Air Astana Eyes Preeminence in Central Asia

by Neelam Mathews

 - December 25, 2014, 9:00 AM

An Air Astana Boeing 757 takes off from Amsterdam Schiphol International Airport. (Photo: Flickr: Creative Commons (BY-SA) bymaarten-sr)

As the ruble continues to depreciate, the economy of Russia’s oil rich neighbor Kazakhstan has held firm, as have the fortunes of that country’s market leading airline, Air Astana. Unlike its fellow carriers in the Commonwealth of Independent States (CIS), including Tajikistan, Kyrgyzstan, Uzbekistan, Belarus, Armenia and Azerbaijan, Air Astana is consolidating its domestic and regional footprint. Initiatives include a visa waiver program for ten countries by the government, increased code shares, fleet orders and joint ventures—all expected to propel the carrier in 2015.

“2014 proved to be a superb year,” said Air Astana president Peter Foster. “Our sixth freedom business was up by 25 percent, contracts for spares and ‘C’ checks were renegotiated, bringing in savings, [as did] signing of operating leases for A320s with excellent rates.”

Foster insists that Aeroflot cannot function as a regional carrier due to its eastern locale. “Moscow can’t be the hub for Central Asia, so, we’re it [as] we are in the heart of Central Asia,” he said. “Kazakhstan is not Russia. In Russia what will happen will happen. Already, Kazakhstan is liberalizing its economy and attracting foreign investment.”

Flying a mixed fleet of 30 airplanes, Air Astana expects to make a decision in February on the procurement of 11 new narrowbodies—either Boeing 737 Max 900s or Airbus A321neos— “to replace and expand our fleet,” said Foster. At some point of time, Foster added, “we will look at the Embraer E2…. We are looking at the A321-LR…we are definitely looking at that. It can cover most of Southeast Asia from Astana…It could be a very very good aircraft.”

Partnerships, too, continue to bring in good business. Air Kazakhstan, a new airline expected to start next year using all-economy-configuration Bombardier Q400s,  “could be a code-share partner,” said Foster. Meanwhile, Air Astana has signed a joint venture Etihad Airways on a full cost and revenue sharing on the Astana-Abu Dhabi route.  However, Air Astana has decided not to join a global alliance following a Seabury report it commissioned. “It would be too costly and too restrictive,” said Foster. “We have such a unique footprint in the  region…we do not want a whole lot of airlines asking us for special rates on our routes. An alliance membership is off the table.”

Foster added Air Astana harbors no interest in Etihad’s equity model because it is predicated on getting market reach and building its hub at Abu Dhabi airport. “We are not interested in that; we are driven by creating economic value [for Kazakhstan],” he said. “The agendas are different and we do not need their money.”

Air Astana does need an upgrade to the Almaty Airport, he added. “We are disappointed Almaty hasn’t come out with a plan for expansion,” said Foster, who noted the prospect would improve if Kazakhstan wins its 2022 Winter Olympics bid against China.