Skyrocketing plane ticket prices after government acquisition of Budapest Airport?

The Hungarian government sold Budapest Airport to foreign investors in 2005. Currently, its shares are owned by Canadian and Singaporean companies. However, the Orbán government’s plan is to purchase it back and nationalise it again. Therefore, they offered EUR 4 million and would like to provide financial background for that transaction by issuing euro bonds for EUR 1.75 billion. However, the purchase may mean higher plane ticket prices at Budapest Airport.

Profitable airport for sale?

According to Szabad Európa, the big question is how expensive the airport’s operation will be in the hands of the Hungarian government. If the prices rise, the passengers will need to pay more, an air traffic expert believes. Szabad Európa wrote that it is rare to buy back privatised airgates. András Bognár, an expert of ICF in London, also raised the question why it would be worth it for the state to operate the airport when the private sector can do that more profitably.

Bognár added that in Europe, the states sold profitable airports in the last few decades and kept only the smaller, less-profitable or even loss-making ones. For instance, the airports of Vienna, Frankfurt or London’s Heathrow are in private ownership.

However, when the Hungarian government privatised the Budapest Airport in 2005, they introduced a price cap on the costs. If that is abolished after the transaction, travelling from and to Budapest will become more expensive. András Bognár said there is no news yet on the issue. He added that the deal’s purpose is purely political because no passengers choose a destination based on the ownership of the given airport.

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Photo: FB/Budapest Airport

Purchase may finalise by December

The Hungarian government privatised the airport in 2005. The first owner was the British BAA International Ltd. In 2007, its shares were bought by the Greman Hochtief AirPort GmbH (from 2013 AviAlliance). That company has 55.44% shares and is owned by a Canadian pension fund, Public Sector Pension Investment. Another Canadian pension fund, the Caisse de dépôt et placement du Québec, has 21.23%. Meanwhile, the Singaporean state investment fund, the GIC, also owns 23.33% of the shares through one of its subsidiaries, Malton.

In February 2023, Márton Nagy, Hungary’s economy minister, received the task of buying back the airport. Later, the Orbán administration began to look for a co-investor, and rumours had it they were negotiating with Qatar companies. Mr Nagy said the transaction might finalise by December.

Paying 4 billion euros, the government’s latest bid on the airgate, is no easy feat, even for the government. Therefore, they issued euro bonds on Tuesday for 1.75 billion euros. Portfolio.hu wrote that the move was successful, they received bids for almost 6 billion euros.

Although the Hungarian government never actually explained why they wanted to buy the airport, the reason is probably that they want to redirect the profit it makes. Balázs Orbán, the prime minister’s political director, said it was not in the interest of the Canadian pensioners to develop the airport.