On Fly Arystan

Today I read a news report that in 2024 there are plans to spin off Fly Arystan from Air Astana and to appoint a representative of the Ministry of Industry and Infrastructure Development to its board of directors, and that these steps are supposed to bring ticket prices down.

Frankly, that is a very questionable claim. Today, an airline's competitiveness is determined by its size. The bigger the company, the cheaper the flights. Many factors contribute to this, and it is a classic example of economies of scale. Fixed costs allocated per passenger and the lower unit cost of buying in larger volumes are the main drivers of cost reduction in aviation. How and by what means Fly Arystan intends to cut its costs remains, for me, a big question.

I remember writing a bewildered post about the creation of Qazaq Air some seven years ago. It is still a loss-making company with an unclear strategy.

In my view, we should not think in terms of lowering ticket prices by administrative methods, which create risks for the industry and invite corruption. We should think in terms of lowering the cost of moving a passenger from point A to point B. That means developing alternative modes of travel. For example, a high-speed highway between Almaty and Astana would make it possible to run passenger services at prices far below the cost of a flight. In 30 years the road has still not been built, but even if it were a toll road, it would still be much cheaper than flying. The same goes for rail: the Talgo project was launched some 15 years ago, and nothing more has been done since. Intercity bus services are not developing at all. So, in my view, Air Astana's main competitors should be KTZ (Kazakhstan Temir Zholy) and Kazavtozhol, not an artificially separated company carved out of Air Astana itself.