Reopened airport crucial for tourism at Hungary's Lake Balaton

By bne IntelliNews April 15, 2010

Kester Eddy in Budapest -

To develop a tourist destination you need the infrastructure to bring the tourists in, so a Hungarian property developer with plans to revive tourism around Lake Balaton has taken over the operatorship and reopened the airport that serves this southwest area of Hungary.

After a six-month hiatus, Fly Balaton airport reopened to traffic on April 10 when it welcomed Lufthansa flights from the German cities of Frankfurt and Dusseldorf. FB Airport, the new airport operator owned by a subsidiary of SCD Holding, a Hungarian property development company, has moved in after the previous management company hit difficulties last year. FB Airport expects the weekly flights from six German cities (the other four being Hamburg, Erfurt, Leipzig and Dresden), along with a summer service to Basle, to generate some 32,000 passengers during this year's tourist season.

Small numbers perhaps in the world of international aviation, but Agoston Gubicza, managing director of FB Airport, sees the airport as crucial to the region's development. "The big thing is we have got the contracts and acquired the licenses and permits [for operations]. Now we can go out and talk to other airlines. We are targeting 80,000-100,000 next year, and aim for 300,000, to break even, in five years," Gubicza tells bne.

The former Soviet aerodrome, which first opened as a commercial airport in 2004, saw traffic peak at some 150,000 passengers in 2008, before Ryanair, the most important carrier, pulled out.

Located near the southern tip of Lake Balaton, Hungary's second most important tourist destination, the airport is particularly well placed to serve the spa resorts in the area. Nearby, northern Croatia, Slovenia and the eastern province of Burgenland in Austria will also benefit from the new links. "There are 2m people within a 100-kilometre radius of the airport. It's about educating people [about flights]. Previously, I met so many Austrians flying from here, attracted by the [proximity], cheap parking and quick procedures at the airport," Gubicza says.

Bringing in these types of tourist numbers will help SCD Holding's grand plans to revive tourism around Lake Balaton. SCD said in early 2007 that, in partnership with Quinlan Private, an Irish private equity and real estate developer, it would invest some €450m in total on 23 real estate projects around the lake over the next seven years. Since the group sees a local airport as essential to underpin these plans, the rationale to become the new operator is clear. "The SCD Group is strongly committed to develop tourism at Lake Balaton, for which an airport with [reliable] operations is inevitable. Further, the international flights will serve as a solid background to SCD's leisure development plans around the lake," Peter Elkan, spokesperson for SCD tells bne.

However, Elkan declined to give any details of exactly where the development plans for the lake stand today, except to say that the launch was planned for this year.

Capital problems

But FB Airport must grapple with another marketing challenge if it is to achieve success beyond regional status; the key city of Budapest, home to the bulk of Hungary's wealthier population, is an inconvenient 100 miles to the northwest. Indeed, the location issue is the principal reason why Hungarian-based budget carrier WizzAir declines to use to Fly Balaton, despite the high fees charged by Budapest's Ferihegy airport, Jozsef Varadi, WizzAir's chief executive, tells bne.

Undeterred, Gubicza says a shuttle bus to the capital can be restored if demand is sufficient, and he remains optimistic, saying he is now approaching other carriers, including Ryanair. "Ryanair flights [to Stansted in the UK] had an average load-factor of 82% in 2008. They were a big success all round," he says.

Simultaneously, he is also eager to win cargo traffic, both by promoting a nascent business park on land adjacent to the airport, and by tempting a number of manufacturers in the region with convenient cargo facilities. "We have Flextronics, Elcoteq and General Motor's plants all within a short drive away. They are using Vienna, or Bratislava or Zagreb airports. But we are much closer and convenient for them," Gubicza says.

He admits, though, that there is no quick fix to developing the airport's customer base. "This is a long-term vision. We expect to lose money for the next five years," he says.

Whatever, for now Fly Balaton has directly created some 120 jobs in an area lacking quality employment opportunities, and is viewed positively by local tourist operators. "I can't give you the numbers, but I know we got quite a lot of guests from the airport when it was open before, so in short, yes, it's good news," says Mike Wallace, manager at Danubius Health Spa Resorts, which owns two wellness hotels at the popular spa resort of Heviz, a short distance from the airport.

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