Air Astana Part 1: Kazakhstan flag carrier increases focus on transit traffic as profits drop
Kazakhstan’s Air Astana is increasing its focus on sixth freedom transit traffic as part of a new strategy aimed at capitalising on its low cost structure and geographic position at the crossroads of Asia and Europe. More transit traffic is necessary to unlock a new phase of growth and reduce its reliance on its home market.
Air Astana has nearly doubled its transit traffic over the past year in response to challenging market conditions in Kazakhstan. The Kazakhstan economy has weakened significantly as oil prices have collapsed, leading to rapid currency devaluation that has impacted Air Astana’s top line. The airline’s revenues have fallen 25% since 2013 while passenger traffic has been relatively flat.
Increased sixth freedom traffic, slower expansion and reduced costs have enabled the airline to maintain profitability. A further and bigger transit traffic push is risky but should drive improved scale, a resumption of growth, and a stronger long-term position – which in turn will make Air Astana more attractive as it revisits long-delayed IPO plans.
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