Future remains bleak for the air transport sector (430 words)

Published: 8/24/2000

It seems that the struggles of the air transport sector in Kazakhstan continue to worsen. Statements from Anvar Batalov, Head of the Civil Aviation Committee of the Ministry of Transport, suggest that the country may end up with three national carriers instead of its current single flag carrier Air Kazakhstan, a view expounded recently by state-owned carrier Irtysh-Avia. For Oleg Guryev, President of Air Kazakhstan, the situation must appear bleak, although he says that he thinks the break-up of the airline is unlikely and any new national carriers will be formed from new airlines. He is also contending with critical aviation fuel shortages that have led to flight delays and are posing ongoing problems, the airline narrowly missing stopping flights altogether on 11th August. Guryev blames government inaction for the shortages, saying that they are failing to force domestic refineries to produce aviation fuel. He also says that despite undertakings from three Kazak refineries to produce the fuel, he believes that they are not capable of delivering. Answering the accusation from Anvar Batalov that the shortage is attributable to the airline's indebtedness to fuel suppliers, Guryev says that they have small debts to suppliers, but if the airline had the ability to pay cash up front for fuel it probably would provide an incentive to suppliers to improve the supply of fuel. To try and resolve its problems, the airline has been attempting to source from refineries in Russia and Turkmenistan. The quantities however, are small, given the airline's requirement for 170 tonnes a day and require 100% down-payment. The airline says it does have an offer of fuel form a more reliable source in Perm and on better terms, but the cost of transporting the fuel are likely to eliminate the price benefit. The impact of the fuel shortages and the current manner of sourcing is likely to feed through to ticket prices according to Guryev, who says that if costs rise through $300 per tonne then prices will increase, although the rises are likely to be focused on high-volume routes out of the country. Guryev also says that the shortage is causing problems for Almaty Airport, part of the Air Kazakhstan Group, as it is undermining its business as a transit centre, given that airlines are being instructed to carry enough fuel to fly through Almaty without refuelling. In Guryev's view the suppliers of fuel such as Almaty Airport are not being aggressive enough in forcing their case for domestic production.

Article ID: 2022