INSIGHT: Kyrgyzstan’s Avia Traffic Company bucks the trend

Avia Traffic Company With the liberalisation of the local market, the existing pressure on Kyrgyztan’s airlines from Russian carriers, already palpable, will only increase (Andrey Chursin)

Even as its own airlines faced declining passenger traffic numbers, the Kyrgyzstan government surprisingly opened the country’s skies for foreign carriers this year. Remarkably – and against all odds – local private carrier Avia Traffic Company has remained optimistic and is most certainly not about to give ground. Instead it has expanded its owned fleet to six aircraft and is gearing up for the IATA International Operating Safety Audit (IOSA).

January 2019 saw several amendments introduced to the country’s Air Code of Kyrgyzstan allowing foreign airlines to operate fifth-freedom flights to the country. It means they may now carry revenue traffic between Kyrgyzstan and any third nation. At the time, the government justified the decision to introduce the “unilateral Open Sky and fifth-freedom of air” with the expectation that the move will “foster development of civil aviation, boost passenger and freight traffic and improve the ease of travel both for the population of Kyrgyzstan and foreign tourists.”

LOSS AFTER LOSS

Meanwhile, the state of the commercial aviation business in what is one of the poorest of the post-Soviet states remains disconcerting, with Kyrgyz airlines still on Europe’s black list. After an uptick in 2017, their collective operational results continued to slide 8.4 per cent year-on-year to 1.36 million passengers and 2.39 million RPKs last year. This year the downward trend has continued. From January through May the number of passengers collectively served by Kyrgyz carriers plunged by 22.7 per cent over the same months of 2018, to just 416,900 passengers. RPKs dropped by 34.6 per cent.

In the same period, the combined traffic handled by the country’s airports shrank by 2.4 per cent to 3.5 million passengers, along with a proportionate decrease in the number of flights by 2.3 per cent to 31,200. The number of international flights remained largely the same – down by less than 0.1 per cent – whilst domestic flight numbers reduced by 6.5 per cent. Other means of passenger transportation within Kyrgyzstan have been demonstrating growth.

Avia Traffic Company

THE FOUR

There are four airlines approved by the aviation authorities of Kyrgyzstan for passenger transportation: Avia Traffic, Tez Jet, Air Manas and Air KG. Air Kyrgyzstan, the national carrier, left the market after its air operator’s certificate was revoked.

Against this backdrop, Air Manas, which is backed by Turkey’s Pegasus Group, has slammed the brakes on its development plans. The airline had previously hatched schemes to bring its fleet to 10 or 15 Boeing 737NGs in addition to the three it already had. But instead, it has reduced its operations to flying a sole Boeing 737-400 (EX-37402) between the capital Bishkek and Osh, the second largest city in Kyrgyzstan.

Air KG continues to operate the state-owned Tupolev Tu-154M, and has so far not been able to bring in any modern aircraft, despite announcing a desire to do so.

Finally, is the privately owned Tez Jet which, according to the Kyrgyzstan Civil Aviation Agency is run by Alik Askarov, general director and co-founder of Avia Traffic. It operates domestic routes using two Avro RJ85s (registration numbers EX-27003 and EX-27005) produced in 1996 and 1997. Both were acquired in the autumn of 2017.

So this leaves Avia Traffic as the only Kyrgyz carrier capable of flying internationally. In his interview with Russian Aviation Insider‘s sister publication ATO.ru, the airline’s deputy general director Georgy Yeryomenko says that although he doubts that the introduction of fifth-freedom traffic rights will fill Kyrgyz airports with passenger flows, doubtless it will complicate life for the local airlines. “I can’t see any preconditions for opening new flights to Kyrgyzstan from, say, London or Washington. We understand that despite the beauty and uniqueness of our country, the travel industry in Kyrgyzstan is still underdeveloped. To begin with, we need to create the decent infrastructure so that people have a place to come to.

“Take Turkey as an example. Some five years ago it wasn’t a country of choice for our travellers, but now Avia Traffic alone flies to Antalya three times a week. So I don’t believe this idea of boosting flights first and shaping up infrastructure some time later will work out. All aviation professionals realise that the passenger traffic doesn’t just grow at someone’s snap of a finger,” Yeryomenko argues.

When the amendments to the air code were debated by the expert community, Avia Traffic insisted that fifth-freedom traffic rights should not be extended to airlines from Turkey and the CIS countries. Russia heads the list of popular international destinations from all Kyrgyz airports.

GAIN AFTER GAIN

Georgy Yeryomenko is also concerned that, with the liberalisation of the local market, the existing pressure from Russian carriers, already palpable, will only increase. But Avia Traffic Company is not about to concede any ground. Last year it saw its traffic grow by 3.8 per cent to 697,200 passengers, while it operated 5,378 flights, 10.4 per cent more than in 2017. In its 16-year history, the only time when it experienced a slide was in 2014.

Avia Traffic Company

Last year Avia Traffic was accountable for almost 20 per cent of the total passenger numbers handled by Kyrgyz airports and operated 17.2 per cent of all flights. Its share of traffic served by local airlines reached 51.3 per cent. The target for this year has been set at 700,000 passengers.

Yeryomenko assures that Avia Traffic will stay in the black, and that its owners prefer to reinvest profits into business development. Proof of this came in June when the airline added a sixth aircraft to its fleet, a Boeing 737-300 (registration EX-73020), thereby boosting its capacity by 15 per cent to 952 economy-class seats. This year it may also introduce its first B737-400, explaining that it prefers the US-made aircraft over Airbus because they are “less costly and more practical.” Plans for next year include the acquisition of a first Boeing 737NG.

All of the aircraft it flies are fully owned by the airline, as the banking system in Kyrgyzstan does not support lease payment schemes. Meanwhile, if everything goes as planned, Avia Traffic Company expects to win its International Operating Safety Audit (IOSA) certificate this year and reach the one-million-passenger milestone in 2021 or 2022.

“Fifth-freedom or not, we will keep on working. We’re not running away. Instead we’re planning for several years ahead. But we wish that the Kyrgyz authorities would listen more attentively to the airlines that are actually holding the industry together,” Yeryomenko concludes.

By Artyom Korenyako

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