[Anonymous]

[MarcusUK]

With a few recent trips to Budapest, it is quite surprising to see how quickly Ryanair and Easyjet jumped into the market there, after the demise of Malev.

There were many destinations offered by both Airlines to various European cities,with 5 Ryanair Aicraft parked up there, and 3 Easyjet Mid afternoon.
Wizzair, Hungarian low cost also had a steady stream in and out.

KLM who i normally fly with to Budapest, appear to be completely full with their 3 flights per day every time i fly with them. They appear, along with AF, to be taking many connecting passengers to their intercontinental flights, not just their hubs.

Qatar did have a flight, but this was i think a n airbus A320, so nothing with great capacity, or special product on board.

Malev did not really feature much in the long haul options from here, and the market is not high, but certainly KLM AF are taking advantage to feed through.

The low cost terminal on the far side of the airport, has been left for cargo, and 2A houses the traditional carriers, with 2B for low cost, with an extention. However, the main terminal airside though new and pleasant, is very crowded at times, with low cost passengers being bused out to stands. Security on that side, appears also very stretched at times, taking a good 30 minutes to get through.

I wonder with if BT forum readers had noticed this inroad in other Eastern European Airports, where the national carriers have weakened, eg Prague?

[BigDog.]

Interesting Marcus as Korean Air has taken a 44% stake in the Czech national carrier for a little more than pennies.

http://www.businesstraveller.com/discussion/topic/Korean-Air-buys-stake-in-Czech-s-CSA

With the demise of an increasing number of national carriers – Alitalia looks to be next, then TAP possibly – the LOCO’s will quickly fill the short haul void however I also foresee ME and FE carriers taking an increasing interest to pick up Long Haul (Cargo and Pax). Picking up equity share, for a song (take note WW), will have the backing of the (broke) national government as it will help preserve vital trade links into the country. In return it gets around long haul route licensing and EU protectionism – which appears designed to protect only its big boys.

As the European big 3 (LH/LX; AF/KLM; BA/IB) are mired in their own restructuring/merging problems there appears little money or appetite to take on the lesser European carriers. As these are mostly owned by their national governments their choice will be no national carrier or joint ownership with non-European foreign carrier.

The big boys from the east will be coming through the back door to set up shop…

[MarcusUK]

Bigdog…
I was too thinking of Korean taking czech, all a bit incestuous within the Skyteam, not letting members fail perhaps. I know they pulled out of LHR, but were pretty awful to fly with, unreliable and aircraft from the Middle Ages!

KLM / AF are packing their flights so well, and clearly making money from transit through their hubs, from Budapest, clearly not for traffic to The Far East. Like Etihad taking financial stakes in other Airlines being their strategy, then setting up co-operation, rather than blatent head to head competing like EK, are Korean doing the same?

There are a lot of new routes with KLM and AF opening up, and padding out the China and Sotuh American markets with extra flights. I am a shareholder, and was reading the newsletter today, and the 2015 strategy unfolding. AF are hiving off many non profitable regional flights to HOP, then perhaps they do not have to count them in their financial results in the same way, or insulate themselves. Who knows if KLM will push more flights onto Transavia as low cost in Europe…they are allocating them extra aircraft.

It really was quite confronting when Ryanair talking of dropping a third of all STN flights due to increased costs there, to set up shop so easily in East Europe, as mini hubs. They already run 3 pretty full lights a day STN to Budapest, and with LTN, LHR thats a good 14 flights between London regions and BUD a day all doing well. But apart from LH and swiss it seems pretty scarce on other carriers that can transfer to a long haul network.

I do not travel to Prague or other Eastern Euopean hubs, but is it similar there, or have their national carriers remained a greater presence without the low cost carriers coming in?

[AMcWhirter]

Hello Markus

All three of the larger E European carriers have faced financial difficulties. The third airline, to which you did not refer, is LOT of Poland.

The piece I wrote in January about LOT having to downsize and the reader comments at the end explain the problems these carriers face.

http://www.businesstraveller.com/news/lot-polish-airlines-to-downsize

Since I wrote the above piece, LOT’s B787s (the plane which LOT hoped would revitalise its long-haul routes) has been grounded, so LOT faces more difficulty in trying to compete.

The E European carriers are outrun on price by the LCCs for short flights while the existence of nearby but powerful rival hubs means that they cannot develop more profitable long distance routes.

You mention that AF/KL carry passengers to and from Budapest well I would imagine that the Lufthansa Group is an even greater force in the Hungarian market because they operate at four nearby hubs: Vienna, Zurich, Munich and Frankfurt.

But Hungarian travellers who need to fly outside Europe need not depend solely on Budapest airport.

Thanks to modern, inexpensive and fast Railjet trains (these are operated by Austria’s OBB) they can reach Vienna in just over 2 hrs 30 mins:

http://www.seat61.com/railjet.htm#.UXBT1aLxWAg

From Vienna they can have a number of long-haul routes at their disposal with carriers like Austrian Air, Emirates, Korean and SIA.

[MarcusUK]

Thanks for the information and insight Alex.
The train looks very swish!

It seems that their is a close eye for these markets from the LCC’s.
They jump in very quickly, obviously having closely watched the demise of other legacy carriers.

I always though LH group’s of Airlines had a strong hold in East Europe, with GermanWings taking on many routes. With LH cutting back on Amsterdam and Budapest, it seems KLM / AF are taking more med / long haul passengers for Skyteam.

there sure is a huge program of consolidation at the 3 main groups in Europe at the moment (KLM/AF, IAG, LH). But i note KLM/AF increasing or starting out several new long haul routes in South America, Africa, China.

Clearly, each re-structuring plan is going to take several years with impacts being felt now with. Perhaps the LCC’s are more agile and can move quickly, and have clearly gained much of the inter European markets.

I wonder where this will be in 2 years time?

[AMcWhirter]

Yes, Railjet is an attractive service and the fares are not expensive because the rail networks did not have to spend a fortune on building new track and constructing sophisticated trains.

LCCs are nimble in the marketplace but they are also fickle. They can enter a market one year and depart it the next. That is why it is good to for any country to have a national carrier.

Certainly that is why when Sabena failed and Swissair failed, their respective governments soon set-up replacements because they need reliable connectivity with the outside world.

[DavidGordon10]

May I endorse the comment about the train – it makes the journey from Budapest to Vienna airport very quick and easy. One small tip – the international ticket office at Budapest Keleti pu has terrible queues, but the last time I took the Vienna train it was easy to buy the ticket on the train, at no extra cost: it had to be two tickets, one to the Austrian border, and then another after crossing the border.

I regularly travel to Prague, and the atmosphere has changed over the last four or five years: quieter and with obviously fewer CSA flights. The slack is only partly taken up with LCCs, mainstream airlines are more in evidence than they were. Some LCCs that served PRG have failed and closed. As Alex has pointed out, PRG would never be a major hub, Vienna and Munich are too close.

I don’t fully agree with Marcus’ comments on CSA, they were and are not that bad, and in the old days when CSA Gold card holders were normally upgraded the business class experience could be good.

If you are closer to LHR than an Easyjet airport, then you are stuck with BA to PRG. Once on the plane it is OK, but it is tedious that it is always a bus transfer at LHR. Can we please move the Prague flights onto a proper gate sometime?

[Nemjee12]

First of all, I would like to start my post by saying that the decision to close Malév was a political one and the Commission’s decision was not in accordance with the Lisbon Treaty.

Wizz Air is a very dangerous airline because, unlike Ryanair, it doesn’t merely mind its business but it attacks other airlines.
In my opinion eastern European carriers have two choices, first is to reform and second is to sell their business to someone else with more experience. CSA has opted for the first solution and it was sold to a successful airline with deep pockets which might help it see another day.
Other option is to reform yourself so as to become competitive when facing the lowcosts. So far, only airBaltic (in eastern Europe) has managed to produce some positive results with their losses being considerably reduced. Another player we should be following is Romania’s Tarom. Tarom did not only have to face Wizz Air but it also had to deal with Blueair. They have announced the completion of a major restructuring process, so let’s see how successful this proves to be. They can’t afford to fail otherwise they might end up like Malév. Their announcement about an upcoming fleet renewal gives me hope.

Last week we saw important developments between Jat Airways and Etihad, and everyone knows that more is to come. If all goes according to plan Wizz Air will suffer in Serbia as well.

I think the era of lowcost domination in eastern Europe is slowly coming to an end. Airlines that have not failed until now will survive in the fight with the lowcosts simply because they have found a way to cope with the challenges.

That said, it doesn’t mean that airlines such as LOT, Air B&H, Croatia Airlines, Adria… might not eventually fail. They might, but this will not be because of lowcosts. It will be because of their own incompetency.

My prediction for the future is that Wizz Air will preserve its dominant position in Budapest, but it will not have similar success anywhere else.

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