Low cost airlines are slowly infiltrating the Kazakh market and Air Astana is responding by setting up its own budget carrier, FlyArystan.

Back in 2016, this author visited the Air Astana HQ in Almaty, Kazakhstan. Even then, the airline’s CEO Peter Foster mentioned that it was inventible that low cost operators would enter the market. He said that despite being a full-service airline, Air Astana had a reasonably low unit cost allowing it to compete with the LCCs.

Fast forward three years, Air Astana is preparing to compete in the market with its own LCC operation called FlyArystan – the carrier is scheduled to take off during the first half of this year, and will operate a fleet of Airbus A320 aircraft configured in all-economy with 180 seats.

At the time of this writing, FlyArystan was preparing to start selling its services through its official website, travel agencies, and additionally via Air Astana sales offices from this spring.

As a subsidiary of Air Astana, financing for the new project will come from within the parent airline: “We are fully supported by the parent company only, and will require no capital from shareholders, no state subsidies or external financial support of any kind,” affirms Janar Jailauova, director marketing and sales at FlyArystan.

The new airline says it will operate a classic LCC model, replicating the successful formula at other LCCs like easyJet, IndiGo, Cebu Pacific, and AirAsia. It will offer low airfares – approximately half of what Air Astana offers today – on mostly domestic routes, but it is expected to expand onto regional international routes in the mid-term.

It will operate initially four aircraft, growing to a fleet of at least 15 by 2022.  FlyArystan will operate from multiple aircraft bases in Kazakhstan with routes and aircraft bases announced gradually. The new LCC will clearly compete with its parent Air Astana on some routes: “There will be some cannibalisation inevitably, but this will be market led growth.

In due course FlyArystan will have its own AOC [Air Operator Certificate] – hopefully within a year and become an established carrier in its own right,” states Jailauova. All safety standards and regulatory processes to which Air Astana is subject, will automatically apply to FlyArystan.

FlyArystan’s management team has already been appointed and is drawn from Air Astana’s senior local managers, whom the airline has been developing for the last 16 years. Jailauova says the team is led by Tim Jordan, a British-Australian national with more than 15 years’ senior LCC management experience at Cebu Pacific and Virgin Blue.

There are now three other carriers operating domestically in Kazakhstan aside from Air Astana. There is SCAT – which has started to take delivery of new 737MAXs, Bek Air and Qazaq Air also operate locally. With competition tightening from both at home and in the region, Jailauova feels it is the right time to set up a low cost airline.

She says the reason mainly lies within the demand of the population to have more affordable air travel.

“FlyArystan is the result of much serious thought and internal business planning, and comes as a result of a rapidly changing local and regional airline business environment. It will benefit the long-term prospects of Air Astana, and we hope, it will be well received by the Kazakhstan’s travelling public, who will be able to enjoy high frequency, significantly cheaper airfares on domestic and regional routes.”

In February, Air Astana declared a net profit for 2018 of $5.3 million, driven by higher revenues and higher jet fuel costs. Foster said 2018 was a challenging year due to higher-priced fuel, and pressure on international yields and domestic market share due to competitive capacity increases on key routes.

Looking forward to 2019, Foster noted a fuel price reduction of 16 per cent from its peak in June 2018, and pointed also to the expected May launch of its low cost unit, FlyArystan. “The low cost airline is a great business opportunity on domestic and shorter regional routes. The travelling public will be delighted by the cheap fares we have in store, as long as the government facilitates the legislative changes required to enable FlyArystan to launch,” he said.

On regional operations Air Astana flies a fleet of A320s including A320neo and A321neo, as well as Embraer E190/E190-E2 aircraft. The airline is in the process of further expanding its regional footprint, with the announcement that Air Astana will be increasing the frequency of services from both Almaty and Astana to Tashkent, the capital of Uzbekistan, with effect from April 2019.

Services to Tashkent are operated by A320 and E190 aircraft, with a flight time of 1 hour 35 minutes from Almaty, and two hours from Astana. Air Astana launched flights to Tashkent from Almaty in December 2010 and from Astana in May 2012. Since the launch of flights to Tashkent, the airline has carried over half a million passengers and 700 tonnes of cargo.

Having a good reputation in the region has gone down well for Air Astana, especially operationally and service wise, as this has cushioned the carrier in tough times, hopefully that reputation will spill over to FlyArystan.