Transcript Role of Reforms in Aviation Sector in Sustaining Economic

Integrating Central Asia
into the World Economy:
Role of Reforms in Aviation Sector
The Special Case of Tajikistan
Central Asia Regional Economic Cooperation Program
(CAREC)
Washington DC
October 22, 2007
Aviation Sector: Needed Reforms
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a less restrictive aviation policy that
allows competition
a stronger institutional structure by
separating:
• Policy Making from Technical Regulation
and Accident Investigation
• Airline, Airport and Air Traffic Control
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Strengthened Technical Regulation
(ICAO)
What reforms may bring?
Competition ->Productivity ->Growth
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Airport will be more interested in attracting more
international flights
Airport can Attract Investment
Airport will not have to Subsidize the National
Airline
Airport is likely to encourage competition for
national airlines
• Providing ground handling equipment for competing
types of aircraft
• Competitive fuel supply
• Fees and charges are used to improve airport
infrastructure
Status of Reforms in CA

Uzbekistan:
• Airline owns Airports
• Partial Privatization of Airline Planned for 2008
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Tajikistan:
• Airline owns Airport
• Separation of Airline Airport and ATC planned
for 2008
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Kazakhstan and Kyrgyz Rep.
• Airports are virtually Separate
• Both attracting New Investments
• New Private Airlines have Emerged
Increasing International frequency would
bring more benefits to the CA economies
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Direct benefits:
• Marginal increase in demand for fuel
• Landing and navigation fees
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Indirect benefits:
• Expand Markets for Products and
Services: e.g., Consumables, Tourism
Products, hotel, translation,
transportation, catering, visa…
• Taxes and other fees
Tajik Aviation Sector
Background
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Country in Peace and Recovering
Technical Competence in Sector
FSU Legacy is Small
Strong Government Reform Agenda
Tajikistan is trying to increase exposure
to the potential “trade & tourism
sources”
Country
Flights to
Western
Destinations
Istanbul
(per week)
(per week)
Bishkek
10
7
Almaty
37
7
Ashkabad
16
9
Dushanbe
2
2
Tashkent
34
6
(Manas)
Tajik Aviation Sector: Government
Actions
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By the introduction of Turkish
Airlines, the Government has
increased operating flights to the
West;
This will help to Strengthen
Tajikistan's ability to attract foreign
investment and affluent tourists and
Business Travelers.
In airlines business, capacity creates
demand… Tajik example
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Huge demand: rejection rate is 50
percent
Load Factor: 97 percent
80 percent of passengers are
western citizens
50 percent western passengers
traveling to Tajikistan for the first
time
The Benefits for the Tajik Aviation Sector
alone would be significant
Sensitivity analysis of income generation by increasing flight
frequency with Istanbul (thousands of US dollars)
Status-Quo
Two flights/week
New Flights
Three flights /
week
Four flights /
week
Fuel Delivery
408
612
816
Airport
528
792
1,056
Air Traffic Control
31
47
63
Airlines
-
66
133
Services
2,779
4,169
5,559
TOTAL
3,746
5,686
7,626
1,940
3,879
Marginal Increase
The Tajik Government plans to build on this
trend….
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Turkish Airlines is interested in
increasing frequency
Tajikistan Plans to take advantage of
growing interest by internationally
reputable operators: Air Arabia, Jet
Airways and Qatar Airways are
interested in flights to Tajikistan
Aviation sector reform: it brings integration
and economic benefits in medium and long
term; some examples
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Access to Markets: Integration with the World, Investment Trade and
Tourism
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Growth: generally, air services output grow approx 50% faster than
the economy (2003 Survey)
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Reformers:
• Riga - 28 flights a day to hubs, New Zealand – 50 flights to Sydney…
• For comparison: Armenia three flights to Western hubs and four flights to
Moscow a day
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Other examples: Netherlands (output increase by 51 % in routes with
US); Czech Republic, Lebanon,
US liberalization (1970s): fares are estimated to be lower by 24
percent than they would be if market was regulated. Productivity
gains and more accessible service.