Affairs

Aviation

National airlines are a country’s brand to the world— Budapest

Preface

On Monday a group of colleagues returned from Budapest – giddy after a weekend of goulash, thermal bathing and cocktailing with Monocle subscribers and collaborators.

Malév

22 February 2012

On Monday a group of colleagues returned from Budapest – giddy after a weekend of goulash, thermal bathing and cocktailing with Monocle subscribers and collaborators. Armed with tales of tasty sweets and tantalizingly cheap real estate, our editor also mentioned a somewhat distressing scene at the Hungarian capital’s airport. 
 


“It was quite sad to see all those blue-nosed Malév planes lined up with nowhere to go,” he said. “It’s more depressing that Ryanair looks set to become Hungary’s new national carrier.”



While airline collapses have become commonplace, with Spanair and Air Australia also going under during the past few weeks, the loss of flag carriers is a less frequent phenomenon.

For sure, we’ve seen high profile bankruptcies, Swissair and Sabena immediately come to mind. But in both cases the public and private sector worked hard to get their flags back on the fuselages of Boeings and Airbuses.

Both Switzerland and Belgium are good examples of why small countries need their own airlines. With not enough space on the Tarmac for a host of home-grown competition, smaller nations need their own carriers to stimulate trade, boost tourism and, in many cases, assert their sovereignty.


Conventional wisdom suggests that states have no business running airlines. Indeed, the past few decades have seen most major economies sell their flag carriers to other airline groups or list them on the local bourse – often keeping minority stakes for sentimental purposes. The results have been mixed, at best. 
 


While Monocle is all for a free and open market, we also believe there’s a need for governments to offer essential services to their citizens. In the case of countries with small populations or lacking strategic hubs, this also means underwriting the national airline.

Consultants might argue that this is wholly unnecessary as other airlines will swoop down to soak up demand. But there’s considerably more at stake than just ensuring every flight boasts an 80 per cent load factor. On a good day, a national airline is an embassy with wings – transporting culture, cuisine, commerce and goodwill around the world.

Air New Zealand is a flying example of Kiwi resourcefulness and ingenuity. A flag carrier that instils a sense of pride when its tail is spotted on the runway of a far-off land; when it brings home the winning team or when it flies out to evacuate citizens stranded in a conflict or disaster zone. 



In an increasingly globalised world, smart governments recognise the importance of having their flags fluttering on as many routes as possible. It’s a message that certainly hasn’t been lost on Singapore, whose government owns the highly respected Singapore Airlines, or Dubai, home of Emirates. In both cases, these small states have made their airlines part of their national identity and growth strategy.
 


At the moment there’s talk in Finland of selling off state-backed Finnair – either in parts or the whole business. Having spent decades building up a hub strategy that exploits the fast travel times across the top of the world, Finnair might have carved out a unique position in international aviation. But a solution that suits Finland is unlikely to be particularly attractive to outside investors. Is Lufthansa really going to invest in a hub on the far side of the Baltic? Ditto – Air France or KLM. 



As governments around the world continue to tighten their belts, they also have to remember there are some things you simply have to protect: education, national security, banks and infrastructure are all fundamental. An airline to call your own is also useful to get your citizens around the world and bring in visitors to invest and marvel at your achievements.

What happens the next time a group of Hungarian tourists need to be airlifted out of a country that’s just seen it’s government implode? Will Budapest have to put a call through to the offices of Ryanair in Dublin to organise an evacuation? Will the Finnish foreign minister need to call the CEO of Norwegian for some 737s?

Maybe so. What a sad day it will be for their national brand image.

Monocle 24

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