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Integrating Central Asia into the World Economy: Role of Reforms in Aviation Sector The Special Case of Tajikistan. Central Asia Regional Economic Cooperation Program (CAREC) Washington DC October 22, 2007. Aviation Sector: Needed Reforms.

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Integrating Central Asia into the World Economy:Role of Reforms in Aviation SectorThe Special Case of Tajikistan

Central Asia Regional Economic Cooperation Program (CAREC)

Washington DC

October 22, 2007

aviation sector needed reforms
Aviation Sector: Needed Reforms
  • a less restrictive aviation policy that allows competition
  • a stronger institutional structure by separating:
    • Policy Making from Technical Regulation and Accident Investigation
    • Airline, Airport and Air Traffic Control
  • Strengthened Technical Regulation (ICAO)
what reforms may bring
What reforms may bring?

Competition ->Productivity ->Growth

  • Airport will be more interested in attracting more international flights
  • Airport can Attract Investment
  • Airport will not have to Subsidize the National Airline
  • Airport is likely to encourage competition for national airlines
    • Providing ground handling equipment for competing types of aircraft
    • Competitive fuel supply
    • Fees and charges are used to improve airport infrastructure
status of reforms in ca
Status of Reforms in CA
  • Uzbekistan:
    • Airline owns Airports
    • Partial Privatization of Airline Planned for 2008
  • Tajikistan:
    • Airline owns Airport
    • Separation of Airline Airport and ATC planned for 2008
  • Kazakhstan and Kyrgyz Rep.
    • Airports are virtually Separate
    • Both attracting New Investments
    • New Private Airlines have Emerged
increasing international frequency would bring more benefits to the ca economies
Increasing International frequency would bring more benefits to the CA economies
  • Direct benefits:
    • Marginal increase in demand for fuel
    • Landing and navigation fees
  • Indirect benefits:
    • Expand Markets for Products and Services: e.g., Consumables, Tourism Products,hotel, translation, transportation, catering, visa…
    • Taxes and other fees
tajik aviation sector
Tajik Aviation Sector


  • Country in Peace and Recovering
  • Technical Competence in Sector
  • FSU Legacy is Small
  • Strong Government Reform Agenda
tajik aviation sector government actions
Tajik Aviation Sector: Government Actions
  • By the introduction of Turkish Airlines, the Government has increased operating flights to the West;
  • This will help to Strengthen Tajikistan's ability to attract foreign investment and affluent touristsand Business Travelers.
in airlines business capacity creates demand tajik example
In airlines business, capacity creates demand… Tajik example
  • Huge demand: rejection rate is 50 percent
  • Load Factor: 97 percent
  • 80 percent of passengers are western citizens
  • 50 percent western passengers traveling to Tajikistan for the first time
the benefits for the tajik aviation sector alone would be significant
The Benefits for the Tajik Aviation Sector alone would be significant

Sensitivity analysis of income generation by increasing flight frequency with Istanbul (thousands of US dollars)

the tajik government plans to build on this trend
The Tajik Government plans to build on this trend….
  • Turkish Airlines is interested in increasing frequency
  • Tajikistan Plans to take advantage of growing interest by internationally reputable operators: Air Arabia, Jet Airways and Qatar Airways are interested in flights to Tajikistan
Aviation sector reform: it brings integration and economic benefits in medium and long term; some examples
  • Access to Markets: Integration with the World, Investment Trade and Tourism
  • Growth: generally, air services output grow approx 50% faster than the economy (2003 Survey)
  • Reformers:
    • Riga - 28 flights a day to hubs, New Zealand – 50 flights to Sydney…
    • For comparison: Armenia three flights to Western hubs and four flights to Moscow a day
  • Other examples: Netherlands (output increase by 51 % in routes with US); Czech Republic, Lebanon,
  • US liberalization (1970s): fares are estimated to be lower by 24 percent than they would be if market was regulated. Productivity gains and more accessible service.