FlightGlobal.com
Home
Premium
Archive
Video
Images
Forum
Atlas
Blogs
Jobs
Shop
RSS
Email Newsletters
You are in:
Home
Aviation History
1969
1969 - 0078.PDF
62-63 N1ALEV ... (plus Moscow); 1960, Frankfurt, Paris, Rome; 1961, London; 1962, Helsinki; 1963, Athens, Cairo, Munich; 1964, Milan; 1965, Nicosia, Damascus (plus Dubrovnik, Zagreb, Kiev); 1966, Beirut; 1967, Istanbul; 1968, Luxembourg. During the same period Western carriers have increasingly started to serve Hungary. The position today is that Malev now serves over 31 cities in 26 countries, while 15 foreign airlines operate into Ferihegy, Budapest's airport. During the Maszovlet era the airline operated Li-2s, sub sequently moving on to Il-14s and -18s. The 11-14 fleet built up to a maximum of seven 32-seat aircraft in 1957 but has been steadily reduced, the remaining four now being phased out to allow the type finally to go out of service this year. The 11-18 fleet was gradually built up to a maximum of seven 90/100-seat aircraft in 1967. Four Tu-134s are on order for delivery this year. Fitted as 68/72-seaters, these will gradually displace the 11-18 starting with the western routes. Because of their economy, most of the -18s will probably be retained, very likely as freighters. Hungary's New Economic Mechanism For those who are particularly interested in the move towards economic decentral isation in Eastern Europe, essential reading is the recent paper by the Institute of Economic Affairs on Pricing in Hungary. Based on material provided by Professor Bela Csikos-Nagy, chairman of the Hungarian Board for Materials and Prices, this paper sets out clearly the way the Hungarian economy is being directed. To use Dr Csikos-Nagy's phase, "Hungary is trying to trans form her economic system from a centrally directed one into a controlled market economy." He remarks that "the auto matic financing of the enterprise's losses by the State creates a flagrant contradiction between the aims of the enterprises and the conditions under which economic growth can be optimised . . . with rigid administrative prices, it is impossible to make realistic export calculations or organise production efficiently." The essential feature of the new system is that "obligatory targets are to be abolished . . . consumer prefer ence and profit motive—as it applies to the enterprise, not to the individual—must shape economic performance." In practice this new policy has meant six main changes for State enterprises such as Malev: first, centrally determined output targets are to be dropped, the production pattern to be set instead by negotiation and bargaining between enter prises; second, the rationing of industrial purchases is to be abolished; third, central allocation of investment funds is to be replaced by self-financing accompanied by a new system of profit tax; fourth, incentives will be based on profit maxi misation rather than fulfilment of production targets; fifth, wages and salaries will be mainly linked to enterprise profits; and sixth, prices will be set by the interaction of demand and supply rather than by central edict. These changes are having a remarkable effect on enterprises like Malev. In a sentence, they are being allowed to grow up, switching from complete dependence on central government on all matters of importance to almost complete economical independence. Because of the stress involved in such a revolu tion, the new system is being introduced gradually and care fully. But already the signs are that the new economic mechanism is working well. FLIGHT International, 9 January 1969 What Malev Does At present Malev is moving passengers at the rate of 250,000 a year. Until 1962 traffic on the eastern routes predominated, but since then traffic on the west ern routes has steadily drawn ahead, thanks both to the steady rise in the numlber of points served and in the opening up of Hungary's tourism and trade to western States. Because of the longer average haul, the western routes now record almost double the passenger-kilometres for eastern routes. This balance of Malev business contrasts strikingly with the pattern for Hungarian trade as a whole (about 75 per cent with the eastern bloc and under 25 per cent with the west). The reason for this imbalance is that much of Hungary's traditional export trade is in commodities which run up against western import restrictions. Unusually for a country in Eastern Europe, Hungary has an adverse balance of trade with Western Europe. To help in balancing this trade, and in building up foreign earnings by encouraging tourism, has been one of the major policy objectives of Malev. There is another related reason for the development of western routes. Except for services to USSR, Yugoslavia and Albania, all eastern services are carried out as part of the six-pool operation (jointly with Interflug, LOT, CSA, Tarom and Balkan). Net revenues from the pool are paid in "clearing roubles" which are not freely convertible into other currencies. Other currency difficulties—all arising from the problem of reconciling the complex exchange-rate patterns which have developed in Eastern Europe—also restrain six-pool operations. A third factor is that the introduction of faster, longer-haul equipment has meant that many air services now overfly Budapest. The original six-pool idea was to offer a minimum service of once daily between neighbouring capitals. This resulted in a heavy flow of transit traffic through central points, notably Budapest. Improved direct services axe result ing in a steady loss of this transit traffic. A final factor which has come into effect since the new economic mechanism came into force is that Malev can now retain a certain part of its foreign exchange earnings to meet foreign expenses; previously all foreign exchange had to be remitted to Budapest and permits were required for all foreign expenditure, independently of the foreign exchange incomes produced by Malev. The westward shift has not only been beneficial to Malev from the viewpoint of foreign exchange, but it has also strengthened the airline's economy, for the eastern routes tend to be uneconomic because of their short haul; except for Moscow, all are under 500 miles. A strange feature of the Malev economy is that it finds the western routes more profit able than do its western partners. This is simply because fares are set, through IATA, by reference to prevailing western cost levels, which tend to be well above those experienced by eastern bloc carriers such as Malev. There appear to be three main reasons for this difference in cost level: first, the rela tively low labour costs which prevail in Eastern Europe (exact figures are meaningless, because of exchange rate peculiarities, but the Hungarian average is around half the Western Europe average); secondly, the absurdly low price of Russian aviation fuel (roughly one-third the western price); and, thirdly, the low price of the Russian aircraft in comparison with similar western types. Because of Hungary's heavy involvement in foreign trade— exports account for an amazing 40 per cent of the gross national product—Malev does an unusually heavy trade in INTERNATIONAL TRAFFIC TOTAL TRAFFIC Year 1961 1962 1963 1964 1965 1966 1967 No. of passengers "West" 29,655 36,065 53,016 77,126 95,717 112,684 120,201 "East" 42,834 40,024 31,002 53,941 57,145 71,265 82,829 Passenger-km (x "West" 39,788 59,546 89,598 113,953 133,936 146,553 ,000) "East" 41,066 32,262 54,253 64,710 72,040 85,599 Footnote : "East:" Six-pool area—USSR, Albania and Yugoslavia. "West:" other countries. Year 1949 I960 1965 1966 1967 I968(est) Network (km x 1,000) 3 14 25 28 31 35 Aircraft- km (X million) 0.1 5.1 6.1 6.8 8.3 8.2 Passengers (X 1,000) 25 150 188 225 242 228 Cargo (tons X 1,000) 0.4 1.6 5.2 6.4 7.5 7.4 Total LTKm (X million) — 53 61 73 76 Total capacity ATKm (x million) 9 26 30 38 39 Load factor (%) — 50 49 52 52
Sign up to
Flight Digital Magazine
Flight Print Magazine
Airline Business Magazine
E-newsletters
RSS
Events
