Expert Comments on Kazakhstan's Aviation Industry Issues

Olivier Jankovec, Director of the Airports Council International in Europe (ACI Europe), was a guest at the Green Airports seminar in Almaty. He noted the noticeable progress in Kazakhstan's aviation industry but also pointed out the problems that hinder its development. Orda.kz reports on which ones.

Olivier Jankovec named state regulation a central problem in the aviation industry, specifically in airports. According to Jankovec, the fact that they operate within regulations is a significant drawback for the aviation industry.

Regulation is a rather outdated instrument. The regulatory framework is a legacy of the past. And now it does not allow airports to finance their modernization. This is clearly visible in the very low fees of Kazakhstan airports. They are low even in comparison with neighboring Central Asian countries, not to mention Europe. So low that they do not allow them to recoup their own costs,says Olivier Jankovec.

The director of ACI Europe refers to fees that airports receive from airlines for the right to use the infrastructure. ACI and the International Civil Aviation Organization believe fees should be increased.

This will allow airports to be more financially sustainable, which means it will provide an opportunity to engage in long-term planning. I mean modernization, digitalization, and planned development, Jankovec believes.

A logical question arises – will the cost of air tickets also increase following airport fees? Olivier Jankovec believes that such a sequence is not necessary. If such a damaging effect does occur, it will be short-term. 

The price of a ticket is rather a consequence of competition between airlines. We conducted our own research, where we looked at what would happen if airport fees around the world became zero. And we did not see any correlation between this factor and ticket prices, says the president of ACI Europe.

According to Jankovec, if rates increase, the sequence may be as follows: increase, improvement of the favorable environment at airports, interest from other airlines, and growth of competition. 

The latter factor, he believes, will adjust ticket prices, even if they initially increase.

Ticket prices go up when an airport has insufficient capacity. Because in this case, there are a limited number of players operating in a limited market. The airlines then have power, which they use to inflate prices, explains Olivier Jankovec.

The President of ACI Europe also says each airport should be considered a separate case, considering its needs, rather than simultaneously raising the fees for everyone. 

If the airport needs to improve its capacity, digitalization, reduce its impact on the environment, then the rate needs to be raised. But not for the sake of enrichment, but for the purpose of investment,  the expert believes.

Jankovec also pointed out that another problem is, to some extent, related to government regulation.

It concerns the purchase of Jet A1 standard aviation fuel, which the European Union is gradually requiring to be used. It is not produced in Kazakhstan.

Vice Minister of Transport Talgat Lastayev said at the same seminar that its production is planned to begin in 2028. Delivering Jet A1 to Kazakhstan, as Olivier Jankovec notes, is quite complicated. 

To purchase this fuel, you need to deal with a state platform. And there are difficulties with suppliers and with the availability of the fuel itself. And, as a consequence, difficulties with the price,  Jankovec believes.

According to the expert, there are issues with purchasing Jet A1 fuel in Almaty and Astana. And this is a reason for the Civil Aviation Committee to pay attention to the situation: 

I believe that Kazakhstan needs to completely reboot the aviation fuel procurement system.

According to the President of ACI Europe, they work closely with the government of Kazakhstan so that residents can benefit from this interaction.

Original Author: Igor Ulitin