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Malev Shows Why Countries Don’t Need Flag Carriers

While last year saw very little in the way of big airlines failing, this year is already off to a quick start with both Spanair and Malev abruptly halting flights. Malev is a particularly interesting case study, because it showcases why flag carriers simply aren’t necessary for many countries anymore. There’s always someone else to step in.

Malev was born out of World War II, becoming the flag carrier for Hungary in 1946. Though at various points in its history it had designs on longer haul flying, it learned its role in the last decade as nothing more than a regional player. In the end, Malev flew mostly 737s only within Europe along with a couple of near Middle East destinations. It successfully brought people to and from Hungary, and it was well-positioned to carry some connecting traffic through Budapest, but it usually did so at a discount.

Malev Goes Away

As part of oneworld, Malev was able to find a niche as a regional feeder. American had a flight from New York that fed Malev. (That flight was abruptly discontinued as soon as Malev failed.) It could also feed people to BA in London, Iberia in Madrid, and Royal Jordanian in Amman. This strategy sounded promising, but it just didn’t create a profitable business. After a couple of stints with privatization, Hungary nationalized the airline once again in 2010. The courts recently ruled that Malev had to repay illegal subsidies that it had received, and that was the end of the airline.

So Malev is gone, but does anyone care? Sure, the sentimentalists who remember the once proud airline and its long history will lament the death, but travelers? Not so much. Those in Budapest can continue to fly oneworld, but they won’t be able to fly Malev. They’ll need to connect through London or Madrid and they can then get just about anywhere they need. If they want to go east, Qatar and Turkish can take people just about anywhere. I’m guessing Etihad and Emirates will get there eventually. But that doesn’t help for short haul travel, so what about that?

Ryanair was quick to announce a massive new operation which, though not yet agreed upon by the airport operator, is already selling on the website. The new base will have more than 30 routes. Meanwhile, local low cost airline Wizz Air has stepped up its game as well with 10 new routes being added right away.

In other words, shortly after Malev disappeared, all the routes with significant demand were served again. Now, is there someone who wants a full service airline to take him to, say, Rome? Probably, but is there enough demand to profitably fill an airplane? Apparently not, since even Alitalia doesn’t serve that route.

In other words, Malev had a lot of capacity in the market that didn’t need to be there, but as the flag carrier, it felt compelled to have out there. There just isn’t a need for that anymore. If a route is good, someone will serve it. If it’s not, only a flag carrier would serve it because someone decided it had to for political or national pride reasons.

Does this mean all flag carriers should disappear? No. But it means that we don’t need them either. The bigger the flag carrier, the harder it would be to replace all that capacity in such a short time, but it would get replaced eventually. That goes for a big airline like, say, American, too. That’s why I’m not a fan of the bankruptcy process in the US. Airlines should be allowed to fail and then others can step in to fill the void. But that’s another story.

What’s the point to this whole post? While it’s sad to see an airline with a rich history like Malev disappear, it’s probably better for the industry. When the weaker airlines disappear, healthier ones step in to fill the void, and most travelers end up better off.

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