Air Astana is cautiously optimistic of being able to compensate for the loss of flights to Russia as other destinations and markets open up.
With the withdrawal of insurance coverage for commercial flights to, from, and over the Russian Federation, Air Astana had to suspend flights to Russia from 11 March. The airline further stated that it does not expect a solution to this problem in the short term.
We received indications early last week (regarding the insurance issue), that this was on the cards, and formal notice came late on Thursday evening. The Russian market is important for us as historically it has represented around 9% of revenue and profitability“,
Air Astana President and CEO Peter Foster
Air Astana normally operates to Moscow and St. Petersburg from both Almaty and Nur-Sultan, and low cost subsidiary FlyArystan flies to a number of secondary Russian cities.
Foster further stated that there is "no point obsessing over it. We have to concentrate on alternatives, just as we had to when we stopped flights (to Russia) at the start of the pandemic. We are increasing flights to Turkey, the EU and UK, India, the Caucasus and elsewhere. Even China is being slowly to open, albeit to Chengdu rather than Beijing. We have a flexible structure and are used to adapting to changed circumstances".
V-Shaped Event in Kazakhstan
The political troubles in Kazakhstan in early January were a V-shaped event for the airline, however the conflict in Ukraine, a country in which Air Astana has had a strong presence since 2013, is posing multiple challenges, the CEO said. The first of these was the repatriation of Kazakhstan nationals from Ukraine via Katowice in Poland, an operation which Foster personally supervised since he was in Kyiv with a senior colleague on the morning of February 24 when hostilities started.
Air Astana has resumed its twice-weekly Nur-Sultan to London Heathrow service, operated by Airbus A321LR. "However, on the London route we have to do a technical landing at Aktau (on the Caspian Sea) for refueling“, Foster said, as a result of the Russian airspace limitation which requires the airline to operate via the southern route, adding approximately 90 minutes' flying time. "This is probably another argument for taking a look at the A321XLR."
Foster stated that increasing fuel costs may result in additional fuel surcharges, though he noted that the airline is approximately 40% hedged for the whole of 2022, at prices current when the positions were taken in late 2020/early 2021.
Recovering from the pandemic
Kazakhstan's largest airline has recovered from the pandemic quicker than expected. The Air Astana Group recovered from a loss-making 2020 to declare a profit after tax of $36.1 million in 2021. Total airline revenue increased by 92% to $756 million. It carried a total of 6.6 million passengers, an increase of 79%, the highest in its history. Air Astana carried 3.5 million passengers whilst its low-cost subsidiary FlyArystan carried 3.1 million passengers. Foster stated that the group "recovered from the effects of the global pandemic far quicker than expected“.
"We had three major successes in 2021. Kazakhstan is currently the fastest-growing domestic market in the world“.
Air Astana President and CEO Peter Foster
Much of this was driven by FlyArystan, which will celebrate its 2nd birthday on May 1, and presently operates ten Airbus A320s, with orders for an extra seven aircraft in 2022 and 2023. “Yields on regional international routes were strong, driven by pent-up demand and limited supply, and the new 'lifestyle' routes have exceeded all expectations“, he said.
During the last 18 months, the Air Astana Group has started flying to The Maldives, Colombo, Goa, Phuket, Montenegro, Samarkand, Hurgada, Batumi, and Kutaisi. It has significantly increased flights to Dubai and the Turkish Riviera, and expects to start flying to Heraklion in Greece this summer.
Looking forward, Foster stated “2022 has thrown up new and early challenges. I can´t speculate too much as circumstances are complex, though we have high expectations, for example, for a strong summer to Europe“.