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Gov’t Attempt to Take Back Budapest Airport Failed So Far

Ábrahám Vass 2019.08.15.

The Hungarian government attempted to purchase Budapest’s Liszt Ferenc Airport but failed, Cabinet Minister Antal Rogán revealed at a committee meeting, economic site napi.hu reported

The site makes reference to the official minutes of the June 20th meeting of the National Assembly’s Committee on Economics. At the meeting, Rogán spoke about the unacceptable conditions at the airport, mentioning that it would be “good” if the Hungarian state could somehow reclaim it.

“Unfortunately, we attempted in vain, and it didn’t work out. But the unacceptable conditions are shocking,” Rogán said at the meeting. He blamed the socialist-liberal Gyurcsány government that privatized the airport in 2005. He explained that “the privatization was a mistake, it has had a negative effect on Hungary and tourism, as no major development has since been done to the airport.”

While it was indeed Gyurcsány who decided to sell the state’s majority ownership in Budapest Airport Ltd., in 2011 the Fidesz government decided to sell the remaining (25%+1) the Hungarian state had, for 36.6 billion HUF (Eur 115.4 million). According to the ministry’s reasoning back then: “that much of share no longer granted a relevant say in the strategic operation of Budapest Airport Ltd.”

Fact

In December 2005, Gyurcsány's government sold the state's 75 percent share (minus one vote) in Budapest Airport Ltd. for BAA International Ltd. The British airport operator has thus been granted the right to operate the airport for 75 years. At the moment, Budapest Airport Zrt. is owned by the German AviAlliance GmbH. This, however, has since been acquired by Canada’s Public Sector Pension Investment fund (PSP Investments). In reaction to the privatisation in 2005, Orbán said that 'even if there is only one percent chance, we'll attempt to take it back...'

That either the government itself or some Fidesz-bond businessman aims to purchase the airport has been speculated about in the press for about a year. In March, economic investigative site G7 revealed that well-known Orbán-ally businessman Lőrinc Mészáros might target the purchase. The site adds, however, that the selling price might be too high -even for Mészáros.

Generally, in recent years, in Europe, airport operator companies have been sold for fifteen-times their annual EBITDA (earnings before interest, taxes, depreciation and amortization). In the case of Budapest Airport, EBITDA in 2017 amounted to Huf 55.5 billion (Eur 175 million), which rose by 2018 to Huf 73 billion (Eur 230.1 million). Easy to calculate, this puts the selling price up in the sky, and even Mészáros’ estimated wealth would not be enough to pay the check.

It still suggests that something should happen, as government officials have recently become loud critics of the airport and its management, although the poor conditions they criticized have existed for years. The Orbán government gave an ultimatum for Budapest Airport Ltd. to put an end to the practice of using container terminals, the so-called “basic boarding gates” serving low-budget flights, which lack seats, bathrooms, heating and cooling. This “solution” was first implemented in 2012, after Malév went bankrupt, and has remained, although having been criticized by passengers.

“Basic boarding gates” at Budapest Airport. Image by MTVA/Csaba Jászai

In addition, after long years of residential complaints about the noise, Budapest mayor István Tarlós finally decided to take action. What is more, he said that in the future, low-budget and cargo flights might potentially be re-routed to a new airport.

featured image: MTI/Szilárd Koszticsák