Published in July 2015 issue

The largest airport in Hungary was recently named Eastern Europe’s Best Airport by SkyTrax. Even after Malev’s demise in 2012, which resulted in a heavy loss of business, Budapest Airport is back in the game.

By Jeff Kriendler

February 3, 2012, was a dark day for Hungary. The national carrier Malev (MA/MAH) ceased operations, having failed to repay US$171 million in state aid, a sum equal to the company’s entire revenue for 2010.

The European Union had considered this aid from the Hungarian state to be illegal and had ordered the country to recover the funds from Malev. Without it, the 66-year-old national carrier could no longer fund its operations— and abruptly folded.Although not unexpected, Malev’s collapse stunned the airline community. With its head office in Budapest and main operations at the city’s Liszt Ferenc International Airport (BUD/LHBP), the airline had served 50 cities in 34 countries and had accounted for almost 40% of the airport’s total traffic. Its demise left a major void.

Budapest Airport Zrt., the airport’s operator, was faced with the daunting task of trying to recover from a significant loss of business. Kam Jandu, the airport’s chief commercial officer (CCO), said that the impact caused by Malev’s shutdown “ran into tens of millions of Euros as a one-time effect due to outstanding debts that were never repaid and the loss of revenue, as Malev accounted for 37% of the total revenues when considering aeronautical and property income.”

But the airport has largely bounced back. “Around 85% of the Malev route segments have been picked up,” Jandu said, “with several destinations now having higher seat capacity than before— largely LCCs (low-cost carriers) in the Central and Eastern European region. Some routes have lost seat capacity, which has caused fares to increase in those markets, further weakening demand. Generally, most routes have been re-connected, but certain regional destinations have not as yet been replaced, mainly in the Balkan region.”

The operator is owned by an international consortium of investors, led by the privately owned German company AviAlliance, which also has equity and partial operations interest in airports in Dusseldorf, Hamburg, Athens, and Tirana.

In 2014, BUD served over nine million passengers and had a land-locked catchment of over 13 million people in a nearby radius. Hungary is now both a full member of the European Union and part of the no-passport Schengen group of countries, thereby providing easy access to the wider European market.

The airport operator has invested nearly $400 million to expand and modernize the airport infrastructure, making it possible to handle 15 million passengers per year.

LOOKING BACK

Originally called Budapest Ferihegy International Airport, its name was officially changed to Budapest Ferenc Liszt International Airport in honor of the Hungarian pianist and composer. Ferihegy is the name of the neighborhood around the airport, like Malpensa in Milan or Fiumicino in Rome.

Located approximately 13 miles (20km) from Budapest’s city center, the airport is connected to the main tourist attractions by a heavily trafficked twoway road—there is no expressway. The flow of traffic is usually quite fluid, and downtown can be reached in approximately 35 minutes. The drive is rather drab, with a view chiefly consisting of Soviet-era buildings, compared with the modern airport facility and the old-world beauty of downtown Budapest, which takes its name from a combination of two cities separated by the Danube River, flat Pest and hilly Buda.

The city can be reached by public buses, a network of taxi companies or an efficient and inexpensive ($15) shared van service that takes passengers directly to their hotels in downtown Budapest.

As to operations, there are two main runways— 13R-31L and 13L-31R—both equipped with an ILS CAT II (instrument landing system, category II). Runway 31R is certified for CAT III A, enabling operations in low-ceiling and poorvisibility conditions.

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BEST AIRPORT IN EASTERN EUROPE

BUD was awarded the “Best Airport—Eastern Europe 2014” distinction by SkyTrax. It is easy to understand why the traveling public has given it such high marks. Flights depart and land at two inter-connected terminals (2A for Schengen countries and 2B for non-Schengen ones).

Terminal 1, some three miles away and across the runways from terminals 2A and 2B, was decommissioned after Malev closed. Renovated in 2007 and awarded Europe’s most prestigious heritage preservation prize for its art deco design, it now houses management offices and is used as an event center.

The very dramatic passenger hall, called the SkyCourt, links 2A and 2B with 60-foot high glass windows, contemporary architecture and a view of the airport’s apron. This is the facility’s signature identifying icon and is extremely attractive. Built at a cost of more than US $130 million in 2011, SkyCourt improved the efficiency of the centralized baggage sorting areas, provided centralized security screening areas and greatly improved the airport’s retail, food and beverage options. “The SkyCourt makes traveling through the airport simpler and more convenient, as well as providing a better experience,” stated the airport’s CCO. The airport has also extended a new apron area for parking aircraft and is continuing to refresh old infrastructure.

The check-in area has been increased, with ten new self-check-in units and 14 screening lanes speeding up the security procedures. The airport offers free WiFi. The public gives high marks for friendliness.

However, there is no direct rail link to the city from terminals 2A and 2B, and staffing issues for both arrivals and departures in the non-Schengen 2B terminal often cause long immigration queues.

On the plus side, the airport is not massive and can easily be managed, especially given the ample number of carts provided. The Fast Track Lane express security checkpoint is available to all passengers—not only elite flyers. For about five euros, anyone can access the express lane by buying a voucher at a vending kiosk. “We have reached the highest European service levels by expanding our Fast Track Lane product, providing more time for shopping or preparation for boarding,” said Jandu.


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WIZZ AIR: THE LARGEST OPERATOR

“We are pleased to be able to provide the 25-minute turnaround demanded by the ultra-low-cost airlines which have flocked to Budapest since Malev’s demise,” said Jandu. “Our airport departure punctuality has risen from an average of 75% to more than 82% on a year-round basis, with most of the delays being caused by late inbound aircraft or inclement weather.”

The airport’s largest operator is Wizz Air (W6/WZZ), which will have nine aircraft based at BUD for the 2015 summer schedule. The Budapest-based carrier has become the largest LCC in Central and Eastern Europe. From its beginnings in May 2004 in Katowice (KTW), Poland, Wizz Air now operates 18 bases in the region, led by Budapest. The airline offers about 350 routes, using a fleet of 54 Airbus A320s, each tightly configured in one class with 180 leather seats.

Ryanair is the second largest airline, with two aircraft based at the airport. The Lufthansa group is the most active network carrier, with over 140 weekly flights, followed by Air France/ KLM, which operates more than 50 weekly services from France and the Netherlands. In 2013, BUD served 36 airlines flying to 34 countries and 99 destinations.

WELCOME EMIRATES

On October 27, 2014, the airport hit the jackpot when Emirates (EK) began daily service with a two-class 278-seat Airbus A330-200 from Dubai (DXB). The only airline operating a wide-bodied aircraft to Budapest, EK stood ready to fly in nearly 200,000 passengers to BUD every year. Wizz Air and Qatar Airways (QR/QTR) also link Budapest with the Middle East, both flying narrow-body Airbus A320s to Dubai and Doha, respectively.

At the welcoming ceremonies, Jandu, the airport’s CCO, remarked that Emirates had become the fifth new airline to launch service in 2014. “We are delighted that Emirates has launched its daily service from Dubai to Budapest, which will provide excellent connections through its Dubai hub,” he said. “For a fast-growing market like Budapest, it is essential to have world-class airlines, and with tourism numbers to Budapest out-performing most European markets and with robust GDP forecast, we are confident that now is the ideal time to celebrate this route launch and look forward to seeing Emirates upgrade the aircraft with more capacity in the nottoo- distant future.”

Emirates is not the only carrier to have set its sights on Budapest. Scandinavian Airlines (SAS) has linked Budapest with Stockholm (ARN), adding to its route from Budapest to Copenhagen (CPH). The marketing team at BUD is now targeting air connections to China and Korea, along with additional points in North America, such as nonstop service to New York (JFK) and Chicago (ORD).

Historically, Budapest had scheduled service to the United States via Pan Am (PA/PAA) and later through Delta (DL/ DAL) and American (AA/AAL). The airport gets more than 400,000 air travelers annually from the U.S., with another 100,000 coming from Canada despite a dearth of nonstop flights. That will change in June, when the Canadian charter carrier Air Transat (TS/TSC) will launch nonstop service from Budapest to Toronto (YYZ) and Montreal (YUL).

China’s Hainan Airlines (HU/CHH) used to offer intercontinental service to Budapest under a codeshare agreement with Malev. But the service was suspended after Malev’s collapse. The airport is looking for regional operators to fill in the blanks in Central and Eastern Europe resulting from the loss of service from Malev. “There is a huge Chinese community concentrated in Budapest,” said Jandu. “The Hungarian government committed to improving economic and trade relationships with China, and numerous Chinese corporations have chosen Budapest as their Central European headquarters.”

Lufthansa Technik has a major facility at BUD and has just opened a unique inflatable hangar—a first for Europe—with 430,554sqft (4,000sqm) of floor space. BUD’s permanent hangar capacity can fit up to five mid-size aircraft simultaneously but is insufficient for the increased winter demand for maintenance, repair and overhaul (MRO) work on civilian aviation. An inflatable hangar, produced by Buildair of Spain, is expected to be operational for the six months of the years during which conditions require protection from cold and wind. The inflatable hangar works on the same principle as tennis court or swimming pool covers. Lufthansa Technik also took over a 21,500sqft spare-parts warehouse in 2013 and plans to add to its presence in Budapest by constructing a dedicated Wizz Air hangar.

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WALTZES, WATERS AND WINES

Clearly, Budapest Airport achieved such a rapid recovery because of aggressive marketing and the city’s enduring attraction to visitors. Budapest is among the top ten visited cities in Europe, renowned for its beauty, unique architecture and abundant and diverse nightlife. According to the International Congress Convention Association, it is the 13th most preferred destination for conferences and meetings worldwide, ahead of Brussels, London and Prague.

It is a city not to be missed. It provides cultural diversity, festivals, and spas. It is the only capital city in the world with close to 100 thermal springs and 12 medical baths within its boundaries, with 19 million gallons of thermal water rising to the surface every day. Many of the most famous baths are remnants of the Turkish occupation of the 16th century. The country’s varied wines and traditional hearty foods also contribute to the popularity of Budapest and surrounding areas. With the Hungarian economy improving and tourism booming over the last two years, the GDP forecasts for the next five years expect to exceed the EU average in economic growth.

The team at Budapest Airport is optimistic that its 50/50 mix of full-service to low-cost carriers is the right formula for future success. “We are committed to offering quality, comfort and convenience,” Jandu stated, proudly. “That is what all air travelers want from global airports.”