Open skies policy to reduce prices of flights to Armenia by 10-50% on the average: CEO of National Competitiveness Foundation of Armenia

The open skies policy will reduce the prices of flights to Armenia by 10-50% on the average. This will allow the country to additionally increase the GDP by 1.5% or $0.3-0.4 bln AMD per annum, Arman Khachatryan, CEO of the  National Competitiveness Foundation of Armenia, said at a press  conference on Tuesday.  

This indicator is mentioned in the program on ensuring provision of  competitive and longlasting air services in Armenia elaborated on the  basis of a joint survey by McKinsey&Company and the National  Competitiveness Foundation of Armenia. Khachatryan thinks that  Armenia will be able to reach that target in 3-4 years. "The conduct  of the open skies policy will lead to growth in the country's  commodity turnover and will increase the inflow of tourists", he  said. 

In particular, passenger operations are expected to rise by 20-25%,  he said. In the meantime, 18- 23 thsd well-paid jobs will be created  in the aviation sector.  

In the context of the new concept "at least one cost-effective air  company" will be launched in spring 2014. Khachatryan said that the  air ticket prices in that company will be low, and the company will  make flights to 10 cities of Europe. He failed to specify who is the  founder of the company, whether the state has a share in it and  whether the company has already been granted a license. 

Khachatryan pointed out that in Armenia air ticket prices are by 60%  higher than in the neighboring countries due to the restricted  geography of flights and low competition in the market. He thinks  that the open skies policy implies full liberalization of the  aviation sector. Moreover, the market will be liberalized for not  only foreign but also local air companies. "We suppose that by 2016  the number of foreign and local air companies in Armenia will range  from 40 to 50", he said. 

Air Armenia company appeared on the Armenian air market in Oct 2013  causing a significant drop in prices. Transporting cargoes since  2003, Air Armenia carried out its first passenger charter flight to  Rostov- on-Don on Oct 3 and the first regular flight to Moscow on Oct  27. The company has two planes: Boeing 737-500 and Airbus 320. 

The company's Executive Director Arsen Avetisyan told ArmInfo earlier  that it is inadmissible that local air carriers face restrictions,  while foreign companies enjoy open skies. He explained that it was the recommendation of the Government's advisor, McKinsey & Company,  who believes that in order to be eligible to provide air services, a  company should have a capital of at least $25mln and enough free  funds to operate at least five planes within three months. 

But, according to Avetisyan, in order to be able to do it, a company  should have a capital of no less than $60mln. This requirement seems  absurd to him as a company cannot have five planes unless it is  allowed to fly: no single leasing company will give it a plane –  whatever its financial status is – unless it has a license to fly.  So, Avetisyan sees in this recommendation an attempt to debar  national air companies from air services in Armenia and to  artificially restrict their activities so as to curb their  development.

In Jan-Oct 2013 1.5mln people used air services in Armenia (1.8% less  than a year before).