Chinese investors plan to acquire 100 Boeing 737 MAXs to launch a Budapest-based airline that will operate long haul flights, particularly to China. Yeah, I’m as confused as you are.
In this post:
What we know so far about Hungary Airlines
An interesting Memorandum of Understanding (MoU) was announced at the China International Supply Chain Expo on Wednesday, November 27, 2024. A signing ceremony took place between Hungary Airlines Chairman Duan Bo and Boeing Commercial Airplanes Group Global Sales VP Gao Sixiang, for the future purchase of up to 100 Boeing 737 MAXs.
Never heard of Hungary Airlines? Well, you’re not alone, and you know about as much as I do. Let me emphasize that details are very limited regarding this potential order. This is just an MoU, and an order hasn’t actually been finalized, so it remains to be seen how many of those 100 orders could be firm rather than options, and also when deliveries would start.
The airline would be based in Hungary but backed by Chinese investors, with the goal of operating passenger service between Europe and China, via the hub in Budapest (BUD). The company’s goal is to become a global carrier, though details beyond that are limited. It would appear that the idea is to largely offer one-stop service between Europe and China, via Budapest.
I can’t really make sense of this airline… at all
Okay, so let me start with what I can make sense of. Relations between China and Hungary are growing increasingly closer, because… well the country’s Prime Minister, Viktor Orbán, is quite a guy, or something. So I can understand in theory why Chinese investors would be interested in increasing air service between the countries, and why they’d want to invest in Hungary.
However, that’s about the extent to which I can make sense of this:
- EU airlines can’t have more than 49% foreign ownership, so who are the Hungarian investors involved here, or how would that 51%+ local stake happen?
- If the goal is to fly between Budapest and China, the 737 MAX doesn’t seem like the right jet; yes, you can make it to the west of China, but that’s about it
- With international demand for travel to and from China recovering so slowly post-pandemic, you’d think there would be plenty of options to increase service to Europe on existing Chinese carriers, if the demand were there
Hungary hasn’t had a national carrier since Malév Hungarian Airlines, which ceased operations in 2012. The airline was forced to cease operations after an EU court made the decision that the airline received unlawful government support, which put the carrier out of business.
Wizz Air is based in Hungary, but is hardly a national carrier, in terms of its network. Instead, it just operates low cost flights primarily across Europe, and has other bases as well. Ryanair also has a substantial presence in Budapest.
Bottom line
Chinese investors want to launch a new Hungary-based airline, which will operate flights between Europe and China with Boeing 737 MAXs. There’s not a whole lot here that makes sense, though I’m curious to see how this evolves.
What do you make of these plans for Hungary Airlines?
Will never materialise.
I think Hungary has a clear goal here—covering Europe first with the 737MAX and then acting as a ‘transfer hub’ for big airlines from the East and the West. Basically, they’re positioning themselves as a connector, which is a pretty practical approach.
I'm not surprised by this at all. It just takes a bit of knowledge about what's going on in world politics, especially behind the scenes.
Key factors here:
- China is building a new world wide empire, called the 'new silk road', and as such it buys itself into all sorts of countries. Particularly African and Asian countries, but also some places in Europe if they get a chance. Serbia used to be...
I'm not surprised by this at all. It just takes a bit of knowledge about what's going on in world politics, especially behind the scenes.
Key factors here:
- China is building a new world wide empire, called the 'new silk road', and as such it buys itself into all sorts of countries. Particularly African and Asian countries, but also some places in Europe if they get a chance. Serbia used to be a prime example, and now Hungary doesn't come as a surprise.
- Hungary is dominated by a populist dictator called Victor Orban. He's as corrupt as it gets in Europe and is hardly on speaking terms with anyone in the rest of the EU anymore. He wasted tons of European funds on his personal hobby projects, like a huge sports temple and train line going nowhere in the village where he grew up. He's also best buddies with Vladimir Putin and expressed his opinion, or rather echoed Putin, that Ukraine and Ukrainians have no right to exist. I bet he'll be best buddies with Trump as he sees to fit right in.
A consequence of all this is that Hungary still is the poorest of the EU countries, by far. It's also increasingly difficult for Hungary to get any EU funds for anything, as EU wants Hungary to meet the lowest EU requirements on a few areas first, like independent media, justice and human rights, and uses withholding money as a way to enforce this. They also used that tactic in Poland when the governing Pis-Party (no, seriously) started acting against European values and against human rights. Now Orban is getting creative and looking for new ways to get funds and money. China is always interested in buying itself in any new country, in search of world domination. It still hurts that Malev is gone on the scale of national pride, so if China wants to operate a new 'Hungarian' airline, then they're welcome. I guess the main purpose will be to fly in Chinese workforce, diplomats and spies as most Chinese overseas infrastructure projects are run and executed by Chinese workers. Because it's not just an airline they're planning, there are more Chinese sponsored projects there.
Usually the terms of these projects seem favorable in the sort run (China pays everything) but are not so favorable in the long run (China owns a stake and controls and operates critical infrastructure like the power plants and airports that they built), so it will be interesting to see how this plays out.
Since the ownership is not to be foreign, you can just be sure that Hungary will allow China to start a 'local' Hungarian company, or several, backed by Chinese money and the Hungarian government to assure any requirements are met. Either that, or Orban will just show the rest of the EU the big finger as he usually does, with Europe not having any real tools weapons to strike back.
The only thing that's surprising is their choice of 737-MAX aircraft. I bet that they'll either announce some 787s soon or that they plan on a fuel stop halfway in for example Jalal-Abad in Kyrgyzstan, which also happens to be Chinese built and owned. I won't even be surprised if they register this as a non-European airline, or have their aircraft registered somewhere outside of Europe, or even just have exclusively wet leased Chinese registered aircraft, to avoid having to fly around due to the closure of Russian air space for European carriers.
tl;dr: Hungary and EU hate each other and China handily (ab)uses the situation to buy influence. It makes complete sense.
What a typical stupid Hungarophob you are. Sickening. Have you ever visited Hungary? Have you ever talked to Hungarian people? Dictatorship? You GFK. Go to newsagents (if you know what that means), and you will see that the majority of newspapers are against Orban. And to say the Hungary is the poorest of the EU countries? You are deranged, and also clearly have the TDS (Trump Derangement Syndrome) as well. Pathetic.
Well done !
interesting，maybe Hungary airlines also target on EU/ME market，not only China.
Around Budapest there are some Chinese businesses but the really visible immigrant businesses are Vietnamese. Serbia and Hungary are aligned similarly and you'll see a lot more Chinese investment in Serbia and perhaps elsewhere in the Balkans, certainly Yugoslavia was aligned much more closely with China than the Eastern Bloc was. Albania had very close ties. Wizz Air is Hungarian, isn't it?
Well done !
I am sorry,itˇs mistake,Well done I meant not for You. I am sorry again .
"EU airlines can’t have more than 49% foreign ownership, so who are the Hungarian investors involved here, or how would that 51%+ local stake happen?"
The 51%+ can belong to any EU Member State, not just Hungary.
Sounds very Air Belgium
I do wonder if the EU would block this deal even if it's only 49% ownership because I doubt any of the Hungarian investors are paying for 51 Maxs
EU can't "block this deal", there's no legal basis for this. The only consequence of not having 51% EU ownership would be not having traffic rights (i.e. being concerned a foreign airline) but I can't see why this would be a problem. If they don't find Hungarian investors, they'll find German, Spanish, Greek, Romanian or whatever investors. Never underestimate how many fools are willing to fall for these stupid Chinese deals.
Hi Ben, you have been diagnosed with the same disease that a majority of Americans including presidents are infected with. It is called CDS ( China Derangement Syndrome) . Cure is simple though. China now allows visa free travel for many European countries. Grab your German passport, head over to every tier-1,2,3,4,5 city in China, head over to xinjiang and blog about what you find there to cure yourself and the followers of this blog...
Hi Ben, you have been diagnosed with the same disease that a majority of Americans including presidents are infected with. It is called CDS ( China Derangement Syndrome) . Cure is simple though. China now allows visa free travel for many European countries. Grab your German passport, head over to every tier-1,2,3,4,5 city in China, head over to xinjiang and blog about what you find there to cure yourself and the followers of this blog from the CDS disease. A good chance to review Chinese airlines and their new COMAC narrow body.
Commie mole. You’re not fooling anyone.
@VJ
Ah yes, I guess I just imagined the Chinese government debt-trapping African and SEA nations, illegally fishing other nations' fishing grounds to destruction, literally stealing Pacific atolls from the nations that actually own them, the list goes on. I can go to many other places in the world to experience a functioning public transit system, good food, friendly people, and stunning natural vistas, while not subjecting myself to the (dis)pleasure of Xi Jingping.
@VJ
Ah yes, I guess I just imagined the Chinese government debt-trapping African and SEA nations, illegally fishing other nations' fishing grounds to destruction, literally stealing Pacific atolls from the nations that actually own them, the list goes on. I can go to many other places in the world to experience a functioning public transit system, good food, friendly people, and stunning natural vistas, while not subjecting myself to the (dis)pleasure of Xi Jingping.
In my humble opinion, VERY SIMPLE:
In awe and anguish about imminent REAL US policy changes towards China, The Chinese are preparing cheap and inconsequential ways to manifest their displeasure at coming US retaliatory measures against them.
The two countries already have numerous commercial agreements over a myriad of products, but most of them are more valuable to China than to America. The Chinese will therefore not cancel them when not pleased at US measures,...
In my humble opinion, VERY SIMPLE:
In awe and anguish about imminent REAL US policy changes towards China, The Chinese are preparing cheap and inconsequential ways to manifest their displeasure at coming US retaliatory measures against them.
The two countries already have numerous commercial agreements over a myriad of products, but most of them are more valuable to China than to America. The Chinese will therefore not cancel them when not pleased at US measures, but they will need to have inconsequential (for them) ways to "retaliate". As usual, "Not losing face" means everything to China.
At the first crisis between the two countries, the new airline will "cancel" those 100 737-Max which they probably never plan to take anyway.
Assuming that the Chinese C-919 should be able to operate, for a few years at least, with a decent safety record (still to be demonstrated but the Chinese are not the Russians and they probably can build slowly and reliably an aircraft with 20+ year-old technology), one would otherwise think that the airline would be a trojan horse to make a "European" airilne buy their C-919, but this is not even mentioned. So, the only reason to order 100 inadequate machines for the type of network they foresee can only be having the ability to exercize pressure in a crisis.
Another country having a panic attack at the coming administration as they realize that the free lunches are over.
Why Hungary ? Probably a combination of them not having anymore a national carrier since the demise of Malev, and the Chinese "investors" having found the right person(s) to bribe to sustain this nonsense.
Elementary my Dear Watson
In my expert opinion, this sounds VERY COMPLEX Sherlock..
An important context is that it is referred to as a "collector airline" in the Hungarian press as in Chinese airlines would bring pax in (overflying Russia) on their own brands and planes and then use this airline to distribute people around Europe. Theoretically, this way they could eliminate the need to open many long-haul non-stop flights (for example from Chinese secondary airports to big European cities). Although, they'd need to open a lot more...
An important context is that it is referred to as a "collector airline" in the Hungarian press as in Chinese airlines would bring pax in (overflying Russia) on their own brands and planes and then use this airline to distribute people around Europe. Theoretically, this way they could eliminate the need to open many long-haul non-stop flights (for example from Chinese secondary airports to big European cities). Although, they'd need to open a lot more BUD-China flights. There are currently 20 weekly flights to many cities and most of them run full in Y and 80% in W/C (Even flights to Ningbo or Xi'An). Since Hungary has a 27% VAT and they can run quick Central-Eastern European tours, there is a huge demand for China-BUD (and they offer splendid prices for BUD-China(-Asia/Oceania) so the few outbound pax can benefit from their presence) and they can stimulate demand even more (even without an airline like this).
If you lease the aircraft as well as the other key assets, you can set up an airline with relatively little capital - and 51% of that small amount is even less. Without any doubt they should be able to find a Hungarian investor for this.
Yet more mysterious are their route and fleet plans …
On the topic of Hungary,
I don't understand why there aren't any US carriers traveling to Budapest, no direct flights from any USA port... It's intersting because Hungary is a safe beautiful eastern European country, beautiful and reasonable cheap hotels and great night life etc. There is seemingly enough business for hundreds of flights a day from all over the globe, but just not for the American public? Seems like a missed opportunity for a...
On the topic of Hungary,
I don't understand why there aren't any US carriers traveling to Budapest, no direct flights from any USA port... It's intersting because Hungary is a safe beautiful eastern European country, beautiful and reasonable cheap hotels and great night life etc. There is seemingly enough business for hundreds of flights a day from all over the globe, but just not for the American public? Seems like a missed opportunity for a US carrier.
I'm wondering if I'm missing something.
The largest segment of Americans visiting Hungary are cruise tourists. While there are enough of them to fill several flights a week, they aren't concentrated in certain cities, many of them come from tertiary US cities. American managed to fill a daily PHL flight with them in pre-COVID summers (they even planned to open a 4x weekly ORD route), they are currently routed through European hubs. (Btw there was also AC Rouge, which flew to...
The largest segment of Americans visiting Hungary are cruise tourists. While there are enough of them to fill several flights a week, they aren't concentrated in certain cities, many of them come from tertiary US cities. American managed to fill a daily PHL flight with them in pre-COVID summers (they even planned to open a 4x weekly ORD route), they are currently routed through European hubs. (Btw there was also AC Rouge, which flew to Toronto and was also carrying mostly cruise tourists.) What I hear is that the US airlines don't have enough planes to "waste" on a BUD route, as they don't like to overly hubs (especially since connecting in Europe to secondary US cities is a more pleasant experience than an International-Domestic transfer in the US). Hungarian outbound travel has very poor yields. LOT survived its JFK route with pilgrimage pax, but on certain days it ran with ~100-150 pax mostly in Y.
Ben, the key thing to understand here is that it's not about the air service.
It's all about increasing Chinese influence through plausible-sounding, yet otherwise pointless endeavors, which also siphon substantial resources from the Hungarian government. There have been numerous Chinese 'investments' in Hungary in the recent decade, though some of these have been a massive fiasco that leave Hungary on the hook for huge costs, since the financing terms are usually pretty unfavorable.
Ben, the key thing to understand here is that it's not about the air service.
It's all about increasing Chinese influence through plausible-sounding, yet otherwise pointless endeavors, which also siphon substantial resources from the Hungarian government. There have been numerous Chinese 'investments' in Hungary in the recent decade, though some of these have been a massive fiasco that leave Hungary on the hook for huge costs, since the financing terms are usually pretty unfavorable.
But the airline part is completely immaterial—next week, it might be a harbor on the Danube or a power plant. It's solely about the money flows and influence over local business.
FWIW, Ryanair and WizzAir are perhaps the closest thing to a true European carrier, with vast, decentralized networks. If only they had a compelling loyalty program, they could actually give a lot of the flag carriers a run for their money.
CCP is using the same tactics across Africa. It’s a scourge.
A lot of their Africa projects are falling apart and being reduced (countries are realizing they can simply not pay them/give up their resources). However, they are also pumping money and infrastructure projects across south and western Asia as well. They're creating a modern day silk road for their own benefit.
The Hungarian owner is most probably a Chinese enterpreneur with Hungarian citizenship held already for many years. And probably the plan is not to fly to China with the max but utilise existing and new flights from China to Budapest and offer connections to Europe. You’ll be surprised when you check how many Chinese cities are connected to Budapest already today.
@Lucky. Here is a link to an English language Hungarian website: https://dailynewshungary.com/new-hungarian-airline-founded-in-beijing/. China is investing a lot of money in Hungary, also building car battery factories, planning to build BYD factory.
I also appreciated your objective article without going into a rant about a PM who has been elected 4 times in a row with absolute majority. The sad thing is, most Americans or even Europeans have no idea about the situation in Hungary,...
@Lucky. Here is a link to an English language Hungarian website: https://dailynewshungary.com/new-hungarian-airline-founded-in-beijing/. China is investing a lot of money in Hungary, also building car battery factories, planning to build BYD factory.
I also appreciated your objective article without going into a rant about a PM who has been elected 4 times in a row with absolute majority. The sad thing is, most Americans or even Europeans have no idea about the situation in Hungary, they are just regurgitating what they hear from the media. Most foreigners have no idea where Hungary is, or that Bucharest is not Budapest.
China operates the Panama Canal. Now they want to operate a European Airline! I am not joking; they are very slyly taking over things. They built a railroad for Djibouti, Djibouti could not pay them back, so China increased their presence there. China is smart, and until we get smart, they will continue to increase their power. 737MAX? maybe they will add extra fuel tanks or use the MAX7 which could barely not reach Hong...
China operates the Panama Canal. Now they want to operate a European Airline! I am not joking; they are very slyly taking over things. They built a railroad for Djibouti, Djibouti could not pay them back, so China increased their presence there. China is smart, and until we get smart, they will continue to increase their power. 737MAX? maybe they will add extra fuel tanks or use the MAX7 which could barely not reach Hong Kong, Beijing, Shanghai etc. Or they have a fuel stop which would be very weird. Even the A321neo could barely barely get to Beijing. And the A321XLR backlog, let's not even start with that
Since when China operated the Panama Canal? Panama operated the Panama Canal, and China has been blocked from doing large scale infrastructure projects in Panama (and a few other Latin American countries) during the last few years. Specially after the reality of the Djibouti (and others) experience with Chinese built infrastructure.
Back to aviation. Reality is: Those 737MAX are unlikely to fly to China. The only way would be with a stop somewhere (Russia?).
Obviously true. And, obviously, one cannot simply “get” smart. Chinese were born that way. They may have small penes, but it’s well compensated in the brain. Culturally, if China can take over, men of the future will brag about their SDE, not BDE.
@Paul Weiss
Actually, there're already some men bragging about their SDE.
Namely TravelinWilly or TravelinPenis.
His name brags about a gentical feature, and based on the stuff he's on to and what he say, I assume that his one is 100% SDE.
Although he's pretty outdated, so not sure about whether can China take over the world.
China operates the Panama Canal(!)
In other news: Lesotho operates the Trans-Siberian Railway and Vanuatu operates the Suez Canal.
I'll take "Things that make you go, 'Hmm'" for $200, Alex.
I totally agree with Ben, this makes almost zero sense. Aside from all the issues mentioned in the article, the selection of the 737-MAX also makes no sense. Why would a startup Chinese-funded airline that intends to promote China-Europe air traffic acquire Boeing aircraft, when the United States and China have increasingly frosty political and trade relations?
China wants to expand its customer list...
I'll take "Things that make you go, 'Hmm'" for $200, Alex.
I totally agree with Ben, this makes almost zero sense. Aside from all the issues mentioned in the article, the selection of the 737-MAX also makes no sense. Why would a startup Chinese-funded airline that intends to promote China-Europe air traffic acquire Boeing aircraft, when the United States and China have increasingly frosty political and trade relations?
China wants to expand its customer list for the indigenously produced Comac C919 aircraft. And if it can't promote its own C919, China would prefer to buy European-made Airbus aircraft over those made by Boeing. The only possible rationale for a China-funded Hungarian airline to choose Boeing 737s over Airbus A32X or Comac C919 aircraft would be if Boeing was willing to sell its MAX planes at dirt-cheap prices.
Fake airline. Just beginning to do fake airline things.
It could be Belt and Road or it could be be the old standby...getting Yuan outside of the control of the ChiComs.
Airlines seem to be a good way to expat/launder money for the Chines.
"Investors" were doing this in Cambodia several years ago.
"Hungary hasn’t had a national carrier since Malév Hungarian Airlines"
"Since then, Hungary has largely been served by foreign airlines, with the biggest carriers in Budapest being Ryanair and Wizzair"
Huh, what? Wizzair is literally based in Budapest, they are not a "foreign airline" by any measure and they are arguably not only Hungary's flag carrier, but also one of their most succesful companies on the European market.
@ Samo -- You're right, I phrased that poorly, so I went ahead and updated that. While Wizz Air is based in Budapest, I still wouldn't consider it to be anything resembling a national carrier for the country.
Wizzair for all intents and purposes is Hungary's flag carrier - they're planes do fly-bys on national holidays, their pilots fly government-owned cargo aircraft ("Hungary Air Cargo") and have operated on behalf of the government on diplomatic missions (e.g. during COVID, evacuations from conflict-zones, etc.).
The government owned cargo aircraft flew its last flight under the wizz aoc today - as of tomorrow it will fly under the aoc of this Hungary Airlines.
Last time I checked, the majority owner of Wizz is Indigo Partners, an American private equity firm. So it is American owned.
@Engel: It's not American owned, if it was, it couldn't operate flights within the EU. While it's true that Indigo Partners is the largest individual shareholder, it's still well below 50%. Any airline with less than 50% EU ownership would be considered a foreign airline and lose traffic rights.
Abu Dhabi Developmental Holding Company
The airline is a joint venture with state-owned Abu Dhabi Developmental Holding Company (ADQ) (formerly, Abu Dhabi Developmental Holding Company, ADDH), which owns 51 percent with Wizz Air Holdings owning the remaining 49 percent.
@bako: Your quote is about Wizz Air Abu Dhabi which is a subsidiary of Wizz Air operating out of AUH.
Mainly for freight, part of 1 belt 1 road strategy