Hungary’s Government Seeks to Take Control of Budapest Airport

Hungarian Prime Minister Viktor Orbán stepped up efforts to gain control over Budapest airport as the Cabinet seeks to bring key infrastructure into state ownership. The government also plans to build 4-5 large international airports and a dozen of business airstrips across the country.

Hungary’s government is keen on gaining control over the nation’s largest international airport, located on the outskirts of Budapest. The Cabinet of Prime Minister Viktor Orbán placed a second offer to buy the airport after the first was rejected, according to a report published by the Financial Times. Earlier this month, Bloomberg reported that Hungary offered USD 4.6 billion to the international investors controlling the Ferenc Liszt International Airport in Budapest. The Hungarian government said in May it was intent on buying back a majority stake in the airport.

Fully privatized
The airport was privatized in 2011 and following several changes in its ownership structure, it is currently majority owned by Canada’s Public Sector Pension Investment Board, which holds a 55% stake through its German-based airport investor AviAlliance. Additional owners include GIC, the Singaporean sovereign wealth fund with a stake of 23% and Canadian pension fund manager Caisse de dépôt et placement du Québec (CDPQ), holds a 21% stake. The owners repeatedly stressed they were planning to hold on to their stake in the airport in the long term given its promising growth potential. Nevertheless, the Hungarian government seems to be committed to purchasing a controlling majority in the airstrip as such a move would be in line with its policy of placing key national infrastructure in state ownership. Since coming to power in 2010, Orbán has regained control over several companies in the energy sector from foreign owners.
Earlier this year, the government’s offer for the airport was turned down by its current owners, which reportedly claimed the offer undervalued the hub.
While travel restrictions caused by Covid have decimated passenger numbers at Budapest Airport, the facility is expected to grow rapidly in coming years given the boom in air travel in Central and Eastern Europe. Budapest Airport is also one of the home bases of low-cost airline Wizz Air, a key player in European air travel industry. The number of passengers at Budapest airport dropped to 3.9 million in 2020 from 16.2 million in 2019. The gateway expects its operations to bounce back to pre-Covid levels by 2023.

Stargate project
Meanwhile, the international owners of Budapest Airport said that they had been awarded EUR 25 million in development funds from the European Commission in the framework of the Stargate sustainability project. As part of the project, Budapest Airport will spend EUR 1.53 million to develop and build sustainability solutions for the airport. These include a cloud-based, paper-free air cargo handling system as well as smart, multimodal transport hubs, and other projects aimed at improving energy-efficiency and traffic functionality. According to the company statement, the implemented short and medium-term green solutions will set an example for other airports in Europe and elsewhere.

Ambitious state plans
In addition to regaining control over Budapest airport, the Orbán government’s new airport development strategy envisages the construction of 4-5 new international airfields across the country, essentially doubling their number. That would come on top of a dozen airfields designed for business traffic. “We do not need large-capacity airports everywhere, but Nyíregyháza (domestic airport) needs a decent 1.5 kilometer-long runway. Thus, if business partners arrive, heading for example to the Záhony region, they will not need to drive over from Budapest or Debrecen,” said Levente Magyar, Parliamentary State Secretary and Deputy Minister of Foreign Affairs and Trade.