After several horror years of airline failures globally, 2011 was a relatively quiet year with only a small number of airline names vanishing.
2012 has already been busy, however, with the collapse of Spanair and Cirrus in January. This week I was sad to see the collapse of Malév, the Hungarian flag carrier. The airline has been on the edge of collapse for years. Shutdown was triggered by a European Commission order to repay €300 million in “illegal” government subsidies and forced when Tel Aviv and Dublin airports grounded two of Malév’s jets.
On closure day, 30 000 passengers were stranded. The airline had 2,600 employees and transported 9.2 million passengers last year. The collapse has wider impacts for Budapest airport, the Hungarian government budget, tourism in Hungary and the Hungarian economy.
Malév is an airline I have had some affection for and I am sad to see them go. I have long followed their progress (or lack of it more recently). Other airlines I have been sad about going include Laker (1982), Pan Am (1991), Ansett Australia (2001), Sabena (Belgium) (2001), Independence Air in USA (2005), Origin Pacific in New Zealand (2006) and Slovakia’s SkyEurope (2009).
Yesterday, the Hungarian free Metropol newspaper had what is probably the last ever advertisement by Malév: “We Thank You! We hereby thank all Malév passengers who chose to fly with the national airline in the last 66 years, for flying with us. Much love, The Employees of Malév The last Malév ad was published from money collected by the employees of Malév with the support of this newspaper.”
Who was this airline?
1946 -1988: Blood, planes and speed
The carrier started as the joint Hungarian- Soviet carrier: Maszovlet in 1946. In 1950 when Budapest’s Ferihegy Airport (now Liszt Ferenc International Airport) opened, the Carrier looked after the airport and also operated Hungary’s air traffic control.
On 26th of November, 1956 Malév Hungarian Airlines (Magyar Légiközlekedési Vállalat) began independent operations as the legal successor of Maszovlet. I am not sure if this separation was linked to the Hungarian uprising that started on the 23rd of October and was brutally crushed on 10th of November 1956?. There was a famous incident at the 1956 Melbourne Olympics in the semifinal water polo match between Hungary and the USSR which turned into a violent battle in the water. The match that what would later be known as the “Blood in the Water match.”-It is the subject of a documentary: Freedom’s Fury). I am curious that two weeks after the uprising containment, the airlines separated.
At that time Malév had a fleet of 15 aircraft (mostly 21-seater Lisunov Li-2s – the Soviet build version of the DC3). It had 18 domestic routes mostly between Soviet bloc countries. In its first year they carried 103,356 passengers and Malév replaced the Li-2s with much faster Ilyushin Il-14s.
In 1960, Malév was the first Soviet bloc airline to fly the Ilyushin Il-18 (pictured here in a museum). This plane gave Malev the ability to fly non-stop to the Middle East and North Africa.
In 1969, Malév shut down all of its domestic flights. It was now flying to 33 cities in 28 countries. 68-seat Tupolev Tu-134 jet passenger aircraft began operations.
1974 saw the arrival of 143-seater Tu-154 planes to replace the Ilyushin-18s from passenger service. Here is a Malev 1980s advertisment featuring a family flying on a TU 1-154. Spot the 80s hairstyles! http://www.youtube.com/watch?v=6bf6cOjX878
Malév became a full member of the International Air Transport Association (IATA) in 1984.
1988- 2007: a new world
With the collapse of Soviet communism, Malév was one of the first of the Eastern European airlines to start introducing non Soviet aircraft with its first Boeing 737 in 1988. The entire Soviet built fleet was replaced by 1999.
At the same time, Hungarian graphic artist László Zsótér designed a new logo- one which survived the transition from communism to this week’s collapse. A rarity in the airline world to have an airline logo last over two decades!
The stylised “M” symbol was usually depicted in the three colours of the Hungarian flag – red, white and green – although it sometimes appeared in a single colour scheme.
At this time, Malév was carrying over a million passengers a year to 40 cities in 30 countries. Malév was ranked among the top 10 companies in Hungary by annual revenues.
In the 1990s, Malév issued shares which were owned by the government. There was a brief part ownership by Alitalia
2007-2012: hurtling toward the inevitable
The airline was sold to a Russian company in 2007 after a desperate search for an owner. By this time, the airline was viewed as a massive financial burden on the state. At privatisation, the Hungarian government absorbed a 2003 loan. Malév also received shareholder “loans” which were all converted to shares and a tax deferral. All of these transactions were to raise the fury of low cost competitor Wizz air and the interest of the European Commission and lead to the inevitable demand to repay the money.
Malév under their new ownership dropped loss making flights particularly transatlantic services and attempted to use Budapest as a hub connecting all parts of European plus the Middle East. Major cost saving initiatives began. Also in 2007, Malév joined One World alliance.
In February, 2009, Malév had to pay wages in two parts because it could not afford to pay them in full.
Malév was re nationalised in 2010 on condition it become profitable by 2012 (which it didn’t). The Hungarian government has said a new Malév could rise if private “investors were prepared to operate it profitably and risk their own cash.” I am very pessimistic, we will ever see Malév again.
Competitor Changes from Budapest:
- Aegean Airlines will launch services to Athens
- Air Berlin started a daily service to Frankfurt
- Air France – will add larger planes to their 20 weekly Paris flights
- British Airways (One World carrier)- will also add larger planes on their London flights
- KLM – larger planes to Amsterdam
- Lufthansa has new services to Berlin and Hamburg
- Norwegian will put larger planes on Budapest routes.
- the biggest change comes from Ryanair , who announced seven hours after the collapse that their new Budapest base on February 17 will provide service to 31 European cities instead of the intended five. I believe, the scale of this expansion will make it almost impossible for any new Malev to appear
- Smartwings (Czech low-cost carrier) will launch services to Athens, Barcelona, Cyprus and Paris
- Wizz Air (Hungarian low-cost carrier ) will increase weekly flights from 129 to 167 adding ten new destinations. It also announced plans for Tel Aviv and Moscow, two destinations previously flown to by Malev
Impact on Budapest airport
The collapse will rob Liszt Ferenc International Airport of 1.5 million passengers a year- 40 per cent of airport revenue. Although these figures may be changed with the massive Ryanair expansions. Privatised in 2007, the airport is owned by five investors. Hungary’s Development Ministry said that the Hungarian state has effectively a full guarantee for any losses in airport revenue. The airport bill could be as much as $3 billion.
Impact on Hungary
The International Monetary Fund, has said Malév’s demise poses new threats to an already struggling Hungarian economy. Malév’s collapse comes as Nokia scales back its Hungarian manufacturing operations. Combined 5,000 jobs will go. There are tourism implications in the short and medium term.
The two big questions of course are: What could have been done differently? and Who is Next? I predict ČSA - České státní aerolinie (Czech Airlines)
There are a few tribute videos for Malév. This one is by Airlineguy29http://www.youtube.com/watch?v=56_F4Trfh5A.