€99 per passenger in Pecs

By bne IntelliNews March 1, 2012

bne -

The Hungarian city of Pecs has until the end of the year to deicide whether to continue to subsidize its struggling airport, Magyar Nemzet reported on February 28. However, as realdeal.hu points out, should Pogany Airport close, we would be losing a perfect illustration of "the madness" that so often lurks in municipal project financing.

Deputy mayor of Pecs Peter Csizi announced that the city and majority owner is spending some HUF200m (€695,000) each year to subsidise the airport, which was opened in 2006 after a HUF3bn development project. Half of the subsidies go towards repayment of loans incurred in building the airport, whilst the remainder is spent on simply keeping it running.

That's not surprising given the chasm that sits between the figures in the business plan and in the real world. Of the 100,000 passengers that the airport assumed it would serve in 2011, no more than 7,000 turned up, according to MTI. That represents a drop of 15% in business year on year - or just over 1,000 passengers.

realdeal.hu suggests it may have spotted one potential weak link, pointing to the airport's route plan map on its website, which details the two routes - to Corfu and Bourgas in Bulgaria - served by the charter airline that uses Pogany. "So there you have it," the news service sums up. "Pecs is spending HUF200m per year so that a few thousand relatively well-heeled people from the surrounding area don't have to drive to Budapest in order to fly to their choice of two beach resorts.

As one wag suggests in response that the HUF200m could be considered a fairly cheap bill for subsidising an airport, unless you look at it on a per-customer basis. Then it works out at HUF28,571, or €99, for each passenger.

Csizi said experts would assess this year whether the operational costs of the airport could be reduced while its services are expanded. The airport operator has already reduced costs by several tens of million forints in recent years as a result of staff cuts and the introduction of seasonal opening times. However, if nothing more can be done, the airport might need to be closed by the end of the year, he added.

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