Arsen Avetisyan: We were right when we decided to start flying at winter season

Air Armenia was set up in 2003 as a cargo carrier. In October 2013 it
started carrying passengers following the bankruptcy of the national carrier,
Armavia, and the revocation of its monopoly. Today Air Armenia is the only
national passenger carrier in Armenia. As soon as it entered the market, the
air ticket prices in Armenia dropped. For the moment the company has two planes
– Boeing 737-500 and Airbus 320.

Mr Averisyan, the company has started implementing regular passenger
air flights since October 2013 which is not a favorable season for flights.
When summing up the past year, will you please tell me, what did you manage to
do?

Naturally, we started implementing passenger traffic at the season of
low loading. Moreover, traffic falls at the pre-holiday days. Nevertheless, we
chiefly managed to fulfill our plans. If we started making flights at the
beginning of April, as air companies usually do, the process of tapping the
market would take place at the period of high loading, and in that case we
would be forced to work with losses. Till October we were creating the needed
infrastructure. For 6-8 months of its functioning Air Armenia settled the
problems linked with infrastructure, rendering service to aircrafts, their
exploiting. It was also attracting passengers.

As for technical service of airplanes, Air Armenia  went the way of outsourcing and made service
contracts with the known European companies “Sabena technics” and “Czech
technics”. They will render technical service to the airplanes until
restoration of our technical base.

We have prepared  pilots and at
present our pilots are waiting for the new airplanes so that to return to
Armenia from Kazakhstan and Russia where they were forced to leave for to earn
money after bankruptcy of the national carrier “Armavia”. Air Armenia has
already completed nine crews, seven of which consisting of 14 pilots, were
formed after Armavia’s bankruptcy. Besides the pilots, 28 stewardesses also
came to Air Armenia from Armavia. Many of them were forced to work in Georgia.
During the winter season all the flight officers attended training courses in
Moscow. If we started implementing flights in April, we would hardly manage to
take back all the employees which used to work in “Armavia”.

Secondly, over that period of time, Air Armenia implemented the
marketing work which has already given fruits. Naturally, we will go on bearing
losses till the end of March. However, these are the planned losses. The
company covers expenses for investments made to leasing of airplanes, equipment
and attraction of passengers. I think we were right when started implementing
flights at the winter season.

As present Air Armenia lags behind its plan on passenger traffic
by 10-12%. According to the business-plan, at the initial stage the
airplane-load had to be on average 60-62%, but actually it is 60%. I am
confident that we shall catch up in spring. In 2014 the airplane-load should be
on average 70-72%.

On Mar 30 2014 you will
switch to summer flight timetable. What new flights are you planning to open?

Air Armenia has already
started flying to Paris and Athens twice week and to Yekaterinburg (Russia)
once a week and is planning to start flying to Moscow four times a day. 

We are also planning to organize
flights to Dusseldorf or Frankfurt twice or thrice a week and to London twice a
week. We are also discussing the possibility to get slots at Heathrow Airport.
As soon as we get them, we will start selling tickets to London.

We are also planning to organize
flights to Tehran thrice a week. Lots of Iranian tourists come to Armenia on
Novruz holidays in March, so, we hope to have a share here. We have already
obtained a relevant permission. We also have plans to fly to Iraq and Ukraine.

For the moment you have two planes – Boeing 737-500 and Airbus 320. Are
you planning to obtain more planes considering your plans to open more flights?

We have already signed a contract
on operating lease of the second aircraft Ђ320 made in 2008. The aircraft will
be received at the end of March - beginning of April 2014. Another A-320 made
in 2006, will be delivered at the end of June. We have got a proposal to lease
another Boeing-737. At present we are revising the conditions of the contract.
I think it is enough to lease 5 airplanes for a year.

Could you say how much you have already invested and how much you are
planning to invest this year?

We have so far invested $5.5
million. The funds have been spent to lease airplanes, to create
infrastructures, to create on-line system for air tickets sale and for
membership of Air Armenia in different international organizations. The
investments are first of all attracted to lease planes and to buy spare parts
to them. However, big investments were also made for training of staff.
Practically, 95% of flight officers were forced to be trained or upgrade their
skills. The same amount will be invested in 2014 for purchasing of planes,
equipment and for the infrastructure.

Were it not for Armavia’s bankruptcy, we would still lease planes with
just a three-month prepayment. After Armavia’s bankruptcy both the prices and
the prepayment jumped.

I looked at the January statistics and was surprised. According to
Zvartnots Airport, last month your two planes carried over 16,000 passengers,
while in January 2013 seven planes of Armavia carried just 18,000 people. How
is this possible?

I think comparison with Armavia is not very appropriate here. In early
2013 that company was already facing financial problems and was no longer able
to fly on a regular basis. As a result, many passengers refused to use their
services. There are people who prefer Armenian carriers. But they need
guarantees of high quality. We give our passengers exactly what they need and
they are grateful to us.

Is your passenger traffic growing and what are you doing to this end?
Today you are the only Armenian passenger carrier and you are faced with free
market conditions?

As soon as we started flying or even selling tickets to certain
destinations, the prices for them began to drop. Now that the prices are low
many passengers who formerly used buses to go, say, to the south of Russia, now
prefer using planes. We started cooperating with Russian travel agencies so as
to attract passengers from Russia, particularly, to the Armenian resorts of
Tsaghkadzor and Jermuk. We expected that most of them would be from Moscow, but
later we saw that almost half of them were from the south of Russia.

We considering several ways for boosting our passenger traffic: to organize transit flights, to create a network of flights first
to Russia and then to Europe and the Middle East and to interline them.

With 85% of our passengers being Armenian-speaking people, we have a
big potential for attracting tourists from other countries. Many travel
agencies in Armenia have long been our partners and successfully attract
passengers from Europe. But since most passengers in Armenia come from Russia,
we are focused on this direction. We hope to restore some old traditions. For
example, in the past many Russian skiers came to Tsaghkadozr for training. Some
people came just to ski. We are planning to restore this tradition. We have
already brought almost 300 tourists to Tsaghkadzor. We are also considering
tours to Jermuk and Dilijan.

At the second stage we are planning to attract tourists from Europe –
also to Tsaghkadzor and Dilijan – and at the third stage to start cooperating
with agencies specializing in historical tourism. If we keep this minimum
quantity of passengers and increase the flight rate, we may turn Zvartnots
Airport into an international hub. If 50% are out core passengers, as many as
25% more can come from tourism and transit.

What new campaigns are you planning for this year?

We regularly announce discount
campaigns. One of the latest is the opportunity for each person to buy a
half-price ticket on his or her birthday and to fly on any day throughout the
year.

In late February we will organize a
draw of air tickets to any destination. Presently our commercial service is
developing a scheme to make the draw fair. For example, the tickets may be
drawn by some child passenger on the board.