Malév (Magyar Légiközlekedési Vállalat), the Hungarian national air carrier and pride of Hungarian tourism, has been consigned to history. There is no more. Köszönöm, Jó éjszakát (thank you and good night). When two airports – one in Israel and one in Ireland – refused to give permission to fly because of unpaid debt, Prime Minister Viktor Orban was left with nothing else to do but to lock the company’s doors and switch off the lights.
Peter Urbanyi, Hungarian Tourism representative for Benelux and a good friend of mine, says that this decision did not come as a surprise. “The European Union demanded a return of some ohoho millions of Euros of state aid at the beginning of the year.” EU rules forbid this kind of state aid. Hungarian tourism thus expected the bankruptcy of Malév and also anticipated it in its business plans.
However, it doesn’t mean that it wasn’t big news. The news was as pleasant as a jump into Balaton Lake in the middle of January. So what brought about the bankruptcy of Malev?
First of all, it terminated the employment contracts of some 2600 employees, which means social difficulties for at least some seven to eight thousand people who need to eat every day. Then came the conflict between the Hungarian state and the German company Hochtief, which owns the Ferenc Liszt international airport in Budapest and will be losing approximately 1,5 million passengers, representing half of total passenger numbers. Next, the sky over Puszta is a witness to a true air battle between low-cost airlines Ryanair and Wizzair. The pervasiveness and success of low-cost airlines is threatened by the success of ‘normal’ airlines, not other low-cost ones, SN Brussels Airlines for instance. In February of this year, the number of passengers between Brussels and Budapest has declined for some 30%, which lead to cancellations of numerous conferences, congresses and incentives. And finally, Hungary has lost a part of its valuable ‘family gold’. Malév planes – previously Tupoljev, more recently Boeing 737, Dash 8 and Fokkers – have been flying since 1946. The wings of 22 Hungarian Icaruses have been broken. The Hungarian meetings industry is also facing difficulties.
It would be wrong to think that the company was state owned. After the fall of the socialist system from 1990, the company has changed various owners, and in 2010 the government has finally stepped in on the ownership structure and nationalised up to 95% of the company (the remaining 5% remaining in hands of the company AirBridge). By doing this, they tried to help it and prevent potential serious problems, but the European Union was not happy with this and initiated an investigation into illegal state financing of the company. This lead to an order from Brussels that the state had to recoup the funds invested between 2007 and 2010, something Malév could not do.
The flyers became parachute jumpers on 3rd February. The Question was over some 130 million Euros, which amounted to the entire 2010 budget of the company. Air Berlin, Lufthansa, Ryanair, SmartWings and Wizzair are of course content, as a new market with some 1,5 million people has now opened to them and, like vultures, they can now demand a share of the carcasses. There are even more casualties. Only a few days prior to this (27th January of this year) Spanish air carrier Spanair, and a week before that Cirrus Airlines as well. Directors at Air Malta must be having troubles sleeping, as well as Serbian Jet. Croatian Airports have seen strikes, and notably Indian Kingfisher is also facing problems, not to mention numerous loss makers across the United States. Apart from the low-cost airlines (EasyJet announced increased profits, despite crisis as well as an increase in business passengers) practically all of the civil aviation is in crisis. IATA (the International Air Transport Association) data shows that the industry will lose some €6,5 billion this year.
Now ex-boss of IATA, Giovanni Bisignani forecast that some ‘dramatic measures’ will need to be taken in the civil aviation sector. Because he is retiring he feels he has nothing to lose and openly criticised governments and their ‘micro regulations’, ‘crazy taxation’, and ‘abuse of monopoly by individual air companies’.“Our industry is fighting for survival,” he said. “Independent of the time the crisis will take, the world is changing. Even if we can reach an agreement on what we can expect after the crisis, we have to admit that the business will be taking a different course than before.” Insiders say that it is all about consolidation of the European airlines market. Thus they will be like Icaruses, flying into the sky, wax melting in their fragile wings – and other airlines are sure to follow. Which ones? Or if we form the question slightly differently: which are the most important ones for the Slovenian meetings industry and tourism in general? Are they also in trouble? Can we help them?
Maybe with the quotation from the Bible: God helps those that help themselves.