Routes Silk Road Speaker Series

Q&A with Andras Bognar, Senior Manager at ICF SH&E, who shares his perspective on the region’s aviation landscape. Bognar will speak in the Routes Silk Road Strategy Summit, Session 4: Airline and Airport Trends Across the Region – Where is the Market Growth?

1. How has the aviation landscape in the region evolved over the past ten years?

Reliable statistics are hard to come by. ACI shows incomplete data, but shows dynamic growth after 2000, reaching approximately an 18 percent compound annual growth rate between 2003 and 2013 within the region.

Turkey is and has been by far the largest market, making up approximately ¾ of the traffic. This is expected, since Turkey has the biggest population and the strongest economy.

2. How do you think the Routes Silk Road Event benefits the region?

In the past, air service marketing was typically not done by airports in the CIS region. Airports were typically reactive in this process.

Air service marketing has been introduced during the last decade, and by now, the best run airports have individuals or teams who perform this task at a high professional level. The Routes events contribute to this process by bringing airports and airlines together following industry best practices.

3. What is the future for the aviation landscape in the region?

In the long term, we expect a continuing growth of traffic fuelled by growing economies, improving the efficiency of airlines and air transport infrastructure, and gradual liberalisation.

4. How have carriers such as Aeroflot and Transaero become leading carriers within the region?

Aeroflot retained most of the international designations after the Soviet Union, and started rebuilding itself on the profitability of these routes, with a generally cautious expansion strategy. Transaero on the other hand took advantage of the remaining unused international designations and targeted the leisure-orientated routes. Eventually they moved into more business-orientated routes and started developing their domestic network as well.  Both carriers were well positioned to benefit from the rapid expansion of the CIS market after 2000.

5.How has Tbilisi/Georgia adapted to accommodate the ever-changing aviation landscape?

Gradual expansion of capacity allowances under bilateral agreements, modernisation of the aviation infrastructure, privatisation of the elements of the aviation value chain and diversification of aviation away from heavy dependence on the CIS.

6. What are the potential opportunities for new routes within the region?

  • Summer tourist destinations – e.g. Batumi – the climate is more moderate than southern Turkish destinations, but hotel capacity is still limited
  • Skiing destinations – e.g. Gudauri – infrastructure is still limited, but Georgia has all-year-round skiing opportunities!
  • Generally, the propensity to fly in the region is still low, and aviation is practical mode of transport for longer distances. Therefore, regional flights and flights connecting major population centres are expected to develop.
  • Initially, hub-and-spoke networks are more likely to succeed, because traffic volumes are not big enough to sustain many direct services.

7. Which markets are expanding within the region and why?

In terms of absolute traffic, these are the top performers between 2013 and 2015:

Domestic Turkey – fast economic growth, LCC growth, dynamic tourism sector

International Turkey – same as above

CIS countries to and from Russia and Turkey – economic development

 8. What’s the best thing about the region?

The potential for rapid growth if industry best practice is introduced

9. What are the most popular destinations in the region?

Not counting Turkey, these markets are still undeveloped. The most popular destinations therefore are the capitals of the countries such as Tehran, Ashgabat, Baku, Baghdad, and Tashkent.

10. Any other industry insights, comments or opinions you would like to share?

The weakening Russian Ruble turned many Russian tourists to domestic destinations, although domestic tourism destinations are not so well-developed in Russia. Therefore, if the Ruble ever regains its strength, Russian tourists can be expected to return to previous destinations.