The aviation industry in Kazakhstan and making it better

Travelling across Kazakhstan is a lively affair, to say the least. To visit the family, attend a wedding, goon a business trip or simply for leisure, there are enough reasons for voyaging around the vast, 9th largest country in the world. Fifty six percent of the population live in 86 settlements that have the status of a city. A modern nomad can choose to travel on the road by bus or by car, take a train to his or her destination, or, where the logistics allow it, fly. With such a massive amount of territory to cover, one could easily be pardoned for thinking that the aviation industry is well developed. But even Beken Seidakhmet, the chairman of the Committee of Civil Aviation under the Ministry of Transport and Communications, admits: “We have problems in the aviation industry.” The problems, explored in this editorial, are threefold: outdated equipment, economic sensibility, and lack of human capital. The government, and business, are already on it.

The minister of transportation and communications, Askar Zhumagaliyev, who recently expressed his disappointments at a conference with airline operators, highlighted the obsolete technology and practices inherited from the Soviet Union. “What is this?” he says, “They [the academy of civil aviation] are still using the An-2 to teach? And the simulator of Tu-134! Nobody operates these planes in Kazakhstan anymore, except for the emergency air services!” Indeed, the aviation industry leaves much to be desired, however, there are certain realities to keep in mind when considering this delicate subject.

A few recent events have drawn extra attention to flying in Kazakhstan. Tragic plane crashes of the border officers’ plane and a passenger plane have made the current condition of the air travel industry stand out and the issue of traveler safety and security more relevant. Mr. Zhumagaliyev highlighted the lack of seriousness in considering the subject, “At the previous meeting last year, we said that the airlines will apply strict requirements, which at the time were being developed. These requirements have met obstruction in the newspapers. They wrote that it is too early to introduce these international rules in Kazakhstan, and instead should come in 2025. And what do we have now?”

The flights between cities in Kazakhstan must be over relatively short, regional scale distances. These factors tend to explain the need for regional scale aircraft.

“On the one hand the economics of this type of flying call for simple aircraft of the utmost reliability in order that fares can be kept to an attractively low level. Conversely, the seasoned air traveller has come to expect good-quality cabin conditioning, low noise level and smooth flights unaffected by weather; he does not take kindly to the more rudimentary surroundings generally offered, and these can have a positive deterrent effect on the new travellers who do not know quite what to expect.” (“Guide to Feederline aircraft,” Flight International 1972)

The above excerpt from Flight International, published in 1972, resonates with the situation of today’s aviation industry in Kazakhstan. What is different is this: if anything, the demand for comfort has grown even more as more and more middle-income families appeared willing to spend time over money when travelling across the steppe. The article continues, “To provide the surroundings which will attract more passengers to the short-haul sectors means that pressurised aircraft must be employed, and yet the very complexity of such types makes their use unlikely to be economic.”

The pressurized cabins for smaller aircraft is a concept introduced withYak 40, which itself is a relatively old aircraft. Out of the 1011 planes built by the Saratov aircraft factory between 1967 and 1978, only 65 to 77 remain in service.

Mr. Seidakhmetov has stated that the An-24 and Yak-40 planes will be banned in Kazakhstan starting from November 2013. This will effectively remove planes that do not meet the International Civil Aviation Organization standards but the chairperson of civil aviation committee acknowledged that the deficit of aircrafts continue. The problem is thwarted due to the high duty on aircraft imports. The fact is that until Kazakhstan entered the Customs Union (CU), the duty on imported Western airliners was zero. With the creation of the CU, Russia insisted on the introduction of a fee of 20% for aircraft. Belarus and Kazakhstan are only able to hold on to the old rules until July 1, 2014. “We wanted to extend the privilege to 2019, but so far the results of negotiations with Russia have not yielded positive results,” said Seidakhmetov. “As such, we will be offering to upgrade the fleet through Samruk-Kazyna and Kazakhstan Transport Leasing Company in the current year.”

In March 2013, Chief of the General Staff Colonel General Saken Zhasuzakov discussed the state of safety, how to improve the reliability of the aviation system and ensuring the safety of the state aviation in the country. “Currently, the Air Force of the Armed Forces maintains an effective system of aircraft in quality condition. We are actively updating the fleet: these are the helicopters “Eurocopter” and C-295 aircraft. We train pilots qualitatively. In other words, the country and the army have all the conditions for the full organization of the state aviation system,” said Zhasuzakov.

A KazEngineering insider has revealed that since 2011, talks have been held with American airplane manufacturer Cessna. However, during the process of signing memorandums of mutual understanding for the purchase of the western AN-2 comparable aircraft, the Grand Caravan, Russia decides to modernize the AN-2. Now while the Kansas airplanes performance characteristics are not worse than the Antonov models, they cost more. The Kansas plane costs a little less than 2 million dollars, while the updated Russian analog is 40-50% cheaper and hence make it the obvious choice. The main difference between the planes is only in the level of comfort, which is a subjective factor. Nevertheless, even if we did buy from the Americans, it still would not have been the latest in technology.

Another alternative to importing is of course the production of domestic airplanes. In this regard it makes sense to start with small planes and gradually develop regional medium range planes. Developments in this field have started in the Aktau Special economic zone where the KazEnergoRegion investment company, with the support of the then Mangistau region governor, Baurzhan Muhamedzhanov, are planning to build a manufacturing plant of Slovenian Pipistrel planes. The model has won a best airplane award in the 4-seater category at the European Aviation Expo in 2012.

Kamariya Sagandyk, the head of the investment company “KazEnergoRegion” explained, “Having studied the overall economic situation in Kazakhstan, we have taken the decision to open the main production of light aircraft in the SEZ “Seaport Aktau”. Along with the economic benefits, we have taken into account the favourable geographical position of the city of Aktau with its convenient location on the coast of the Caspian Sea and access to the shores of other countries. We have not yet started the production itself, but today we already have orders for our planes for the next 5 years. The main customers of our aircraft are in countries such as Russia, China, Azerbaijan, and India.” Working at full capacity, the plant will be employing 300 people and make up to 200 planes a year.

To be fair, for five Kazakh airlines operating on the passenger market, 84% of their park consists of Western technology. “Air Astana” and “Scat” companies alone have partially updated their fleet with the acquisition of eight Western aircraft each in 2012. In 2013, these companies will receive additional 11 modern planes. Realistically, Kazakhstan doesn’t need a lot of planes because the population is relatively small. It needs the right planes. Moreover, it needs the right people.

As the Minister of Transport and Communications duly noted, new recruits lack training. Starting with the most important figure in an aircraft, the captain. Not only is it hard to obtain a flying license in Kazakhstan, it is also hard to maintain, as the law requires that every month the license has to be backed up by flight hours. With such a conditionality, very few people even apply to train for piloting. A hard to attain important document required to be a pilot in Kazakhstan could be easily revoked for lack of practice. How that practice is supposed to be achieved if a pilot is not working is another interesting question.

On the ground, specialists also lack training and a comprehensive system of logistics which needs to be improved.

In an attempt to standardize the system of logistics throughout Kazakhstan, the government made a principled decision on the creation of a holding company for local airports. The management company, created by “Samruk-Kazyna” will operate 11 public airports. The holding plans to attract foreign management. At present, according to the chairman of Kazakhstan Competition Protection Agency Bolatbek Kuandykov, over a half of Kazakhstan airports incur losses because of excessive state regulation. “Basic services of airports are qualified as natural monopolies and regulated markets sector that are subject to state regulation of prices. This has caused 12 out of 21 airports to become unprofitable. The excessive regulation of the airports’ activities made most of the airports loss-making.”

To boost competition, and liven up the aviation industry, according to Seidakhmetov, “We are considering the possibility of intraregional connection.” The government recognizes the need for public investments. “It is necessary to develop small aircrafts, to reopen airports. Work is already being done with akimats. Each oblast determines for themselves which airports will be developed. We have received applications for 32 aerodromes from local airlines. We want to prepare a proposal to the budget committee for the development of the flight maintenance and design estimates for the reconstruction or creation of ground runways. Today we have 8 airports with local airline flights, by 2020 there will be 40. Local akimats can subsidize these intraregional flights.”

The problems faced by the aviation industry of Kazakhstan as a whole cannot be met without collective efforts of the people involved. This includes the Ministry of Transport and Communications, private airlines and investors, and most importantly the passengers. The flag of Kazakhstan features a proud eagle gloriously gliding in the clear blue sky. Soon, this could be a representation of a new age in the Kazakhstan’s navigation industry.

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