Expert: Planned Air Astana, FlyArystan separation to boost competition

The planned separation of Kazakhstan’s first low-cost airline FlyArystan from its mother company Air Astana is a logical outcome of the former’s success, according to Aydar Kashkarbayev, the managing director of the Almaty Consulting Group law firm.

Kashkarbayev, a former lawyer with Air Astana, says FlyArystan has exceeded all “optimistic expectations” because low-budget flights are in great demand in Kazakhstan given the long distances between cities.

Its operation as part of Air Astana was from the outset seen as a temporary situation, he told Exclusive.kz in an interview.

“FlyArystan has been picking up the pace quite fast and it has started ‘to steal’ passengers from the mother airline, especially on internal flights. Naturally, it has been generating good revenues for Air Astana.

“When you create strong competition with your own hands, eventually it will start asking itself: do I need the mother company at all?” Kashkarbayev said.

He said that FlyArystan’s further success as part of Air Astana could begin to undermine the latter’s own brand.

Kashkarbayev dismissed speculation that FlyArystan’s separation from Air Astana would lead to a rise in prices on internal flights.

“Of course, there will be no price hike. Moreover, after the separation, the low-cost airline will become more dynamic and will have more economic freedom. Its main task will be to generate more profit, which means it will develop new routes,” he said.

He added that the separation should have a good impact on flight safety at both airlines, because each will have its own systems looking after a smaller number of aircraft.

Kashkarbayev also said that after separating from FlyArystan, Air Astana was likely to lose some of its share of the domestic air transport market, which currently stands at 80 percent.

“It might still maintain its dominant position, but not at the current level, because it will be in a more competitive environment,” he said.  

Regarding Air Astana’s IPO plans, Kashkarbayev said that it would be a good step in terms of attracting new investors.

“In addition, IPO is the best way to reduce the state share in the business. Let private investors, institutions, funds and so on come,” he added.

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