Airport CEO Sees Budapest Back in Game After Malev Collapse

  • Hub posts fastest growth among main central European peers
  • Budapest Airport plans 160 million-euro upgrade through 2020

Hungary’s main international airport is bouncing back from the collapse of national carrier Malev and closing in on Prague and Warsaw in the race to become the key hub in central and Eastern Europe, its chief executive said.

Budapest Airport, which posted the steepest rise in passenger numbers in central Europe in 2015 and the first eight months of 2016, expects to keep increasing the number of people and amount of cargo it handles, Chief Executive Officer Jost Lammers said in an interview in Budapest on Tuesday.

Lammers has been in charge in the period following Malev’s bankruptcy in 2012, which threatened to cost Budapest Airport as many as 40 percent of its passengers and half of its revenue. As discount carriers like Ryanair Holdings Plc and Wizz Air Holdings Plc filled the void, the aerodrome recovered to post a 10.2 percent rise in passenger numbers through August this year, surpassing the 6.6 percent increase in Prague and the 9 percent expansion in Warsaw.

"We benefited from the collapse of Malev in learning to be more focused on key issues and marketing, and not sit back and count on existing infrastructure to drive the business," Lammers said. "Budapest is catching up and our relative position is much closer to our regional peers."

Lammers expects 11.2 million travelers to use the facility this year, up from last year’s record 10.3 million. The number of passengers using Prague’s Vaclav Havel Airport totaled 12 million in 2015 while Warsaw’s Chopin Airport handled 11.2 million.

Heathrow’s Area

Air traffic in the former Communist countries of central and eastern Europe has benefited from the convergence of their economies with the more affluent western Europe, a wave of easterners taking up employment in the west and an influx of tourists. Lammers sees Budapest Airport traffic numbers rising at a pace of around 5 percent annually over the next three to five years, boosting the airstrip’s revenue by as much as 6 percent each year over the period.

Tourism data bodes well for Budapest Airport. The number of foreign visitors arriving to Hungary last year jumped 17 percent from 2014 to over 20 million, according to data from Hungary’s state tourism board. The World Aquatics Championships to be hosted by Budapest in 2017 is also set to attract visitors.

The airport, which lies on a larger area than London’s Heathrow, has set out a 160 million-euro ($179 million) development plan through 2020 financed from its own cash-flow, including the construction of a 145-room Ibis hotel, and the extension of Terminal B with a new passenger pier. If growth continues as forecast, the airport will need to consider the construction of a new terminal in 2020, according to Lammers.

"The beauty of it is that we can accommodate growth for the next 50 years as opposed to many western European airports where there are hardly any significant developments at the moment due to lack of space or available land for construction of new facilities," Lammers said.

Management is in talks with around 20 airlines on adding new routes to complement the 100 destinations now served by over 50 carriers. A key objective is to re-establish a direct air connection with the U.S., forecast by 2018, to better position Budapest for transit passengers. Direct long-haul flights already link the Hungarian capital to international hubs such as Beijing, Toronto, Doha or Dubai.

"We strive to stay lean and hungry, and rely on our experiences from the Malev collapse," Lammers said.

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