AZAL Reduces Tariffs

For the first time in its history, in the summer of this year, Azerbaijan Airlines (AZAL) offered passengers its low-cost airlines, tickets for which are fixed - 99 Euros.

Since August, Embraer-190 planes carry passengers to Antalya, since September - to Istanbul, and from October 25, it will be cheap to fly to Dubai and Moscow (on the Airbus A320). The AZAL has not considered the outcome of its low-cost airlines yet, but as they told Turan in the company, the passengers are happy, the flights are popular, the number of flights can be increased, and the idea is considered of creating a new brand of low cost flights within AZAL.

From August 1, the prices for economy class on airplanes flying on all the main international routes decreased by 20-30%.

Has AZAL become competitive on ticket prices when compared with other companies?

The distance from Baku to Istanbul is 2,218.6 km. On this route AZAL carries passengers for 99 Euros by low-cost aircraft and for 219 Euros by ordinary planes. From Moscow to Istanbul, it is about the same distance – 2,302 km, but on this route the Air Moldova airline transports passengers for 109 Euros, Turkish Airlines offer tickets for 138 Euros, and the low-cost British company Easy Jet offers tickets for 192 euros.

As it can be seen, while the Azerbaijani low-cost planes offer services similar to their European counterparts and even cheaper prices, the AZAL flights by classic aircraft are still more expensive than in Europe. This is despite the fact, that at the Cabinet meeting on July 13 President Ilham Aliyev asked the national airline to make flights to Azerbaijan more attractive for tourists, noting that aircraft for AZAL are purchased by the state and the company uses the services of the Baku Airport named after Heydar Aliyev. So the price of AZAL tickets should be lower than that of private foreign carriers.

The airline still has an opportunity for further reduction in the price of tickets. As the head of the AZAL press service P. Kesamanski said, the prices for low-cost tickets can be reviewed and the number of budgetary flights increased, depending on the needs of passengers. The airline does not intend to abandon the implementation of its usual flights, especially if the flight is 4 hours or more. By 2016 the purchase of new aircraft is not planned.

According to the press service, the airline is working out its own development strategy in the crisis and is very interested in transforming its basic airport into a major passenger hub. AZAL has created favorable conditions for the emergence of the Hungarian low-cost airline Wizz Air in Azerbaijan’s market and looks forward to hearing from Budapest.

In 2014, passenger air transport brought the airlines losses of 17 million AZN, twice less than in the previous year.

The State Statistics Committee told Turan the revenues of the airlines in the past year amounted to 298.6 million AZN, which is 13.8% more than in 2013. The costs of the companies for passenger transportation amounted to 314.6 million AZN, increasing by 5.7%.

In Azerbaijan, passenger traffic is managed by two local airlines – state-run JSC AZAL and LLC Silk Way Business Aviation (member of the group of companies Silk Way Holding).

In 2014, the airlines transported around 1.8 million passengers (+ 7.6%). The share of Silk Way Business Aviation in passenger traffic is 0.4%. The company only performs commercial flights, and therefore, unlike AZAL, it operates at a profit. However, both companies do not publish financial statements. In compliance with Article 5.3 of the Statute, AZAL is obliged to publish the annual financial report no later than 30 April of the following financial year, in accordance with the legislation.

AZAL receives at least 10 million AZN annually from the state budget as subsidies for losses on the route Baku – Nakhchivan – Baku. The ticket price in one direction is defined at the level of 70 AZN, 20 AZN of which is financed from the state budget.

Note that the international airports in Azerbaijan receive aircraft of several foreign airlines, including Turkish Airlines, Aeroflot, Siberia, Fly Dubai, Ukraine International Airlines, Qatar Airways, Air Astana, British Airways, Lufthansa, Belavia and others. --08B-