Mno.hu writes that the resigning managing director of state property Malév GH denounced the Turkish Celebi, responsible for the airplanes’ services on land, at the competition authority with the suspicion of cartelization. The option of forbidden cost agreement came up in connection with the offers for land service by British Airways, Iberia, Air Lingus and Alitalia.
The authorities are investigating the enterprises responsible for the land service of airplanes at the Liszt Ferenc Airport due to billionaire cartel suspicion. János Kisvári, the former managing director of Malév Ground Handling Inc. is believed to have reported on the case to the Economic Competition Authority in a letter dated on the 16th of October. He also informed the Hungarian National Asset Management Inc., who own the enterprise.
According to this report, the Turkish owned Celebi Ground Handling Hungary looked up Malév GH several times with the suggestion that rival companies should conciliate the costs of the running tenders of British Airways, Iberia, Air Lingus and Alitalia.
The letter also attracts attention to the fact that the airport land service market turns over more than 15 billion forints every year, and the 48% of this is covered by Celebi, 41% by the onetime Malév subsidiary, while the remaining 11% by the British Menzies Aviation and the Hungarian Budport Handling Kft.
Wild Eastern conditions
“On the occasion of our personal meeting, the costs of different airplane types also came up. We didn’t take these information and the requests of Celebi into consideration at the Malév GH pricing. (…) Since the competition-limiting behaviour can only be successful when all market performers support it, it is rightly presumable that the above mentioned fellow competitors were all approached by the enterprise at issue” says the letter, according to which Celebi aims to get the serving rights of British Airways and Iberia.
It’s also a relevant information that Celebi has been the partner of British Airways, Iberia and Alitalia for some time, while Air Lingus was served by Menzies, because IAG Holding disgregated the portfolio at a former tender.
Anonymous sources from the airport told mno.hu that wild eastern conditions have characterised the land service market for some time, so the current cartel suspicion could be real. As one of them explained “the fellow competitors would most likely drown one and other in a bowl of water, but they occasionally make non-aggression pacts to keep their market positions”.
Another source highlighted that, while Celebi is moving in on the contracts of British Airways and Iberia, it would be vital for Malév GH to get Alitalia, as the enterprise has an 800 million minus, which could be helped with a long-term commission. So, if Kisvári’s report concerning the “marching” of Celebi is true, the other part of the deal could’ve been the non-aggression regarding Malév GH’s offer towards Alitalia.
Both cases concern three-year contracts and businesses of hundreds of millions or even billions. In addition, there is another twist in the story since Menzies could be moved by the similar interest in keeping positions, only on a smaller scale. “If there was a cartelization intention on any side, its gist could’ve been the interference in Malév GH promising anything to Celebi and Menzies at IAG’s tender, while fellow competitors wouldn’t “attack” Malév’s offer with a cheaper takeover at Alitalia’s tender” said MNO’s source.
MNO looked up the Economic Competition Authority, the Hungarian National Asset Management Inc. practising Malév GH’s ownership, and the three other companies concerned in land services. The Economic Competition Authority couldn’t give sufficient information, but the asset manager confirmed what MNO has found out. They said that János Kisvári informed them after the termination of his position as managing director, and they immediately did the consequential steps at the Economic Competition Authority. They didn’t react to whether or not the retiring of Kisvári has anything to do with the case.
Celebi denies: the Turkish owned enterprise, in their short answer, called the information unfounded and emphasized that they keep to the relevant rules and orders. Menzies Aviation hasn’t answered MNO’s questions yet. The youngest performer of the market who’s only been doing land service as an assigned partner, Budport stated that they “haven’t supported any initiation concerning the dishonest manipulation of the land service market”.
“We disavow as accurately as possible from any initiation concerning cartels” stated the firm, emphasizing that their inner rules exclude communication with fellow competitors during tenders.
Malév GH has been struggling with serious economic issues since the bankruptcy of the parent company in the February of 2012. This is signalled by the data that they finished the year of 2015 with a loss of 604 million forints, and that its own capital was minus 241 million forints at the end of last year. For that matter, the Hungarian National Asset Management Inc. has already prepared a reorganisation programme for Malév GH, which means a rationalization of hundreds of millions.
Copy editor: bm