Economic impacts on destination air traffic following a flag carrier's market exit: a case study for Budapest

Abstract

After 66 years of existence, the Hungarian state carrier MALEV had to cease operations in 2012 because of its financial situation. The sudden market exit affected more than half of the traffic at Budapest's Liszt Ferenc Airport (BUD). This paper aims to investigate the market reactions, taking particular note of the role of low-cost carriers (LCC). The examination of a legacy carrier's situation contending with dynamic low-cost airlines establishes the basis for the case of Budapest. Originating with the hypothesis that the shift from a flag carrier to an LCC dominated market has effects on incoming tourism, this paper also studies the secondary effects of this situation.

Keywords:

• post-liberalised airline market
• flag carrier
• low-cost carrier
• market exit
• incoming tourism

Additional information

Notes on contributors

Adam Torok

Adam TOROK, Dr

Date of birth: 18 January 1981.

Education: Brno University of Technology (BUTE), Transportation Faculty, MSc in Transport Engineering (2004); MSc in Transport Management (2007); PhD in Transport Science (2008).

Affiliations and functions: 2004–2008 – participation in Developing Harmonised European Approaches for Transport Costing and Project Assessment (HEATCO), EU 6th Framework Programme, Research and Development Project. 2005 – design of a database for the National Transportation Authority. Database of technical and environmental vehicle inspectors. 2004–2005 – participation in the project ‘The contradiction of liability of maintenance and feasibility at Public Transport of Budapest Plc’, done by BUTE Department of Transport Economics. 2005–2006 – participation in the project co-financed by International Road Transport Union (IRU) and Organisation for Economic Co-operation and Development (OECD) ‘Attacks on international drivers of heavy goods vehicles’. 2006 – leader of the economic workgroup for Advanced Vehicles & Vehicle Control Knowledge Centre in the project ‘Feasibility studies of fleet management at Hungarian Post Plc’. 2006–2007 – Thessaloniki for Hellenic Institute of Transportation. Development of a port choice model for common logistics operation in the region of Crete. 2007– 2008 – part-time job at KTI – Institute for Transport Science Non-Profit Ltd. 2008 – member of PIARC Technical Committee A.3. 2008 –full-time job at KTI – Institute for Transport Science Non- Profit Ltd. 2009 – part-time job at BUTE – Department of Transport Economics.

Research interests: mathematical decision modelling, environmental pollution, climate change. Publications: author of 57 articles (21 in a foreign language), 1 lecture notes, 21 research studies, 47 presentations (21 in a foreign language).

Florian Heinitz

Florian HEINITZ, Prof. Dr

Year of birth 1972.

Education: degrees in Physics and Economics, Universities of Stuttgart, Marburg, and Karlsruhe.

Memberships: Air Transport Research Society (ATRS), World Conference on Transportation Research Society (WCTRS), Transportation Research Board, TransBaltica Conference, Vilnius – Scientific Committee (2009). German Aviation Research Society (G.A.R.S.), Scientific Board – Periodica Polytechnica, Ser. Transportation Engineering, Budapest.

Research interests: decision support systems in the transport industry, travel demand modelling/ customer analytics, air transport economics.

Academic honours and grants: 1996 – Heraeus Foundation Prize for outstanding graduates in physics. 1997 – Transportation Research Scholarship of the Krupp Foundation. 2002 – Etienne Laspeyres Prize in National Economics and Statistics.

Publications: author and co-author of 21 articles.

Present position: Head of Transport and Spatial Planning Institute, Coordinator of Studies, MSc Programme ‘Intelligent Transport Systems and Mobility Management’ (IVM). Sino-German University of Applied Sciences (CDHAW), BEng Programme ‘Economic Engineering’: Departmental Coordinator at FH Erfurt.