- 19 Sep 2023 4:59 PM
If the bid is successful, passengers will be in the dark as to whether the airport will become more expensive under state ownership, paid for through air fares, said aviation expert András Bognár of the London-based ICF consulting company, to Szabad Európa.
According to him, the airport is just infrastructure, and no one chooses their travel destination based on who owns the airport there, so it is not entirely clear what motivates the purchase beyond political goals. Elsewhere, previously privatised airports are rarely bought back.
Budapest’s is large enough for the private sector to run it successfully, so it's a question of why the government should want a part of it, just like any other economic activity run by the private sector.
The wave of airport privatisation in Europe started about 20 years ago, typically leaving smaller, less profitable airports in state ownership, noted Bognár. Most of Vienna Airport is privately owned, while Frankfurt and Heathrow are completely private. An airport is considered infrastructure, like a toll motorway, said Bognár.
Since the 2005 privatisation of Budapest Airport, the government has introduced price capping on costs. Passengers would be keen to discover whether this will continue to work in the future, whether the state will adhere to this monopoly regulation or lift it and change fees at its discretion.
Currently, there is no information about the government's intentions.
In the case of a government buyer, Bognár believes it's unclear what constitutes a return on investment. They mainly justify the purchase with tourism development, but in this case, he thinks that this money should not be invested in the airport but directly in tourism, for example, in hotel construction.
Previous statements by Márton Nagy, Minister of Economic Development, indicate that Budapest Airport is a strategic asset and should be in Hungarian hands.
"So, does this mean that Austrians, Germans, French, and English are squandering their strategic assets? What will change if it goes into state ownership? This is the big question that no one can see yet," he said.
In December 2005, the Hungarian government sold the right to operate the airport to the UK’s BAA International for 464.5 billion forints for 75 years. in June 2007, the German Hochtief AirPort (from 2013 AviAlliance) bought BAA’s stake, making the German company the majority owner.
Itself owned by a Canadian pension fund, Public Sector Pension Investment, AviAlliance holds 55.44% of Budapest Airport. Another Canadian pension fund, Caisse de dépôt et placement du Québec, has 21.23% and a Singaporean sovereign wealth fund subsidiary, Malton, has a 23.33% stake.
The Orbán government has been planning to buy the airport for years. They made an offer in 2021, but later halted the process. In February 2023, they revived the purchase of the airport, and Márton Nagy was tasked with negotiations.
According to the most recent information, Budapest Airport, after two loss-making years due to the pandemic, achieved a net profit of €76.6 million (29.7 billion (29.7 billion forints) in 2022, with a net revenue of €277.7 million (108 billion forints).
According to Bloomberg, the Hungarian state would acquire a 51% ownership stake, and the remaining 49% would go to a friendly co-investor, ideally an airport operator.
Words by Peterjon Cresswell for Xpatloop.com
Peterjon has been researching the byways of Budapest for 30 years, extending his expertise across Europe to produce guidebooks for Time Out and his own website liberoguide.com