Politicians still keen to participate (530 words)

Published: 12/20/2000

At a meeting on the 12th of December between the Kazakh government and the management of the state air control company Kazaeronavogatsiya, General Director Serguey Kulnazarov commented that the heavily indebted company was slowly getting control of its debts having accumulated debts of $150m from ordering equipment for the system's upgrade. According to Kulnazorov the state owned entity had now scaled back its activities and had persuaded its suppliers to reduce their contracted deliveries back to a more manageable $88m, striking the balance between the continuation of acceptable service levels and not forcing the company to default on its commitments. In terms of developing its business, the company commented it has had considerable success in persuading carriers to over fly Kazakhstan particularly cargo carriers from Azerbaijan en route for China. The company's main customers however, remain Uzbekistan Airlines, airlines based in Hong Kong and British Airways and loss of any of these customers would be a serious blow to the company. The company did say however, that its largest customers had become more interested in what they were actually paying for and were asking for cost breakdowns, although the company is confident they remain competitive with neighboring countries. Kulnazarov also reported that the company had boosted its revenues to $22m in 2000 compared with $12m in 1999. The equalizing of tariffs for domestic carriers is also an issue for the company, given that their new membership of the ICAO requires them to charge domestic carriers on the same basis as foreigners, which means that the current discount of 50% is unacceptable. The leveling of the charges could however mean considerably higher costs of the domestic sector, although a study by the government's anti monopoly committee of Irtysh-Avia has suggested that the increase would still leave navigation charges as only 2-3% of the airline's costs. The decision has yet to be made finally and there remain domestic political concerns that any addition to the costs of the fragile sector will result on ticket price increases. The government in the form of Vice Premier Yerzhan Utembayev, was however, less than sympathetic to the company's plight and suggested that there was need for a detailed audit of the entity's activities adding that the control of the state company should rest with the government rather than the respective ministries. Another Vice Premier Daniyal Akhmetov has also suggested that the company has over invested given the primary objective of providing transit services. Utembayev did however support the proposal from Kulnazarov that the newly privatized Air Kazakhstan controlled by Kazkommertzbank should repay its debts to the company within 2 years instead of the currently scheduled 6 years. The Minster of Transport, Nalibayev however, said that the bank had originally wanted a ten year repayment schedule and has acted in good faith in reducing the period to 6 years, he also added that the ministry still remained unhappy about the transfer of the government's 50% holding in the airline in trust to the bank and discussions were still taking place to reach agreement. Kazaeronavogatsiya however, is still contemplating action against the airline for an unpaid loan it granted to Air Kazakhstan to prevent the repossession of two A-310s last year.

Article ID: 2256