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Raising the stakes

Air Astana’s Chief Executive Officer Peter Foster discusses the impact of cheap oil, the regional network strategy and competing with low cost carriers. Keith Mwanalushi reports

This year’s Farnborough International Airshow was a cheerful occasion for Kazakhstan’s national carrier, Air Astana, after winning the Skytrax “Best Airline in Central Asia and India” award for the fifth year running. The airline was also recognised with a Skytrax Certified 4-Star Airline Rating.


The accolade does not come as a surprise. The service levels on board this writer’s flight to and from Kazakhstan a month earlier had been superb and more reminiscent of larger, more prestigious carriers. 


Air Astana launched flight operations in May 2002 and currently operates a network of more than 60 international and domestic routes from hubs in Almaty and Astana. The fleet comprises 30 aircraft that includes 767-300ERs, 757-200s, A320s, A321s and E-190s.


“We have been profitable every year from 2003,” – just a year after operations began – says Peter Foster at the airline’s headquarters in Almaty. “We don’t receive government or shareholder subsidies, guarantees or anything,” he stresses.


Behind the glitz and glamour of award ceremonies and the string of profitable operations, Foster admits that these are rather difficult times. “Things are very hard here,” he says. “As we all know Kazakhstan is an oil and commodity economy and we all know what is happening to oil and commodity prices.”


In July Kazakhstan’s currency, the Tenge, experienced its biggest fall all year, following a four-day drop in crude oil prices.


While the global airline industry, Air Astana included, has benefitted from cheaper fuel over the past year, Foster believes it’s somewhat of a double-edged sword for the airline. “Obviously, investment in the local economy has reduced significantly. Government budget cutbacks have knocked on to the private sector so there has been a significant slowdown in traffic. And of course the currency has affected us very heavily because all of our domestic fares are sold in Kazakh Tenge,” he explains.


The airline has, to a large extent, been able to compensate for a steep drop in revenue, particularly on domestic routes, by further reducing unit cost and substantially increasing international transit traffic between Europe and Asia. 


Notwithstanding that, the first five months of this year haven’t been anywhere near as bad as they might have been. In June, Foster said the airline expected to report a small loss for the first half of the year. The carrier has since posted a loss of $6.6 million for the first half of 2016.


However, Foster is positively of the belief that the airline will maintain its profitability record. “We will be profitable for the year, we make our money in the second half in any case.”


Foster’s optimism is derived mostly from the airline’s international routes, as he feels Air Astana is the strongest airline in the region by a considerable margin. “We have the best operational record and we have an extremely good technical dispatch reliability,” he states. >>

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