Airlines budget ‘in name only’

“The prices offered by the budget airlines may seem cheaper at first glance than those of Malév were, but once you have added in all the fees, the airport tax and other cost items, there is little that is ‘budget’ about the seemingly such good-value tickets.
The word ‘budget’ in reference to this class of airlines shouldn’t be taken too literally. Instead of price it mostly just refers to service quality and reliability.”

Ágnes Perlaky has led the Morea travel agency, which specialises in company travel and exotic destinations, since it was established in 1995 and has been the owner for the last 15 of those 17 years. She spoke to The Budapest Times about the situation on the Hungarian market since national airline Malév went bankrupt and the need for a new national carrier.

Has the situation calmed to some extent following the end of Malév?

No, a settled-down situation looks rather different. There is still a lot of movement on the market. The Malév cake is still being divided up. Currently nothing is final yet.

To what extent have flights to Malév destinations been replaced?

Only to a limited extent. For some destinations, mainly within the region, such as Pristina, Sarajevo or even Belgrade, there is still no replacement. I am assuming this will not change all that quickly because the budget airlines are only jumping at the highly profitable routes. The situation is not good for our business because the destinations now left with no replacement were very popular with our company clients.

What other implications does the new situation have for you?

More work! Instead of dealing with one main airline, now we have to deal with a multitude of budget airlines. That takes up a lot of extra time. With Malév we had access to flight information via the uniform Amadeus system, while now we have to work through a large number of websites. For the same fee we have to work a lot more in order to find the best solution for our customers.

Are there at least price advantages for customers, since they now have no choice but to fly with budget airlines?

No, there were noticeable cost benefits at the beginning at most, in particular after Ryanair arrived on the market. That phase, however, is already over. The prices offered by the budget airlines may seem cheaper at first glance than those of Malév were, but once you have added in all the fees, the airport tax and other cost items, there is little that is “budget” about the seemingly such good-value tickets. The word “budget” in reference to this class of airlines shouldn’t be taken too literally. Instead of price it mostly just refers to service quality and reliability.

In other words the new situation is to neither the advantage of travel agencies or customers. That would be two reasons for the creation of a new national carrier.

I think that there will soon be such an airline. The situation is bad for the whole industry, not to mention the considerable direct and indirect economic impact. The situation cannot remain like this. Earlier the arrivals board was so full that not all the flights could be shown at one time. Now there is plenty of room. To anyone who looks it is evident that many flights are missing. That gap simply demands to be filled as soon as possible.

What could a national carrier look like?

It would probably have several owners and considerably less staff than Malév. Various possible owners and set-ups are being discussed. There is no final information yet. I am very much hoping that the state is also dealing with such plans behind closed doors.

Why can the existing WizzAir not become the new national carrier?

A budget airline cannot assume that role. The involvement of the state, to whatever extent, is certainly necessary. We need a proper, reliable national carrier, rather than one that simply picks out a few profitable destinations and, depending on the market situation, either serves or drops them again. We need an airline that systematically takes care of the region, long-term and comprehensively, and develops Budapest as a transport hub strategically. In addition, many customers are unwilling to accept aspects that go with budget airlines, such as more frequent delays, lower reliability and poorer service.

Why was there not immediately a Plan B, the creation of an alternative national airline, when Malév went bankrupt suddenly?

To this day nobody understands that unforgivable failing. For quite some time it was clear that Malév could no longer be saved. The airline had one year of losses after the next. The ending of the story was clear to any halfway intelligent observer, and there was time to think about alternatives and take the necessary precautionary measures. I cannot understand why the state walked straight into the Malév bankruptcy without working out an alternative at the same time. Perhaps those responsible negligently overestimated the role of the budget airlines. Perhaps they were also not clear about how many jobs and how much turnover depend on the existence of a national carrier – not only at Malév directly but also its suppliers and tourism providers. Many employees of Malév had worked there all their lives. That suddenly came to an end because of a decision that wasn’t thought through properly. That is very bitter for many. Incidentally, I myself began my career at Malév at the former ticket office on Vörösmarty tér (square). It was my first workplace. I learned a lot there over two years. At that time the uniforms designed by Pierre Cardin had just been introduced. Being a Malév employee carried high social prestige then.

Do you know anything about whether it has finally dawned on the state that something needs to be done?

No, nothing specific. I have only heard rumours. Meanwhile an exceptional situation is increasingly becoming normality, which all those involved are adjusting to. Now Terminal 1 was even closed and the budget airlines were moved to Terminal 2B. You have to imagine that: the budget airlines are now cavorting at our beautiful new terminal, the central terminal of the Hungarian capital. Something is not right there! That is unheard of at any other European airport but that is the sad Hungarian reality.

What damage will there be in your industry?

I know of some ticket offices that are having to cut jobs because of the Malév bankruptcy. I am anticipating a fall of 20 to 30 per cent on the Hungarian flight tickets market this year. That is far from a welcome prospect after the stagnation of last year.

Will some travel agencies have to shut up shop altogether?

Yes, certainly. Anyone who does not have any reserves and cannot make up for the loss in turnover elsewhere will not survive this year. However, our industry is not only being strapped by the shrinking market volume. The general loss of confidence also has a negative effect on business. More and more customers are booking at increasingly short notice.

As a customer what should one be aware of, given the possibility of travel agencies failing?

Customers should only book with travel agencies that have been on the market for a long time and that have a good reputation or reputable network partners. We are looking more closely at the financial background of our travel agency partners. If more interest had been shown in the figures of the Aeroviva travel agency, which failed last year, then many people would have been spared a nasty surprise. Unfortunately Hungarian consumers are too price-driven. That is what some less serious providers on our market rely on.

As a customer, can one not protect oneself by taking out insurance?

Yes, in theory, but in practice… Until the police have closed a bankruptcy case there is no money. That can drag on for years. So customers usually do not see their money for a long time.

How much money are you owed by Malév?

Luckily not too much, partly because we didn’t have any charter deals with Malév. At the beginning of April we are expecting to learn how much money we will get back. Meanwhile there are well-founded suspicions in the industry that some travel agencies are simply keeping the money of their customers under the pretext of Malév. I would like to stress here: we are not involved in such funny business. We will return in full all money paid by customers that we receive from Malév. We are thinking long-term and have no interest in such short-term revenues that would damage our reputation.

What justifies the existence of travel agencies in the internet age?

We provide personal, individual advice. We can inform our customers, based on our own experiences, about the quality of airlines and hotels, and thereby provide them with greater security and comfort. Customers don’t need to trawl through the massive numbers of hotel ratings online, which are frequently contradictory and in some cases even falsified.

What other grounds are there to use traditional travel agencies?

In addition to reliability there is our flexibility, which is particularly valued in exceptional cases such as the volcano eruption last year or now with the Malév bankruptcy. Customers who have ever tried in such a situation to receive assistance via a call centre really appreciate our efficient help. In those two cases, for example, we worked around the clock to find flexible, pragmatic solutions. We see the internet not as a threat but as providing something extra. We ourselves have two web pages which we keep on developing. In many cases the internet is simply the better alternative but not in all cases.

What possibilities have opened up for travellers as a result of the new situation on the Hungarian market? Will there be new, attractive, direct flights from Budapest?

I cannot yet say anything final about that. The situation hasn’t settled down. Our customers can book all destinations that are served by Budapest as well as Vienna. It is evident, however, that our customers are not keen on flying with budget airlines. We ourselves also prefer national carriers with reliable service and definite flight times, which means fewer risks for everyone. That is why we are eagerly waiting a new national carrier.

It’s all in the name

The Morea travel agency was founded in 1995 as a subsidiary of the Vista travel agency. Its name is the Hungarian translation of Moruroa in French Polynesia. The travel agency was so named because, within Vista, it specialised in exotic destinations and still does today. In 1997 the travel agency was acquired by its director, Ágnes Perlaky. Over the years she also built up business travel, which now accounts for roughly 80 per cent of the company’s turnover. The agency, which started out with two employees, now employs 29 in three offices. In 2010 Morea joined the Lufthansa City Centre Group, an alliance of 600 offices in 80 countries that satisfies the same high-quality standards. In the very first year of its membership, Morea was given the title of “Business Plus” within the group. Morea was also named “Most Active Travel Agency” at the world congress of the group in Athens in 2011. Perlaky herself is a keen traveller, particularly to exotic locations off the beaten track. She is the single mother of two children.