The Aviation in Armenia Needs State Sponsorship
02.06.2016
12:00
The field of aviation needs clarification of legislative regulations, state sponsorship and stricter control over the national airlines to avoid dumping things on the market, as well as ensuring equal conditions for all the airlines. Representatives of Air Transport Policy Sub-Committee of the Public Council drew attention to these problems during the press conference on "Problems of Aviation Sector in Armenia: is having a national airline an imperative?” at Media Center on June 2.

The speakers emphasized the importance of activity of the national airlines in Armenia from the security perspective. But this problem can be solved only in case of state sponsorship and control. “Given the blockade and limitations of logistics of our country, we are doomed to have developed civil aviation and own airlines for our own security. To solve this problem it is necessary to state sponsorship and oversight of market players are necessary,” Hakob Tjagharyan, Member of the Subcommittee on Air Transport Policy of Public Council, Founder of the first private "Phoenix Avia" company, former pilot, said.

By the Government's decision, Armenia has adopted open sky policy for several years, under which state sponsorship is almost excluded. Experts and specialists, however, complain that the open sky policy has led to "neglected" situation when the controlling functions of any state bodies such as the General Administration of Civil Aviation, the Ministry of Economy and the State Commission for the Protection of Economic Competition, and anti-dumping measures are almost not implemented.

“By saying state sponsorship, we mean not the creation of artificial support or parity, but ensuring equal conditions, anti-dumping measures in order big airlines do not extrude the local airline out of the market by setting damping prices of ticket. First, this is an issue of the security of Armenia, as in case of force majeure situations foreign airlines will immediately abandon flights to Armenia or from Armenia,” Tjagharyan said. 

Such a situation took place during the August war in Georgia in 2008. At that time, many international airlines stopped to make flights to Georgia. If there was not “Georgian Airlines”, Georgia will be in an air blockade.

Armenia, especially as a result of intensive lobbying by former US Ambassador John Heffern, the opened its sky for everyone. New players appeared in the market, "Air Armenia", a new airline with the Armenian capital, began to conduct flights. Since the main direction is to the different cities of Russia, especially Moscow, and the "open sky" establishes equal conditions for all the players without exception, it is no wonder that the larger ones strengthened their positions in the Armenian sky. Especially, the Russian companies. To Russia, and from there it can be said to have The Russian "Aeroflot" with its many small satellite companies captured monopoly positions to make flights to Russia and many other European cities from there. An aggressive competition started, Russian companies even offered low prices out of market logics as a result of which "Air Armenia" appeared on the verge of bankruptcy.

“Once Russian Airlines sold Krasnodar-Yerevan tickets for 30 euros. This is just dumping, against which the State did nothing. And when Russian companies took the lion's share of our market, pushing out competitors, the air tickets prices increased nearly five times for the same direction,” Hakob Tjagharyan said and added that unless the competition field is regulated, no local airline can survive. “We all remember the example of “Air Armenia”,” he said. 

For primarily the security problem, the speaker proposes to strengthen the regulatory role of the state and employ almost the open-air model of Georgia. “In spite of the mode of the open air of Georgia, the number of flights were limited when they noticed that the Russian airlines can create problems for local companies,” the speaker said. He emphasized the issue of the state participation in the establishment of the national airlines. “The State can have at least 50 percent stake in the local airline. And it deprives these companies from going bankrupt,” he said and brought as an example the actions of the French Government during the world economic crisis in 2008 when “Air France” Airline was provided 1 million Euro daily in order not to be bankrupted.  

“In case of Armenia that sum will comprise about 10 thousand USD which state can afford,” he said.

Besides the weakness of the state control mechanisms, another problem is the cost burden of prices of the Zvartnots Airport in the aviation sector. In this context, the pilot recalled the Minister of Economy Artsvik Minasyan's statement made a few days ago that the prices of the "Zvartnots" Airport are the cheapest in the region. Tjagharyan said that the Minister had false information, the service prices in the capitals of neighboring countries Baku and Tbilisi airports are cheaper. They are approximately 25-30% lower than those of the Yerevan Airport which affect the price of tickets.

President of the Air Transport Policy Sub-Committee of the Public Council Dmitri Adbashyan assured that all aviation problems stem from the lack of well-designed and improved air Code aimed at the development of the aviation. He reminded that the Law on Aviation of Armenia was amended several times; however, there is no provision in the latest version about the state's responsibility in the development of the sector. "When the law was adopted in 2003, we spoke about the problems and expected that this would lead to the destruction of our national airline. Ten years later in 2013, our aircraft was destroyed. Until law settles the issue of responsibility, the issue will not be completely solved. Now we have developed and sent a draft Air Code to the National Assembly," he said.

Civil Aviation Department did not agree with this opinion and concerned that the Draft Code is just the Armenian translation of the Russian Federation Air Code, and “without including the compliance with the international standards of recent years”.

“We do not agree with the remark in the statement of the General Administration of Civil Aviation, as the Air Code is based on our realities, it emphasis the state responsibility for the development of the field. In addition, the draft is based on the standards of the Interstate Aviation Committee,” Dmitri Adbashyan said. 

Representatives of the Civil Aviation and the Ministry of Economy were invited to the press conference but they refused to come for certain reasons. 

Arshaluys Mghdesyan, editor/events coordinator at “Media Center”

To contact the author please send an email to arshaluismghdesyan@pjc.am.

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