Airlines Could Quit Kazakstan

Sunday, 20 November, 2005

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IWPR Central Asia

Fears are mounting that international airlines could pull out of Kazakstan following a controversial government decision to force them to fly to the new capital Astana.

President Nursultan Nazarbayev has ruled that starting from September 1 this year, all foreign flights must move from Almaty, the old capital and still the country’s business and tourist centre, and base themselves instead in Astana, some 1,500 kilometres to the northwest. They will still be able to fly onwards to Almaty, but direct international flights going there will stop.

The ruling is part of Nazarbaev’s campaign to force businessmen and politicians to divert their activities from the old capital – which many of them clearly prefer – to the new one.

Tourist companies are particularly outraged and have appealed directly to Nazarbaev to change his mind, warning that the decision to move flights represents “a serious threat to the development of tourism”.

“There is a real possibility that these large international airlines, if they lose their profits from flights to Almaty, will end their flights to Kazakstan altogether,” said Rashida Shaikenova, acting director of the Kazakstan Tourist Association.

About 60 per cent of the country’s tourist firms are located in Almaty, a 19th century city nesting at the foot of spectacular mountains, while its successor is largely a new creation located in the middle of the steppe.

The association worries that airlines currently flying to Kazakstan will simply take their business to neighbouring Uzbekistan or Kyrgyzstan. Both Tashkent and Bishkek are closer to Almaty than Astana is, and offer cheaper airport services. Planes transiting Astana have to pay 8,000 US dollars for services, while in Tashkent the transit fee is just 3,000 dollars.

The cost of routing planes through the new capital and then on to Almaty, thousands of kms away, would double the current price of a ticket to Kazakstan, the association claims, and could ultimately cost the country 90 million dollars a year.

Members of Kazakstan’s business community are also concerned about the impending change. They say the stop in Astana would greatly increase the cost of shipping goods by air, and warn that this could put many smaller firms out of business.

Viktor Yambayev, president of the Almaty Business Association, said that instead of restricting flights to Astana, all the country’s 14 airports should be developed. “We must open the skies to foreign carriers, so that residents of any region can fly wherever they like from their town,” he said.

Nazarbaev decided in 1997 to make Astana the country’s capital, quickly relocating civil servants and parliamentary deputies to a city that, as Akmolinsk and before that Tselinograd, was the centre of the Soviets’ disastrous “virgin lands” project.

Foreign embassies and many international organisations have been slow to make the move. Almaty, with a population of 1.3 million, remains the republic’s largest and for many people the most important city.

“The president, who has staked a great deal on developing [the political image of the new] capital, is pressuring the economy and the air transport sector into moving to the capital,” said economist Piotr Svoik. “There are no economic grounds here. It is a purely political decision.

“It’s fair to say it is a foolish and harmful decision for everyone, including the president who’s insisting on it.”

Kazakstan is well served by numerous western airlines, including British Airways, KLM and Lufthansa, as well as those from former Soviet countries. All fly internationally to Almaty, with the exception of Russia’s Transaero and the Kazak state carrier Air Astana.

The airlines have so far had little to say on the upcoming changes and are currently weighing their options, though rumours of possible exits are making the rounds.

Lufthansa has already reduced its Frankfurt-Almaty service from seven to five times a week. A proposal to add an extra flight from Frankfurt to Astana while keeping its existing Almaty route has reportedly been rejected by the transport ministry.

A press release from Lufthansa’s office in Almaty said the authorities were behaving in a protectionist manner, “Artificial barriers to market development are being created. It is market development that brings profitability, and not solutions imposed by force to the detriment of business.”

Staff at Lufthansa in Almaty refused to comment on their future plans for Kazakstan, as did those at KLM and British Airways, which said it had yet to be officially notified of the change.

Economist Tulegen Askarov is pessimistic about the future of Kazakstan’s air links with the outside world, saying the airlines will have little choice but to leave. He described the decision to force them to move airports as “illogical”.

“I think that only one or two airlines will remain, and the rest will move to Tashkent or Bishkek,” said Askarov. “They have been preparing for this for a long time. And this is not even because our government decided to move airlines to Astana, but because fuel costs more here than in neighbouring countries.”

Despite such concerns, the government remains confident that international airlines will eventually comply with the new rules.

“No one is going anywhere,” said deputy transport minister Yury Lavrienko. “No one is going to create a situation where they have to pack up and go. On the contrary, we are creating conditions which will attract airlines to Kazakstan.”

Lavrienko told IWPR that losses from the move would be minimal, though he was unable to estimate the amount.

The construction of a new airport at Astana provided the impetus for the decision. At the opening ceremony on February 2, Nazarbaev said he hoped that “the world’s airlines would make [Astana airport] a transit point between Europe and the Far East, southeast Asia, and the Middle East”.

The capacity of the grandiose new terminal far exceeds the demands of this middle-sized city of half a million residents.

One airline has wholeheartedly welcomed the changes – Air Astana, which has been put in charge of running the airport. The state carrier was set up in 2001 with the Kazak government owning a controlling 51 per cent, and Britain’s BAE Systems the rest.

Since the bankruptcy last year of Air Kazakstan, the previous national carrier, Air Astana has been the only domestic airline working internationally, flying on 21 international and 17 internal routes.

“Air Astana welcomes the move of international flights to Astana, as the new international terminal meets all the demands of a major international hub,” the airline said in a press release. “As the national airline, we support the policy of Kazakstan’s government to have a fully-functioning international airport in the republic’s capital.”

Alim Bekenov is the pseudonym of an IWPR correspondent in Astana.