Kazakh airlines sell 7.9 million passenger tickets in 2018

For 12 months of 2018, Kazakhstan’s airlines transported a record number of passengers over the past 5 years at 7.9 million fares against 7.4 million a year earlier. Air transportation is leading in terms of growth rates among all types of transport. At the end of 2018, the number of airline passengers increased by 6.9%, while the number of rail and road passengers increased by only 1.7% and 1.3%, respectively.

However, the share of traffic by airlines is still insignificant at 0.03% of the total number of transported passengers.

Currently, there are 4 major airlines operating in Kazakhstan, including Air Astana, SCAT Airlines, Bek Air and Qazaq Air. Air Astana is the industry leader, with a total of 4.2 million people transported in 2017 with an increase of 10.5% on-year. An important factor in the activities of the airline is almost complete parity of domestic flights, which account for 52.4% or 2.2 million people and international traffic for 47.6%, or 2 million people.

In 2017, the share of Air Astana in the domestic market was 51%. The second place was taken by SCAT Airlines with a specific weight of 24%, while Bek Air was the third leader with a market share of 19%.

On the instructions of the President of Kazakhstan N. Nazarbayev, in the first half of 2019 on the basis of Air Astana, the launch of Flyarystan, a Kazakhstani low-cost airline, is planned to be launched by 4 Airbus A320 aircraft with a configuration of 180 economy class seats for domestic flights, and by 2020 their number will increase to 15 units.

According to the company, air tickets will be two times cheaper than the current tariffs in the domestic market. To date, the cheapest tickets on the Almaty-Astana route in one direction are offered by SCAT Airlines at 18.6 thousand tenge. Air Astana on the same route offers tickets at prices ranging from 28.9 thousand to 54.3 thousand tenge.

In the second half of 2019, it will become clear how much the state of the country's main air carrier about a twofold decrease in prices will be true. However, if this happens, Air Astana will fully occupy the niche of cheap air tickets, which in the future may adversely affect market competition and, as a result, affect the pricing of tickets and the subsequent rise in prices for them.

During the first 9 months of 2018, the cost of servicing Air Astana passengers reached its maximum over the past 5 years, reaching 24.2 billion tenge, 3 billion tenge more than a year earlier.

Passenger service is one of the key expenses of the company. Its share in operating expenses was 11.8%. Service costs include airport services, meals, entertainment for passengers during flight, security, and more.

The colossal expenses of the airline in this area are justified by its strategy for customer orientation.

Despite the positive changes both in the company and in the market as a whole, in January-September 2018, the costs of Air Astana increased by 20.9% and amounted to 35.5 billion tenge.

Revenues, in turn, increased by 17.1% year-to-year.

As a result, the net profit of the airline fell by 59.7%, from 10.8 billion to 4.3 billion tenge.

One of the reasons for the decline in profits is an increase in fuel costs. For 9 months of 2018, these expenses reached 60.9 billion tenge against 42.9 billion tenge for the first nine months of 2017.

In addition, the growth in the number of operations with international transportation contributed to the formation of foreign exchange losses. In January-September 2018, these losses reached 4.1 billion tenge, with an increase of 141.2% year-on-year.

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