Flying High

2017 started as a successful year for Kazakhstan’s aviation industry. In the first two months of 2017, airlines in Kazakhstan managed to significantly increase revenues by 19% YoY. Though airlines’ incomes also increased as a result of a 9% general increase in fare prices, profits from passenger transportation alone grew by 18%. This is due to air transport surging by 12% in the first two months compared to 2016.

After Russia, Kazakhstan boasts the most developed regional airline services network among CIS countries, and the government has recognized the importance of further developing air transportation as a necessary step toward economic growth, particularly through connecting and integrating the more remote areas of the vast Central Asian country. The government in 2016 allocated KZT979 million to fund nine domestic routes from the major centres of Almaty, Astana, and Karaganda to more remote and more economically sensitive regions such as Kokshetau, Petropavlovsk, Kyzylorda, Urdzhar, and Ust-Kamenogorsk. The most popular route in the country is the one connecting Almaty and Astana, and as of December 2016 four airlines—flag-carrier Air Astana, Qazaq Air, Bek Air, and SCAT Airlines—were operating the route. Only three airlines covered another seven regional destinations and two have flights to 15 smaller destinations. But it is important to ensure that Astana and Almaty are not the only two cities enjoying economic growth. Qazaq Air, an airline subsidiary of national sovereign fund Samruk-Kazyna, was established in 2015 for this exact purpose. On the topic of regional connections, Blair Pollock, CEO of the airline, told TBY: “Many other countries have direct correlations between developed aviation networks and the development of their economies. We have been included in the Nurly Zhol program […] The government thus recognizes the importance of transportation connectivity for the economic and social development of the regions and the economy overall.”

Airlines have had to contend with a shortage of fuel in recent years. An inadequate presence of refineries across the country to process petroleum into aviation fuel has caused carriers to struggle and compete for an adequate amount of fuel. To that end, the country has been heavily investing in improving its three refineries in Shyment, Pavlodar, and Atyrau. In fact, in 1Q2016 alone, local oil processing plants provided 73.9% of total demand for gasoline, including aviation fuel. Kanat Bozumbayev, Minister of Energy, said in March 2017 that between 2017 and 2018 modernization of the refining plants will significantly increase the local production of fuel among other oil-derivatives, and predicted that by 2019 the country will be completely self-dependent on the provision of oil derivatives. Another important area of investment has been airspace management and infrastructure development. As of today, 17 out of 18 airports with either a national or a regional status are cleared for international flights, and 13 have been certified by the International Civil Aviation Organization (ICAO). In 2015, Director General of Airport Management Group Claude Badan announced that KZT167 billion had been allocated as investments for the modernization of the country’s airports. For instance, reconstruction of a runway and passenger terminal at Petropavlovsk airport was completed in December 2016, and this year Astana International Airport underwent a major transformation ahead of Expo, with a brand new terminal being built. Moreover, by 2020 reconstruction works of runways are expected to be completed at the Kostanay and Ust-Kamenogorsk airports. Air Astana, meanwhile, confirmed its position as the leading airline in Central Asia in 2016, by again winning the title of Best Airline in Central Asia and India and Best Foreign Airline by Sheremetyevo Airport. Such accolades, as well as the government’s recognition of the importance of the aviation sector, only reaffirms the bright future of Kazakhstan’s skies and will contribute to the ultimate goal of developing Astana, and the country as a whole, as an aviation hub in the region and beyond.