FLUG REVUE July 2004: Budapest airport expands with EU influx

BUDAPEST FERIHEGY AIRPORT READY FOR BOOM

By Dierk Wünsche

Low-cost air travel arrived at Budapest's Ferihegy airport on 12 April 2003, when the Scandinavian airline, Snowflake, commenced operations with a Boeing 737-800. This no-frills subsidiary of SAS operates a twice-weekly service between Budapest and Stockholm, which offers transfer flights to the destinations of Istanbul, Athens, Rome, Bologna, Prague, Nice, Barcelona, Malaga and Dublin. Germanwings was the second low-fare airline to move in to Ferihegy, offering daily flights to Cologne/Bonn since 22 May 2003. This service is to be stepped up to two flights a day before the end of the year. Cologne/Bonn is marketed to Hungarian passengers as offering transfer flights to a number of European destinations. Since 15 September 2003, Germanwings has also operated four flights a week to Stuttgart, the capital of Swabia, with the Airbus A319 and A320. In May 2004, the frequency of this service was increased to once a day.

Another low-cost airline to have commenced operations in Hungary is Sky Europe Airlines of Slovakia (Bratislava). During the winter season 2003/2004 it operated daily services with Boeing 737-500 and Embraer 120ER aircraft from Budapest to London Stansted, Milan Orio al Serio, Paris Orly and Zurich Kloten. To attract further airlines to Budapest, the airport operating company is offering reduced landing and take-off charges for new routes. Thus, it is offering new partners a discount of 50% in the first operating year, 25% in the second year and 10 percent in the third.

In view of the range of offerings from three low-fare carriers, it is hardly surprising that in 2003, for the first time since the aviation crisis of the last few years, Budapest Ferihegy notched up significant growth in passenger numbers, handling some five million passengers. To put this in perspective, in 2000 it handled approx. 4.6 million, in 2001 approx. 4.5 million and in 2002 approx. 4.4 million. If one compares the total volume of traffic at Ferihegy airport in December 2003 with the same month of the previous year, it had risen by an impressive 22.2 percent. The busiest month last year was August, in which 594,134 passengers were handled.

Yet anyone looking for a printed flight schedule for Budapest Ferihegy airport has to approach Malev or one of the other airlines that serve this airport for specific information on departures and arrivals. Ferihegy airport does not maintain a flight schedule of its own as yet. In this respect, privatisation in 2002, when the state operating company LRI (founded in 1973) was split into HungaroControl and Budapest Airport plc, has not changed anything. György Petö, Director of Communications at the airport, told FLUG REVUE in an interview that Budapest Ferihegy saw itself as competing with Prague and Vienna airports. “In the long-term, we want to be number one,” he asserted confidently. When one compares the volume of passengers handled by the three airports as of August 2002/2003 (Budapest 592,668, Prague 870,932, Vienna 1,307,200), it seems that there is still a long way to go, not least as Prague and Vienna now enjoy the attentions of a number of low-cost airlines, which are rapidly boosting passenger numbers there as well.

Budapest airport has three terminals. Ferihegy 2A was opened in 1985 and has a floor space of 24,000m2. This terminal is used exclusively by the national carrier, Malev, for scheduled and charter flights and by partner airlines which operate codeshare flights with Malev. The departures area in Terminal 2A underwent a five-month long renovation last year and was reopened this May. The refurbishment cost Euro 5 million. The open, light-flooded glass architecture is a complete departure from the predominantly wood and marble charm of Budapest's socialist days. Terminal 2A now has air-conditioning, full video monitoring and 24 modern check-in desks. The security systems, which now include a full x-ray baggage checking facility, have been upgraded to the state-of-the-art and comply with international standards.

Terminal 2B, which was opened in 1998, handles the flights of foreign airlines. It has a floor space of 30,000m2. About one kilometre away from this is Terminal 1, the old Budapest airport building. The partially renovated, once magnificent building, whose large hall recalls Berlin Tempelhof, is today used by General Aviation, air cargo companies, VIPs and, since April 2003, the low-cost airlines.

Compared with passenger traffic, cargo traffic has risen steadily and did not even suffer any downturn after the events of 11 September. Since 1993, when around 20,000 tonnes were handled, freight tonnage has risen steadily and by 2002 stood at 46,476 tonnes. The most important cargo destinations were the EU countries. Transportation of goods to and from the Middle East has also been marked by significant increases compared with earlier years. The biggest freight forwarders after Malev of Hungary are the cargolux, DHL and UPS air cargo companies.

Lufthansa Technik Budapest (LHB) has proved a promising new collaborative venture at Ferihegy Airport. Jointly owned by Lufthansa Technik (85 percent) and the Hungarian airline Malev (15 percent), this company is part of the international aircraft overhaul network. Founded in 2000, LHB carries out D checks and IL checks on the Boeing 737 and Airbus A320 family aircraft types. Wolfgang Gohde, head of aircraft overhaul and modification at Lufthansa Technik, explained, “We chose Budapest for our new operation as buildings and equipment were available here, along with the necessary highly skilled workforce and a generally acceptable cost situation. In the global competition for aircraft maintenance, these are the critical requirements. We are convinced that Budapest has every prospect of becoming a European aviation centre, and we are therefore very pleased that Malev chose us as partner for this joint venture.”

In March 2002, only two years after the foundation of the company, operations were already being expanded following the conclusion of a collaborative agreement with another member of the Lufthansa Technik Group, Shannon Aerospace. Training and qualification of the predominantly Hungarian workforce were carried out in collaboration with this subsidiary. “We didn't waste any time reinventing the wheel, but the Shannon Aerospace business model was transferred 1:1 to Budapest,” says Managing Director Peter Ellison, who himself worked for Shannon at one time.

At present LTB employs a workforce of around 300 in Budapest, and plans to take on more staff in the long-term. The renovated and modern equipped hangars and workshops boast a floor space of 11,600m2, situated directly at the airport. Some Euro 8 million were invested on building up the company, which is now in a position to overhaul a Boeing 737 and an Airbus A320 series aircraft at the same time. The contract covers the five-and ten-year maintenance events (IL and D Checks) which, depending on the scope of work, normally last between 27 and 32 days. Five 737's and one A319 belonging to launch customer Lufthansa were overhauled in 2002. Austrian is the first customer outside the Lufthansa Group to have its aircraft maintained by Lufthansa Technik Budapest. Within the next few years, five Airbus A321-100/200's and six Airbus A320-200's will be maintained here. For the future, Lufthansa Technik Budapest plans to canvass for additional customers. “In the long-term we want to build up the proportion of non-Lufthansa Group customers to fifty percent,” says Ellison.

There are also good contacts between Budapest Airport plc, the airport operating company, and Fraport AG. Thus, a co-operation agreement was concluded in February 1999 between Fraport and Ferihegy. The partners collaborate in the areas of freight, marketing, company location and the exchange of personnel. In August 2002, Gábor Hidvégy, General Director of Budapest Airport plc, and Manfred Schölch, Vice Chairman of the Executive Board of Fraport, signed another co-operation agreement. This agreement covers the possibility of joint involvement in the building and operation of a new cargo centre at Ferihegy airport. The planned cargo centre, which would handle up to 150,000 tonnes of cargo per year, would enable the sharply rising volume of air cargo to be handled in the future using state-of-the-art facilities. At the same time it would give the airport a significant boost in the direction of becoming a regional cargo hub. A joint team of experts from both airports is to start work immediately and will also assess the potential for settling air cargo companies in Budapest. “Against the background of EU eastwards expansion, this is a first important step for both companies towards preparing for the coming market,” Schölch said on the occasion of signing the contract. But, as Fraport explained in answer to a question from FLUG REVUE, the co-operation agreement with Budapest airport is currently on hold due to an imminent reorganisation of the airport operating company.

From page 68 of FLUG REVUE 7/2004

Last updated 11 June 2004

FLUG REVUE, Ubierstr. 83, 53173 Bonn, Germany