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Qazaq's social service

Martin Rivers speaks to the CEO of Kazakhstan’s government-owned airline, Qazaq Air, about flying above economic turbulence, a popular social mandate and the quest for profitability
 

Looking back, 2015 seems like an unfortunate time to have launched an airline in Kazakhstan, the central Asian nation whose economy relies heavily on commodity earnings.

 

The collapse in oil prices from $115 per barrel in mid-2014 to $30 in early 2016 had a crippling effect on the former Soviet Republic, choking off both domestic spending and foreign investment. While the government responded prudently by floating its currency, a subsequent halving of the value of the Tenge (the local currency) only heaped more pressure on Kazakh workers and businesses.

 

Having launched operations at the height of the crisis, there was little chance that Qazaq Air would enjoy the smooth entry into service its management originally hoped for.

 

However, Chief Executive Officer Blair Pollock is quick to find a silver lining, arguing that headwinds create opportunities for ambitious startups, particularly state-owned ones that have a political mandate to drive long-term development.

 

“We talk about the recession and the bad economic environment, but actually if you’re going to start a business that’s quite a good time to do it,” Pollock tells Low Cost & Regional Airline Business. “In terms of recruiting people, in terms of having access to available capacity…it’s not a bad time to grow a business. When things are booming in Kazakhstan you just can’t get anyone to work for you.”

 

Economic conditions are now stabilising, with oil prices edging up to $55 and the Tenge clawing back 20% of its value since early 2016. Though by no means signalling a sustained recovery, these indicators have convinced many that Kazakhstan is back on its feet.

 

Russia’s return to growth late last year – capping seven consecutive quarters of contraction – gives further cause for optimism. Kazakhstan’s economic prospects are inexorably tied to its northern neighbour. “We’ve definitely seen a pickup,” Pollock insists.

 

“We’re seeing announcements on increased spending from the oil majors in Kazakhstan. With commodity prices recovering we’re seeing investors coming back to town. Financiers are flying to Astana. Of course, if you ask people in the street, it’s still pretty tough. With devaluation, they’re experiencing inflation and static wages. But actually, the big picture in Kazakhstan is encouraging.”

 

Qazaq Air presently deploys three Bombardier Dash 8 Q400 turboprops from its south-eastern base of Almaty – the largest city in Kazakhstan and, until 1997, its capital.

 

The airline’s route network comprises non-stop flights to four domestic points: new capital Astana, Kostanay and Pavlodar in the north; plus, Shymkent in the south. Connecting services also operate through Shymkent to the west of the vast country, linking first with Aktobe and then Atyrau and Orál. As of March, Shymkent further gained a non-stop connection with Astana. >>


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