Kazakhstan Aviation Market: Growth Slows & Competition Intensifies As Air Astana Prepares For IPO
Traffic growth in Kazakhstan has slowed significantly due to a sluggish economy and currency depreciation impacting local demand. Passenger traffic in Kazakhstan increased by only 1% in 2016 and the market would have contracted if it were not for a significant increase in transit traffic at flag carrier Air Astana, CAPA Centre for Aviation writes.
Kazakhstan aviation authorities expect another year of anaemic growth in 2017 despite a surge in visitor numbers anticipated for EXPO 2017, which will take place this summer at the capital Astana. The Astana Airport is opening a new international terminal just ahead of EXPO, which will enable Air Astana to pursue further growth in transit traffic in the coming years.
Sixth freedom traffic, which accounted for approximately 10% of total international traffic in Kazakhstan in 2016 compared to only 5% in 2015, could drive a new phase of growth for Air Astana and the Kazakhstan market overall. Proceeds from Air Astana’s planned initial public offering (IPO) could be used to accelerate fleet and network expansion with a focus on transit traffic but the airline will have to overcome relatively challenging market conditions, including intensifying competition from both local and foreign airlines.