Air Astana A320 at Nursultan Nazarbayev International Airport

Imagine knowing which aviation market would be the next big thing. Markets like the deregulation of the US aviation industry in 1978, the rise of low-cost carriers in Europe, or perhaps the ignition of Vietnam’s domestic industry. Those gold rush moments may have passed, but there is one untapped vein bubbling with the potential left: Central Asia.

“Despite substantial growth in the past decade, the aviation market in the region is still not realizing its full potential.”Market Development and Aviation Liberalization in Central Asia published in 2018. 

What is the Central Asian region?

Five countries make up the majority of Central Asia, sandwiched between Russia, India, China, and Iran. They are the colloquially known as the stans, Uzbekistan, Kazakhstan, Turkmenistan, Tajikistan, and Kyrgyzstan. But you would be mistaken to think these are backwater forgotten regions of the world and not bustling, diverse economies on the verge of significant international attention.

Map highlighting the main countries that make up Central Asia. While Afghanistan is in the region, it is also simultaneously part of the Middle-East.

These five countries represent aviation’s next playground as the region’s unique geopolitics, investment, and geography make it perfect for aero transport.

Why is Central Asia best suited for aviation?

There are a few simple reasons why the landscape of Central Asia lends itself well to being an aviation hub:

Geographical

Many of the countries in this region are vast and have dispersed populations, with staggering distances between regional centers. Take, for example, the trip from Kazakhstan’s city of Astana to Almaty, 21 and a half hours by car or two hours by plane. This is more than the distance between Melbourne and Brisbane, or London to Berlin.

Speaking of far-flung destinations, Central Asia finds itself in a better position between West and East than the Middle-East. Those wishing to fly from South East Asia to Europe could potentially fly through Central Asia as the region transforms itself as the perfect far-flung hub. Some airlines have already capitalized on it, such as Turkmenistan Airlines running lucrative routes from Birmingham to Bangkok or Bejing.

Turkmenistan Airlines route map

Turkmenistan Airlines route map.

Lack of fast rail or connected waterways

Unlike the first world countries mentioned above, there is no high-speed railway line or a viable alternative to air travel. Many regions are surrounded by mountains or lakes, preventing traditional ground-based transport. And all five countries are completely land-locked with no access to any oceans, ruling out any sea transport. Some rail networks criss-cross the land, but they were built in the last century and can only accommodate older locomotives.

Multiple countries

Another bonus is that there are multiple countries in the region. Other countries may be bigger than the area combined, but they have a government that dictates which areas receive aviation priority (such as Australia, who pushes international travel to the east coast).

In Central Asia, the five countries compete in the same aviation space, with each attempting to draw international travel to their respective flagship international airports. This means that there is five times more focus and funding going to developing the industry in this area, as each country competes for a piece of the global aviation market.

Competitive aviation marketplace

Just how competitive is the region? According to the CAPA – Center for Aviation database, there is almost one airline for every airport (sixty airlines for sixty-three airports). In fact, on most international routes alone, passengers are spoilt for choice between airlines. More competition means that the aviation landscape is more developed, and aviation support services exist. It also means there is a healthy market for newcomers to enter and could be very lucrative indeed for the right international partner. Kazakhstan has moved ahead in this race, partnering up with BAE Systems to provide some infrastructure for local fleets, fueling the market growth in this area.

These airlines mentioned above are not running old-fashioned planes either, but everything from the Boeing 787 Dreamliners (with direct routes to London) to Airbus A320neo workhorses.

Ambitious Airlines. The example of Air Astana

Since beginning commercial flights in 2002, Air Astana, the flag carrier of Kazakhstan, has grown steadily and has successfully adapted its strategy to market realities.

“Initially we relied on a good competitive domestic market, but this changed in 2011, when we implemented our ‘extended home market’ strategy to access underserved ‘near abroad’ markets in Central Asia, southern Russia, western China and the Caucasus – for example Dushanbe [Tajikistan] and Urumqi [China’s Xinjiang province],” explains Richard Ledger, Air Astana’s vice president marketing and sales to BusinessTraveller in 2017.

Air Astana is careful though, to not compete directly against the major legacy carriers on popular long-haul routes. « “We’re strategising to steer clear of the competition,” Ledger continues, “so we look for large, underserved markets such as St Petersburg that have real potential. »

What market opportunities exist in Central Asia?

“Kazakhstan sits at the crossroads of East and West. And with double-digit growth in air traffic demand across the whole of Central Asia and the Caucasus, it is an emerging success story—a Silk Road in the Sky. But turning the long-term potential of the region into reality requires urgent attention to safety and the provision of cost-efficient airport infrastructure,” said Tony Tyler, IATA’s Director General and CEO back in 2012. 

Eight years on, how has the region fared?

There has been substantial growth, with numbers in the more prominent countries doubling year on year. Airlines have been able to reinvest their capital into new aircraft like the Boeing Dreamliner, facilitating longer routes and some operated coast-to-coast Eurasian trips.

According to Routes Online, there were 5.70 million passenger seats in 2005, and now 15.2 million seats in 2014. This is a 166% increase over ten years from 2005 to the start of 2015.

There are still some teething problems with the liberalization of the marketplace. Because the region is historically tied to Russia and its authority system, there is still some hesitation to fully embrace the free-market aviation model seen in the West (particularly by Uzbekistan). This does not mean that there are no opportunities, only that there are more challenges to entering into this lucrative market.

“World aviation passenger traffic will double by 2037, and there will be an expected shift of the global economic axis from west to east. Consequently, passenger traffic in central Asian countries will grow significantly” – IATA forecast in 2019.

How has COVID-19 affected Central Asia’s aviation market?

We can’t ignore that 2020 has been a year unlike any other, and not mentioning it in this article would be amiss.

The region was rocked hard by the coronavirus, with passenger numbers falling anywhere from 90% to 100%. But the signs of a return to normality are starting to show, with both Kazakhstan and Uzbekistan restarting domestic operations. Borders and other restrictions may still be in effect, but thanks to the large geographical size of these countries, there is enough of a domestic local market to maintain some semblance of normality.

In an in-house interview at IATA with Central Asia, expert Funda Calisir highlighted the number one priority of aviation in this sector.

“After this Covid-19 crisis, with revenues having dropped to historically low levels, passenger confidence will represent one of the most important stimulating factors for demand, and this can only be achieved with strong safety numbers. “

For firms looking to enter this new market, understanding the desire for safety (perhaps from an internationally recognized authority) will make massive inroads with the local populace. Showcasing international expertise or partners will restore confidence in the brand and build trust (especially with a new market entrant).

Eways Aviation is an international aviation supplier working with frontline airlines worldwide during the COVID-19 crisis. From AOG services to biosecurity supplies, Eways can deliver with its global network.  Give us a call today to build customer confidence and get back to doing what you do best – connecting customers around the world.