BBT talks to Peter Foster, CEO of Kazakhstan’s flag carrier, Air Astana about future growth, LCCs and alliances...
What is Air Astana’s strategy forfuture growth?
We’ve exceeded expectations in terms of growth, quality and reputation and what we were hoping to achieve. Looking forward, we see Air Astana’s positioning as the carrier of first choice for all of central Asia. We seek to develop our extended home market to all the neighbouring countries, as well as, of course, routes within Kazakhstan, to feed business between those points and from and to our long-haul network – Europe, India, the Gulf and Asia.
We would like to see a lot more expansion to China, as we see significant potential here. New routes to Singapore could also be possibility in the future, as well as flights to Tokyo.
Within the region, low-cost carriers(LCCs) are important – do you haveany plans to launch an LCC, and are you concerned someone else will?
I believe we are already a LCC. I think there’s a lot of confusion on this subject. There is a difference between LCCs and no-frills carriers – we are not going to have aircraft configured to a 28-inch seat pitch with no food and drink offering, because many of our flights are long-haul. I think it’s been proven beyond reasonable doubt that the concept of long-haul low-cost just doesn’t work. The key is efficiency and we are one of the most efficient airlines in the world – our unit cost is significantly lower than the likes of Easyjet.
What challenges do you have?
We pioneered the whole concept of e-commerce in this region. The problem we have got here is the banking system is quite restricted. Credit cards have a pretty low penetration, most people operate on the basis of debit cards, and banks remain rather reluctant to allow those account holders to use the debit cards for online retail.
What’s your take on the debateabout global distributionsystems?
We very much support the drive to reduce that element of cost, because you’ve got some very large, dominant suppliers operating at very high margins in a market where the ultimate customer is the airline. Airlines currently have limited control over the price and costs of that element of the supply chain. Every time you sell through direct online channels you are saving the GDS transaction cost, so clearly an airline like ours would like to reduce its dependency on distribution booking tools.
You say around 90 per cent of your revenue comes via travelagents – is there a danger of damaging those relationships?
The whole debate with regards to agents is very clear – they will survive and prosper if they can add value, through their corporate relationships and the work they do as sub-contracted travel managers for companies. Travel agents that are just order-takers simply don’t have a future.
You are not a member of an alliance – do you have any plans to join one?
We believe in organic growth, that’s our main aim. We have three very effective codeshares – Turkish Airlines, Asiana and Etihad. They are very effective; the problem is if you join an alliance there is a primary obligation to do codeshares with the airlines in that alliance. We don’t want to be constrained by that limitation, so we believe more in bilateral relationships than alliances.