Expert Shows Way to Escape from AZAL Monopoly

Baku/25.03.21/Turan: "The reason for the high cost of air tickets in AZAL is the presence of demand, the lack of competition, the company's arbitrary disregard of the pricing policy and the unpredictability of the rules of the game." This was stated by economist-expert Natig Jafarli in the release of the Turan program Difficult Question dated March 25, 2021 on the topic Skyrocketing Prices.

The expert said that even if several airlines operate in the country, they work by agreement with AZAL, otherwise they may be excluded from this market. As an example, the economist emphasizes that 12 airlines operate in Georgia, and two more are preparing to sign contracts.

“The Georgian authorities determine the prices for services and tickets in advance. In our country, on the contrary, the company dictates its will to the market,” the expert said.

According to him, AZAL wants to explain the increase in ticket prices by the reduction in the number of flights: “Baku-Istanbul flights are always overcrowded. Experts in the field say that if 70% of tickets are sold in a certain direction, then this line will be considered profitable and may even turn out to be profitable."

The expert adds that the most expensive for the airline is the purchase of aircraft. The state purchases them for AZAL.

In his opinion, fuel and maintenance on the ground and others do not require much funding, nevertheless, AZAL works at a loss.

"I will also say that AZAL was allocated 210 million manat from the state budget in 2018. At the beginning of 2020, 80 million manat of subsidies were issued. In turn, the work of AZAL at a loss still continues. Both ends are 890 manat, and the cost with testing for Covid is 1,000 manat. Before the pandemic, prices were much lower," the expert said.

He said that due to the high price, 1/5 of the passengers who were supposed to fly from Azerbaijan preferred to fly to Turkey via Georgia in 2018-19 due to the cheapness.

Jafarli notes that during the pandemic, airlines around the world operate flights at a discount to attract customers, and in Azerbaijan, AZAL inflates prices and dictates the desired price.

According to the economist, the privatization of the company is also not a way out of the situation, and in this case there is such a threat as the sale of aircraft. In his opinion, the joint participation of public and private companies can be useful here, and the management system as a whole should change.

"The way out of the situation is to liquidate the AZAL monopoly, establish transparent rules of the game, conduct an audit of the company, and determine costs and profits," the expert said.
He added that there are airports in the regions of Azerbaijan, and it is planned to build new ones, so these airports should also begin to function as intended. -05B-