And one of the top beneficiaries of this development is Budapest Airport in Hungary. This was proven by figures and statements delivered at the joint conference of Budapest Airport Cargo (BUD Cargo) and the organization World of Freight (WOF), which has made a name for itself in recent years, especially in Eastern Europe. The two-day meeting was held from 26/27SEP23 at the old Terminal 1 of Budapest Liszt Ferenc Airport, colloquially known as "Ferihegy Airport".
TIACA Chairman, Steven Polmans’ keynote surely pleased BUD Airport Chief, Kam Jandu, Chief Development Officer, Rene Droese, and Head of BUD Cargo, Jozsef Kossuth. Polmans' key phrases were: “Budapest is a pivotal player in the air cargo landscape in Central and Eastern Europe. Today, BUD Cargo is a respected international brand. Its success is based on collective efforts, achieved by the contribution of every individual member and companies doing business there.” The network encloses a multitude of forwarding agents, freight airlines serving BUD, integrators such as DHL Express or UPS, and various ground handling agents.
Two main economic drivers
Their joint success would be unthinkable were it not for two key drivers: large investments by international companies in Hungary, led by German and Korean firms, and the country's aviation policy. Although ruled authoritatively by Orban and his Fidesz party, the country has one of the most liberal aviation regimes in the world. It is based on bilateral agreements between, for example, EU member, Hungary and third countries such as China, Qatar, or Turkey, to name three examples. “For instance, if Chinese passenger or cargo carriers request 20 cargo flights each per week and the Hungarian government agrees, a bilateral agreement is signed. In case they want to double the number of weekly services, the agreement will be amended instantly,” Jozsef Kossuth, Director Cargo at BUD Airport describes the basics of this policy. Since Hungary no longer has a national carrier after Malev went bankrupt in early 2012, leaving aside the very successful budget carrier Wizz Air, the government does not need aviation rules limiting the traffic rights of non-EU carriers to protect any national airline.
Liberal traffic regime has attracted non-EU airlines
In this respect, Hungary differs fundamentally in its air traffic policy from countries such as France (Air France), the Netherlands (KLM), Germany (Lufthansa), Portugal (TAP) or Spain (IAG/Iberia). Incidentally, the aforementioned carriers could in turn use the bilateral agreements to offer flights from Hungary to China or Turkey. Polish LOT, for example, does this, offering passenger flights from BUD to intercontinental destinations.
This combination of industrial growth and a transport policy based on bilateral agreements, has led to a considerable upswing in cargo traffic at Budapest Airport. “Until recently, investments used to flow from the West to the Far East, but now it is reversing and money comes flowing back from there, especially to Eastern Europe,” Balazs Vecsey, MD Commercial of automotive supplier, Bosch Magyarország (Hungary), stated at the event. His company runs a warehouse comprising of 100,000 m² in Hungary.
Cargo City will be further expanded
Other drivers of the economic upswing include fast and unbureaucratic customs clearance practices, the establishment of a cargo community that relies on cloud-based information exchange, and the construction and expansion of the Cargo Center within the airport’s fence. Today, BUD offers customers 16,000 m² of handling space, and 80 million euros have been invested in the development of the complex. Another 100 million euros will follow in the next 2 years for expansion measures, including the construction of four new parking spaces for freighters directly in front of the warehouse, BUD Cargo Director, Kossuth announced at the event.
He added that thanks to the upswing in cargo traffic, the airport's catchment area has expanded considerably. It now stretches from Poland to the Mediterranean Sea and east to Romania. The fact that BUD has also developed into a hub for e-commerce, which continues to grow strongly, is part of the success model, the executive stated.
This also applies to the investment made by Envirotainer, which has built a depot for its cool containers in BUD. This step meets market demands and facilitates the safe transport of temperature-critical goods, Kossuth emphasized.
Hungary’s GDP is growing, but so are debts
Analyst Marcel Nemeth of KPMI pointed out that further economic growth is to be expected in Hungary and the EEC countries as a whole in 2024. According to his forecast, Hungary's GDP will increase by 2.8% next year, topped only by Romania (+3.5%), but still ahead of Poland (+2.7%). However, the country's public debt of 71.1% in relation to GDP is also the highest of any country in Central and Eastern Europe, sharply limiting public investments. This raises the question how the Orban government will fund the repeatedly announced intent to takeover BUD Airport from its current majority owner, the AviAlliance, that is backed and financed by Canadian institutional investors. However, this thorny issue was largely left out of the recent meeting of BUD Cargo and WOF.
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