Emirates Is Hungary For New Fifth Freedom US Flights

As anyone who has been following the airline industry knows, the US and Gulf carriers have been battling over Open Skies for well over a year now. The US carriers argue that the Gulf carriers are subsidized, and therefore shouldn’t be able to compete under a treaty intended to promote free trade and competition.

Meanwhile the Gulf carriers complain that the US airlines are just whiny and have a double standard, given that they’ve benefitted from endless government subsidies as well, and are turning record profits.

Emirates has a flight they operate from Dubai to New York via Milan. This is a fifth freedom flight, meaning they can transport passengers exclusively between New York and Milan. This is the route the other airlines in the market — Alitalia, Delta, and United — have been fighting against, and in the past an Italian court even considered taking away Emirates’ right to operate the route.

Emirates-A380-First-Class-01
Emirates A380 flying between New York and Milan

So while Emirates would love to expand with similar flights, they’re getting opposition from most European countries, given that they’re protective of their own airlines. Well, except one country — Hungary. Hungary is basically welcoming Emirates with open arms, encouraging them to use Budapest as a transatlantic hub.

Hilton-Budapest-View
Budapest, Hungary

Budapest is one of the largest cities in Europe without any transatlantic flights. American used to fly to Budapest, though that flight was discontinued. Furthermore, Hungary’s airline, MALEV, went out of business in 2012.

Per Al Arabiya:

Although no formal announcement has been made, it looks increasingly likely that Dubai’s flag-carrier, Emirates Airline, will soon launch nonstop flights from the Hungarian capital Budapest to America.

Senior transport officials from Hungary and the UAE have voiced support for the so-called fifth-freedom route – an industry term for connecting flights between two foreign countries.

Saif al-Suwaidi, the director general of the UAE’s General Civil Aviation Authority, confirmed this month that the Gulf country has requested access to two fifth-freedom services over Budapest. Without naming the destinations being discussed, Péter Szijjártó, Hungary’s foreign minister, added: “We are prepared to provide this freedom and will conduct the required procedures rapidly with both the Emirates and the European Union.”

In the battle over Open Skies, the argument is always made that the Gulf carriers are simply trying to flood markets with over capacity. That argument can’t really be made here, since they’d be serving a market which no other airline is willing to operate in. I’m sure there will still be plenty of opposition, but it’s tougher to justify complaints in this instance.

On the other hand, though, I’m not sure I totally see the upside for Emirates:

  • Emirates doesn’t have the ability to get any connecting traffic from Budapest, so unless passengers are connecting from Dubai, this will be all origin & destination traffic; contrast that to Emirates in Seattle and Los Angeles (where they partner with Alaska), or in various other US cities (where they partner with JetBlue)
  • If this route is simply meant as a way for Emirates to increase US capacity, I don’t see the advantage of this over their existing routes, given that their US flights are far from full as it is
  • Admittedly Emirates is hoping to pick up some local traffic in Budapest, though it seems that wouldn’t be especially high yielding traffic; if markets like New York to Budapest were profitable, there’s no doubt a US carrier would be operating the route nonstop

JFK-BUD-DXB

My guess is that this really would be more of an ideological route, where Emirates is taking advantage of any opportunity they can to expand their fifth freedom flights to the US. And with how efficiently Emirates operates, it might not be an unprofitable route — when you combine the (presumably low yielding) demand out of Budapest with connecting traffic, they could probably achieve decent load factors.

Bottom line

This situation is noteworthy because Hungary would be one of the few European countries to welcome Emirates with open arms. And frankly there’s not a very good argument against Emirates offering flights between the US and Hungary, at least from the perspective of the two countries. I don’t totally see a huge upside for Emirates, other than further expanding their fifth freedom footprint.

What do you make of Emirates using Budapest as a transatlantic focus city for fifth freedom flights?

(Tip of the hat to Wandering Aramean)

Comments

  1. Business wise it just gives them another avenue into the US. I saw the Anniston Emirates commercial for the 1st time last night and it was interesting and I guess she is getting flack about it but it will drive business to them. They are relatively unknown in the US except for folks on here. The average American has no idea who they are but if Emirates dropped prices a little with a flt to Hungary I’m sure it would be successful . The air carrier world is a little odd now (read greedy & poor service) from my point of view and while not a FF I know how business works and Emirates is in the hunt to grow.It might help to put pressure on US carriers. I saw your alert about cheap flts to Eur this summer Ben thx and nice job

  2. If this goes through then there will be 5 Emirates daily flights from JFK (three non-stop JFK-DXB, one JFK-MXP-DXB, and one JFK-BUD-DXB.) I remember the days when there was only one JFK-DXB EK flight daily and it was almost always full/oversold. Heck back then there was even a JFK-HAM-DXB flight but that was axed. I just doubt EK will have decent loads on the JFK-BUD route but who knows. Hopefully there will be good award availability or hopefully the prices in Y are cheap.

  3. If they would want to get another fifth freedom route I don’t see why they would do it from JFK since they already have the MXP route from there. If they would route it from LAX that would be a huge win as it would give west coast passengers more competition/choices to get to Europe from LAX/SFO

  4. I am quite sure this will not be a “profitable” (whatever that means for EK) route as theres no connecting traffic in BUD at all. If prices are right (read: low enough, as in 500 EUR-ish return), there might be some Eco demand BUD-US, but AA, DL and Malév failed on the JFK route (with the latter providing a sizable network in Europe for connections). There is a reason why the only airlines to fly in and out of BUD to a decent amount of cities are Wizzair and Ryanair…

  5. Wouldn’t it make more sense for EY to set up a Euro hub? They could use their partner airlines for feeder traffic.

  6. DXB-BUD-JFK or even DXB-BUD-LAX/SEA won’t have the yields. A better bet would be to set up shop in Birmingham or Manchester. EK does have UK-US 5th freedom routes and strong route partners in AS and B6 for North American Feed.

  7. Fares BUD-DXB will be quite low probably, as they’ll have hard competition on this route. W6 flies BUD-DWC, and tickets are sometimes just 39 EUR!
    People in that area of Europe are price sensitive and used to fly lowcosts.

    Maybe they also hope that people from small cities in Europe will fly to BUD with lowcosts, and connect there on their own risk to EK (W6 and FR have an extensive network in BUD).

  8. “A very tasteless and classless joke.” Lighten up Francis. Ben made a corny pun.

    It’s like saying I enjoy traveling to Istanbul every Thanksgiving because I like Turkey.

  9. I basically agree with Ben’s conclusion: this is a rather ‘ideological route’.
    Though there are a few facts that might be taken into consideration why it will still be launched:
    1) Urge to grow for Emirates, with the many airplanes they ordered and about to join their fleet (not to mention their not well known margin calculation)
    2) Growth potential of Budapest Airport (last year traffic grew with more than 14% – though it was mainly driven by low cost carriers)
    3) This route is an underserved one as it was pointed out by anna.aero (potentially 275.000 people searched on skyscanner for this route and 12% purchased ticked, which is well above skyscanner average)
    4) Willingness of low cost carriers to collect traffic from surrounding airports for such flights (so that Budapest can act as a hub for Emirates or for the company that would start such a service)

    On the other hand:
    1) This route will be price sensitive
    2) There is already a big competition in the transatlantic market (ok, with a stopover somewhere in Western Europe)
    3) Air Serbia (in Belgrade) is about to launch transatlantic flights – as Etihad partly owns them they have the fund for that
    4) Summer schedule already started, and it is not likely they’d introduce such a flight during wintertime

    As I’m based in Budapest, I’d love to see new services, but this is a very unlikely one.

  10. @Bruno: Emirates started the Budapest-Dubai flights in October 2014…
    So you can already check the prices for this route to see if it as per your guess 🙂

  11. Oh I totally disagree that Emirates is not right on the mark with this. I hate my flag carriers. They have old tired crews with little customer service skills. If you told me I could fly Emirates from SFO to Budapest with a shower I would make that my primary way to get to Europe. I love this capitalist move! But then us frequent fliers don’t mean anything to the industry.

  12. Well, if BUD can be a 5th freedom hub for EK, with new EK routes fr BUD into Asia, n a new subdiary for intra europe flights?

    That may change the game..

  13. If this route happens I will be buying two business class seats ASAP! Screw the greedy American carriers with their lousy lounges & non existent award redemptions.

  14. Air Transat is also already flying from YYZ to BUD and to PRG from YUL and YYZ! OK with very low frequencies and during summer only. But it is not their first season, meaning they believe in the market.
    AC is flying under its Rouge brand from YYZ to BUD, PRG and WAW seasonnaly, with maybe LO for connecting traffic in WAW. So they believe in the market too.
    Furthermore DL is flying JFK-PRG seasonaly with OK as local partner for connecting traffic.
    In addition LO flies from WAW to ORD, JFK and YYZ with feeder traffic at home and at their partner hub in ORD and YYZ.
    So basicaly I think the transatlantic market from Eastern European countries is developping and Canada might be a better guess for EK than the US 😉

  15. Air Transat already flies seasonal BUD-YYZ and AC ROUGE is starting same rout this summer.

Leave a Reply

Your email address will not be published. Required fields are marked *