OREANDA-NEWS. August 12, 2014. What does the country has to undertake that the introduction of open skies policies not only help increase passenger traffic and the number of routes and destinations, but also keep the domestic civil aviation? These and many other issues were discussed at an open meeting held by the International Business Council (IBC) based in Bishkek.

The discussions involved members of the Kyrgyz Parliament, experts from international projects, independent experts, representatives of the public sector, private aviation companies and the business community. The meeting was held with the support of GIZ (German Federal Enterprise for International Cooperation).

First, the participants decided what the term "open skies" means. This term, used in international aviation and once included in the Air Code of the Kyrgyz Republic, implies the ability to control the aviation infrastructure of a country.

The commercial interpretation of "open skies" is associated with large-scale liberalization, when our country can allow almost all carriers to enter its aviation market if they wish to do so, to bring their payload here, sell tickets and carry passengers and cargo to the third and fourth countries.

Early in 2013 the Ministry of Transport and Communications strictly opposed introduction of an open skies policy developed by the Economy Ministry. However, after the document had been revised to reflect the interests of the domestic aviation industry, both ministries agreed that Kyrgyzstan will declare an open skies regime starting from 1 January 2015, and by that time both ministries should amend Kyrgyzstan’s Aviation Code, to include the open skies concept. 

It was decided that the country will be liberalizing the aviation industry step by step, creating conditions for local airlines to work and compete with foreign companies.

Benefits

Economy Minister Temir Sariyev told about the benefits of the open skies. This policy has been introduced in 119 countries, including 18 countries that declared open skies unilaterally.
There are eight freedoms of the air, said Sariyev. Kyrgyzstan now applies the fourth air freedom, which means that a plane that has flown from point A to point B should then fly back to point A. With the fifth freedom, an airline may fly from point A to point B and then fly on to point C.

A study conducted by the expert group of the Economy Ministry has shown the necessity of introduction in Kyrgyzstan of the fifth and sixth air freedoms, set by the International Civil Aviation Organization (ICAO). Under such freedoms, many airlines could run transit flights through Kyrgyzstan. The more transit flights we have, the tougher the competition, the better the quality of services, the lower the prices, and the more air routes we will have.  

It will result in increased payments for ground handling services and therefore more taxes. New jobs will be created. Ticket prices will lower and flight safety will improve.

There is a high possibility that major international airline companies will invest in developing the infrastructure of airports they will use as hubs. The open skies regime will boost tourism development, since new transit flights will increase the number of tourists, who now cannot fly to Kyrgyzstan due to the absence of air communication. 

Besides, the introduction of open skies policy could resolve the problem with dropout of payments due to the withdrawal of the U.S. Transit Center at the Manas International Airport.  

It is easy to declare the open skies policy. “But as soon as airlines begin to study our market, they will refuse to fly through us, because our airports do not comply with international standards. The most important is to attract international airlines so that they fly through Kyrgyzstan," said Sariyev.

If the country introduces open skies, the Government will not interfere in the activities of airlines in setting ticket prices and freight and passenger transportation, the economy minister added.

Let’s join Customs Union first

The Customs Union countries plan to implement the project on Common Eurasian Skies. Kyrgyzstan has officially announced its intention to join the CU and the Eurasian Economic Union, and the introduction of open skies should be agreed with the CU countries. “Will these countries be happy if foreign aircrafts would fly over them?” asked representative of the Ministry of Transport and Communications.

According to the Ministry, over the last two years domestic civil aviation has seen a sharp growth. In 2013, passenger traffic grew 41 percent compared to 2012. New routes have been established, air companies have started to buy modern aircraft, relations with foreign countries have improved, and so we are developing.

Deputy of Parliament Narynbek Moldobayev believes that the open skies regime should be introduced after the country's accession to the CU, otherwise problems may occur.

"We want to join the CU, but they have their own rules. We need to think everything through, so not to change the projects later. Hurrying, we can harm the domestic companies," Moldobayev said.

The MP doubts that Kyrgyzstan is ready to introduce the open skies. “Will we be able to take more passengers at passport control and baggage at reception? Do we have a high-speed refueling complex? We have only one runway, but should have at least two. All this requires money the state budget does not have," Moldobayev concluded.

Hope for investors

“From the perspective of the airport, we welcome any liberalization of the market, because an open skies policy gives us the opportunity to increase the number of airlines that will fly through Kyrgyzstan and arrive in Kyrgyzstan,” said Dair Tokobayev, Deputy Board Chairman of the Manas International Airport JSC (MIA). “We will earn through takeoff and landing of aircrafts, and other services, as we earned with the U.S. Transit Center.”

From a strategic point of view it is important to support national airlines. The income from national companies is only two percent of the total MIA income. “We operate at a loss, providing services to local companies below cost,” he said.

According to Tokobayev, investors want to build a new airport in Osh, without burdening the state budget. In general, the country’s airports are using only four percent of their capacity, in particular Manas uses 17 percent, but the Osh airport is overloaded.

Investors are also willing to invest in reconstruction of the Tamchy airport in Issyk-Kul, which will contribute to the development of tourism. In addition, about \\$200 million will be invested in the reconstruction of the Batken airport in the south of the country.

Eight investors proposed to participate in the creation of an air hub at Manas. “We have to choose the most favorable model not only in financial terms but also in investment attractiveness. A hub could not be built without investment,” Tokobayev concluded.

Taalaibek Okenov, President of the Association of Air Carriers of Kyrgyzstan, believes that introduction of an open skies policy will not open the sky, “because aviation, like any other type of transport, is part of infrastructure. It means that aviation serves the economy of Kyrgyzstan — it is secondary, while the economy lies at the basis of everything.”

The Association is not against open skies but it suggests implementing it gradually, as it was done in Europe and the United States. Europe’s way to liberalization took 30 years until they introduced an open skies, and only within the European Union. 

Kyrgyzstan should wait until strong domestic airlines appear in the market, said the association head.