FlyArystan, the low-fare subsidiary of Kazakhstan flag carrier Air Astana, is still on track to gain its own Air Operator Certificate (AOC) by Q1 of 2024 at the latest.
In an exclusive interview with LARA, Air Astana’s Group CEO, Peter Foster, commented on why this move is still going ahead: “It’s more logical from a procedural point of view. And from a safety point of view, we really have to have it operating under its own AOC.”
What’s more, the plan for FlyArystan to be put into a separate company still remains. However, suggestions that the low-fare carrier is likely to split from the Air Astana Group were dismissed by Foster; “there are no immediate plans to spin it off out the group.”
In fact, the CEO celebrated how much the low-fare carrier had contributed to the Group.
Totalling its profits from 2022, whilst the low-fare carrier made up around US$16 million of the total US$78.4 million – roughly 20% – Foster noted that this was only going to increase alongside the popularity of the airline.
“It’s small in terms of its contribution, but of course, it’s the fastest growing unit. So, if you take the growth trajectory [of low-fare airlines in general], it’s reasonable to assume FlyArystan is going to power the growth of the Air Astana Group going forwards in a more aggressive way,” he added.
The low-fare carrier commenced operations in May 2019 and flew its first flights from its hub airport, Almaty International Airport. It currently has 14 A320neo aircraft in its fleet, with plans to expand this number by three additional A320neos by the end of 2023.
Demand and ticket price increases
However, in a discussion over the elasticity of the low-fare pricing model, Foster discussed the general difficulties of assessing its long-term sustainability as ticket fares continue to rise.
“Low-fare pricing models are predicated on being able to sell low fares to fill 80% of the aircraft,” he said. “There comes a point where that elasticity of demand snaps, and if inflation is still going up, then who knows what will happen.”
Handily for Air Astana, and the Group in general, Foster singled out its preparedness in dealing with fluctuating uncertainties in the market.
“We’ve always had, what I’d call, a defensively aggressive strategy. Yes, we have an aggressive growth strategy, but it is managed. If demand really does hit the buffers, we can come back,” he said.
