Founder of "Armenia" company: Criminal competition prevails on airline market in Armenia

ArmInfo. Criminal competition  prevails on airline market in Armenia, Chairman and founder of  "Armenia" Airline Company Tamaz Gaiashvili stated at the press  conference today. 

"We are not afraid of competition, if it is fair, however quite other  conditions prevail in this country.  Setting prices lower than the  prime cost is nothing else than dumping", Gaiashvili emphasized  referring to the tariffs set by "Pobeda" low cost airline company and  recalled that it is subsidiary of Aeroflot.  According to him the  Russian company intends to neutralize all the competitors and remain  the main player on the Armenian market so that it will able to  dictate its conditions. "I assure that no one is going to carry out  flights for free, this is a temporary measure to drive out all the  competitors, after that the prices will be set at least $200 for any  direction", he stated. 

Director General of the Company Robert Hovhannisyan for his part  explained why the prices of the airline company are non competitive  on the airline market. "For the Russian carrier  Yerevan-Moscow-Yerevan flight costs $10-12 or even $15 thousand  cheaper than for any Armenian airline carrier, as a result we had to  cancel all the planned flights to Russian cities of Moscow, Saint  Petersburg, Sochi, Rostov, etc", he said. 

Hovhannisyan noted that service prices for Armenian and Russian  companies are different. "If the Russian carrier pays $200 for 1 ton  of fuel, we pay $600, while at least 15 tons are needed for a flight.  We spend $3 thousand for navigation, while the Russian company pays  only $200, their airport service price is $500 while our airport  service costs are $7000", he explained. 

The company intends to meet members of the new government in the  nearest future to discuss all the issues. "We continue to work,  carrying out regular and charter flights, however not everything  depends on us. There are issues, which can be solved only with the  help of the government. The state should protect the interests of its  companies and exert efforts to stop the current chaos", Gaiashvili  noted. 

Despite difficulties of working in "Open Sky" regime the company  managed to transport nearly 800 thousand citizens on regular and  charter flights in one year, the Director of the Company informed.  Next year the company plans to carry out flights to Brussels,  Barcelona, transit flight to Spain and possibly Portugal. 

In a talk to ArmInfo's correspondent Hovhannisyan noted that the  company intends to increase passenger turnover by 150% in one year,  which may be achieved due to recent successful agreement on carrying  out flights to Beirut and a number of Iranian cities (Tehran, Shiraz,  Rasht etc.). "We have discovered this market and we hope that these  directions will be profitable and will serve as financing source for  the flights we intend to carry out to a number of European  countries", he summarized. 

To note, "Armenia" airline company entered the market in 2016. The  founders of the "Armenia" air carrier are Ashot Torosyan (51% stake),  Tamaz Gaiashvili (25%) and Robert Hovhannisyan (24%). According to  the Director of the company as of today 53 specialists of civil  aviation work in the company and 4 young pilots are being trained.   Recently "Armenia" received license to carry out flights to European  countries directly or via transit over third countries. 

To recall, the national air carrier of Armenia - Armavia - suspended  its flights on 1 April 2013 and launched the bankruptcy procedure. In  2014 the same happened to Air Armenia. On October 23, 2013, the  Armenian government approved the programme implying provision of  competitive and long-term air transportation services in the country.   The program is based on a joint study of McKinsey & Company and  National Competitiveness Foundation of Armenia.  The "open sky"  policy that was announced in the country in 2013 sparked a  large-scale exodus of foreign companies from the Armenian market.  Consequently, due to the high prices of air tickets, many Armenian  passengers prefer to make use of the services of neighboring Georgia,  where there are several low- cost European companies.