Air Astana launches new LCC arm – FlyArystan

posted on 12th March 2019

The Kazakhstan and the Central Asian aviation market is expanding fast and will soon have a new player and a dedicated LCC, writes Justin Burns

Air Astana has launched a dedicated low-cost arm – FlyArystan – as it looks to increase traffic into Kazakhstan and tap into the fast-expanding Central Asian market.

The low-cost carrier (LCC) will operate a classic LCC model, following the examples of successful airlines such as easyJet, Indigo, Cebu Pacific, and Air Asia and was started in response to aggressive market pressure from the likes of Pobeda Airlines, Wizz Air and Air Arabia.

Initial fares and destinations will be announced and go on sale this month (March) and the first flight is scheduled to take-off in the second quarter of 2019.

FlyArystan plans to primarily operate domestic flights across Kazakhstan before gradually covering some regional international routes to neighbouring countries with the first services to be started from its Almaty base, although it will eventually operate from multiple bases in the country.
The LCC will start by operating the Airbus A320 aircraft on routes configured with 180 seats with the first four aircraft sourced from sister carrier Air Astana’s existing fleet. The plan is in the first phase of growth to grow FlyArystan’s fleet to 15 aircraft by 2022 and orders have been placed for aircraft with both Boeing and Airbus.

Janar Jailauova, Director of Marketing & Sales, FlyArystan says the launch was made after “much serious thought and internal business planning” and is in response to a rapidly changing local and regional airline business environment.

“It complements the mid to long-term aspirations of Air Astana, and we hope, it will be very welcome to the Kazakhstan travelling public, who will be able to benefit from significantly lower air fares on domestic and regional routes,” he adds: “Its mission is to bring people closer together by providing an affordable and reliable mode of air travel for all citizens, regardless of income, social status or age.”

Region of opportunity

 

The Kazakhstan and Central Asia marketplace represent a significant opportunity as connectivity is still limited across the region.

Jailauova says based on the geography of Kazakhstan, its density of population and the income of its citizens, establishing a low-cost airline is a significant strategic step in the continued development of aviation and domestic tourism in the country. “There are a number of international LCCs operating in Kazakhstan, such as Wizz Air, Air Arabia and FlyDubai. FlyArystan, however, is expected to be the first genuine Central Asian LCC,” he adds.
Competition is hotting up in the marketplace he says, and FlyArystan will have do battle in the LCC sector with BekAir, Scat and Qazaq Air who are among competitors but it also anticipates others to emerge in the following years.

Strategy and vision (Picture 2 Air Astana fleet)

The FlyArystan management team has deliberately been drawn from Air Astana’s senior local managers, whom the airline has been developing for the last 16 years. It will be led by Tim Jordan, a British-Australian national with more than 15 years’ senior LCC management experience at Cebu Pacific and Virgin Blue.

In a competitive industry, the airline is aiming to be distinct and set it apart from competition domestically and regionally and it was why the word ‘Arystan’ was chosen as it means lion.
The lion was picked for the purpose of expressing courage and confidence Jailauova says – due to it being the first LCC based in Eurasia and confident in its abilities and capabilities to implement convenient, low-cost flights in Kazakhstan and the region.
Other reasons are power, strength and victory – as it will provide a safe and high-quality service at affordable prices that will encourage those who have considered flying to be a luxury it is now accessible for everyone – a victory over the stereotype of inaccessibility of traveling across the sky.

The final reason is fairness and protection – as in creating its services for the benefit and needs of the passenger, the airline is on the customers’ side, presenting itself as a reliable companion and travel guide.

Air Astana synergies

The synergies gained from parent carrier Air Astana will no doubt help the development and growth of FlyArystan and the two will work closely.

All maintenance and engineering, safety and operational standards for FlyArystan will be the same as for Air Astana and Jailauova says in time, it expects FlyArystan to provide additional feed traffic to the broader Air Astana international network, although he points out that this will not compromise the LCC fundamentals of FlyArystan operations.
Ground handling services is another area where it can reap benefits and Jailauova says FlyArystan will look to cross utilise services of Air Astana when it is “sensible and cost effective to do so”.

However, he notes that this is likely to vary by location based on the proposed scale of operation of FlyArystan, and as for ramp handlers and baggage handers across its network, this is yet to be finalised but will not be a single handler across all stations.
There are challenges for any new carrier and as many have collapses across the globe due to spiraling costs, notably from fuel prices, FlyArystan is likely to face several headwinds.

“The major limitations and challenges will largely be those faced by the vast majority of airlines across the world currently with airport infrastructure, ongoing availability of pilots and fuel pricing concerns being critical to the success of FlyArystan,” Jailauova says.

Healthy parent

Parent carrier Air Astana is in stable financial health in challenging industry times and has navigated a tough 2018 when fuel prices impacted its business, along with many other airlines.
The carrier reported an unaudited net profit for 2018 of US$5.3 million driven by higher revenues but also affected by a more than 25 per cent increase in fuel prices. Total airline revenue rose by 10 per cent to $840.8 million. Capacity as measured in ASKs rose by five per cent and total passenger numbers by three per cent to 4.3 million.
Transit business via the airline’s Astana and Almaty hubs rose by 48 per cent, and now represents close to 40 per cent of total international traffic.
Air Astana itself operates flights to over 60 domestic and international routes from hubs in Astana and Almaty utilising a fleet of Boeing 767/757, Airbus A320neo and A321neo and Embraer E190 / E190-E2 aircraft.
Peter Foster, President and Chief Executive Officer, Air Astana says: “2018 was a challenging year to due to higher-priced fuel, and pressure on international yields and domestic market share due to competitive capacity increases on key routes.” He says the low-cost unit, FlyArystan is a “great business opportunity on domestic and shorter regional routes”.
Only time will tell if FlyArystan can be a success, but being backed by a prudently run parent carrier in Air Astana is sure to help while Kazakhstan market and Central Asian region as a whole still have much room to grow in terms of connectivity.
The LCC is also ideally located in terms of its geographic position to meet demand from neighbouring countries in the rest of Asia – the world’s fastest growing aviation market.