Air Transportation in the Silk Road Region

I attended the Tourism Development in Central Asia under the Silk Road Project Forum in Astana on 18-19 September organised by Kazakh Tourism National Company JSC and Ministry of Culture and Sports of the Republic of Kazakhstan and supported by the International Air Transport Association (IATA). Significant discussion during the event was about the role of international passenger air transportation in the region and the major factors impacting its development and performance in this part of the world.

Aviation and the potential impact on the local economies

The Regional Vice President Europe at IATA, Rafael Schvartzman, highlighted the importance of the aviation segment as a provider of employment opportunities not only for the segment but the whole supply chain in addition to being a key enabler of a range of economic and social interactions, with one of the most visible of these being the tourism industry. He pointed out that aviation’s footprint impact is not limited to tourism. International trade is also dependent on aviation. Although, according to him in weight or volume terms, air transport only accounts for 0.5% of global trade, in value terms it is almost 35%.

Mr. Schvartzman pointed out that countries such as Kazakhstan, if the right policies are put in place such as favourable regulatory and operating environment, demand growth could increase, possibly as high as 3.6 times the current levels of traffic. He pointed out that the major blueprint for aviation success comes down to some key areas, such as:

  • Removal or reduction of financial barriers that hinder the development of air connectivity, by ensuring that taxes and charges meet international guidelines;
  • Development of masterplans to address long-term infrastructure needs. Adoption of international best-practice to manage short-term infrastructure constraints
  • Implementation of a smarter regulation approach for aviation

Tourism proposition must be improved

Other speakers at the event such as Vice President, Marketing & Sales at Air Astana, Richard Ledger, strongly advocated the need for better marketing strategies for the tourism segment in Central Asia which in turn can facilitate the development of the airline segment. Specifically, he pointed out that in Kazakhstan some of the pain points are around the lack of strong product distribution, poor overseas promotion of the destination as well as ease of visa requirements for tourists which can help boost international arrivals.

Faced with such barriers for operation, the airline launched its own Stopover Program, which allows transit passengers to explore two of the major cities in the country for USD1 per night, including transfers, breakfast, accommodation and a half day tour. The aim of the programme, according to Mr. Ledger, is to provide a branded, internationally recognised vehicle to distribute local content on behalf of local operators, which in turn can increase awareness of Kazakhstan overseas and stimulate subsequent repeat and longer visits. The programme is expected to generate 18,000 room nights in 2018 with an investment of USD360,000 in the promotion of the Stopover initiative.

Open Skies Agreement and restrictions

Several speakers highlighted the need for local government and tourism bodies to abolish restrictions on the operation of charter flights by foreign carriers to such markets as Kazakhstan as it hampers the appeal of this country as a tourism destination. In addition, the lack of a transparent pricing system by airport operators in the country is leading to extortionate charges for the provision of ground services and refuelling of airlines. This in turn is contributing to many international operators leaving the market altogether and ultimately to reducing the competitiveness of the local airline segment. Speakers voiced the opinion for a need to boost the tourism offering by looking into the opportunity to increase bed capacity as well as provide new and affordable accommodation in this part of the world, in addition to attracting international low-cost carriers, which can be help speed up the growth of international arrivals. One of the key areas for development that was highlighted is the Open Skies regime and the need to be extended in Kazakhstan which is expected to bring more foreign airline operators in Central Asia, boost frequency of flights and increase route networks.

For more insights, please contact Nadejda Popova at nadejda.popova@euromonitor.com.