Air Kazakhstan Group sets out on long haul survival strategy

Published: 2/3/2000

Alexander Krinichansky, President of the recently formed Air Kazakhstan Group, has said that an agreement has been reached whereby Russia will offset the cost of the lease of the Baikonur cosmodrome with the provision of aircraft spares and overhaul. The newly consolidated group, created to try and improve the viability of air transport in Kazakhstan, has just 16 operable aircraft from a total of 63. A fleet review is underway and much of it may be written off and sold, subject to the approval of the State Property Committee. Curiously, the fleet is said to have significant value, even in its inoperable state, although no explanation is given as to why this should be so. Most Russian and CIS aircraft are declared to be inoperable on the grounds that they have reached their life limits for both airframes and engines. Krinichansky, faced with debts currently accumulating at a rate of $1.5m pre month, is focusing on firefighting and rationalisation. He concedes that administrative redundancies are possible, but insists that aircrews will be maintained. He remains confident that, over the long term, the company will survive, observing that, politically, bankruptcy would be highly undesirable. The company, in any case, still has to pay back leases secured by state guarantees for the A-310s acquired in November 1999. Krinichansky considers that the lease transaction for the Airbuses, negotiated by his predecessors, was about average for the market at that time. For the time being, the launch of new routes and the acquisition of aircraft, through lease or purchase, seem unlikely. However, the group is discussing a possible alliance with Aeroflot, in which the Kazakh operator would play a secondary role, on the route Alma-Ata-Moscow, using Sheremetyevo airport. Krinichansky argues that domestic carriers should be protected by the state against what he sees as the dominance of foreign operators (notably Iranian, Russian and Ukrainian carriers) on the Kazakhstan market. Air Kazakhstan intends to develop its own charter flights and reports suggest that VIP-Air may merge with the airline. According to Krinichansky, state support and subsidies will be vital in resurrecting the civil aviation industry in Kazakhstan. At the very least, he is hopeful of a new tariff structure that would make air travel more affordable for Kazaks. Even so, his task remains a daunting one, requiring long term vision and the courage of conviction. Associated article: www.concise.org 11th January 2000

Article ID: 1385