the collapse of the moderately-priced national airline been averted, Hungary's tourism sector would have benefited much more than today. A case in lost profits, in the immensely competitive tourism business.

More broadly, the case is iconic of the immense, ugly and very chaotic post-state-socialist struggles concerning the property of the erstwhile-state-socialist-state that reflect just about any and every interest in society except for the interests of the owner, society as a whole. All this happened in the context of the resounding failure of the post-state-socialist project of "catching up" with western Europe . The end result is, of course, what we see today as the embarrassing geopolitical marginalization of east European states and other actors alike. To make this even more profound, political meddling around the socialist-state-owned, privatized (to KLM), returned, privatized (to Alitalia), returned, partly transformed (with the--within China, relatively small--Hainan Airlines), repurchased, partly transformed (with a Russian investor), bought back, and finally bankrupted airline involved political parties on both "sides" of the political aisle.

If you are interested in some background to the case, I wrote bits and pieces about the de-development-bankruptcy-cum-takeover scenario here and tried to follow the subsequent, grim and absurd saga here, here, here and here.


cover page of the book

cover page of the book
image used for the cover design by Anannya Dasgupta