Our plane, a Boeing B767-300ER, passed over the Karakoram mountain range in mid-afternoon as it headed towards Tajikistan, en route to Almaty. The map on the screen in front indicated that K2, the world’s second highest peak, was somewhere below us.
Taking in spectacular views of snow capped mountains and vast steppes is but one of the many highlights when flying on Air Astana , the relatively young (it made its maiden flight in May 2002) flag carrier of Kazakhstan.
In an industry littered by airlines that struggle to excite and enthral, let alone make money, it’s always nice to meet a company that’s doing something different, something daring and make a tidy profit along the way.
Air Astana is the crazy diamond amongst all the airlines in central Asia.
There must be method to the madness in running a four-star (Skytrax) carrier in a country that shares its borders with six other sovereign nations (including Russia and China), with a population of 18 million and having a capital (Astana) that is ranked the world’s second coldest city (after Ulaanbataar).
Make no mistake – the cold is brutal and winter lasts for almost six months. The day we arrived the temperature hovered at -23°C, mild according to the locals given that in January and February it’s not uncommon for the mercury to dip to between -30°C and -35°C.
But the airline doesn’t let the extreme cold get in the way of Astana or Almaty becoming an international business and leisure transit hub. Air Astana sees the market beyond its own borders; to the east lies western China (with some 20 million people), to the south are the other Stans – Kyrgyzstan, Tajikistan, Uzbekistan, Turkmenistan and to the west the oil rich region bordering the Caspian Sea.
This is an airline with a small but smart and savvy management team. Their strategy isn’t exactly conservative but they don’t bite what they can’t chew. Air Astana operates a fleet of just 34 planes – puny compared to the national carriers in Southeast Asia – but it has been consistently profitable. In 2017 Air Astana posted a profit of USD40 million.
Where Air Astana has succeeded (and many Asian carriers failed) is its ability to be both efficient and productive: this is a premium service carrier with a low cost base. Its operating cost is less than USD0.06 according to Ibrahim Canliel, the carrier’s CFO. “We have never had to go to our shareholders to ask for money,” he said proudly.
That’s not to say all is hunky-dory at Air Astana. Like other airlines around the world it faces similar challenges: swings in the oil market, currency fluctuations and global economic instability. Management is closely watching developments in the on-going trade spat between the US and China. Chinese tourists are important to the airline’s revenue.
Foreign exchange volatility is now more manageable compared to two years ago when the tenge (KZT) lost 82% of its value following a devaluation. It resulted in a loss of USD40 million for the airline in 2016.
As Kazakhstan’s revenue is largely derived from oil and gas, the KZT’s fortune is often linked to the movement of oil prices, which have been on the downside in recent years.
The KZT is more stable now, allowing Air Astana to cut its forex losses by almost 28%, from USD14.4 million in 2016 to USD10.4 million in 2017.
The airline operates a network of 65 routes serving 42 international and domestic destinations. Its main long-haul aircraft is the B767-300ER, which connects Astana and Almaty to the Far East (Beijing and Seoul) and to Southeast Asia (Bangkok and Kuala Lumpur).
Apart from the three B767-300ERs in its fleet, the main workhorses are its Airbus A320 family of aircraft (including A320neo and A321neo). Five Boeing B757-200s are slated to be phased out in 2019 and will be replaced by A321neos.
Air Astana complements its fleet by flying regional jets, specifically the Embraer E190, a plane that has been in service since 2011. On Dec. 14 the airline introduced the new iteration of the E190 – the E190-E2 – a plane with better economics and better range, according to CEO Peter Foster. He believes this will give Air Astana more options in terms of new destinations.
The first E190-E2, with a snow leopard painted on its nose, will initially fly domestically between Astana and Almaty. Four more E190-E2s will join the fleet next year.
The role of the E190-E2s is well defined and Air Astana clearly has been pleased with the first generation E190s. The airline could have gone for another aircraft type (possibly for less money), but we get the impression management trusts the Brazilian-made jets and hence, kept faith with them. The E190-E2s are on operating leases from Aercap.
And having the snow leopard as the theme of the Embraer fleet is fitting, too. An endangered cat, there are less than 200 in the country. Air Astana donated USD10,000 to the conservation of this animal during the ceremony to welcome the first E190-E2.
Kazakhstan is a unique country and one that will remain exotic in spite of the influx of McDonalds, Starbucks and the herds of Jaguars and Lexuses roaming the cities.
While the weather can be undeniably harsh and unforgiving (it can be extremely cold in winter and extremely hot in summer), Astana forges ahead as a rapidly growing city. Earlier this year it launched the Astana International Financial Centre in a move to make Kazakhstan a financial hub in central Asia.
Some things though haven’t changed much. Or at all.
On the edge of Astana, where the great steppe begins, they still go hunting with eagles and falcons, eat shuzhuk (horsemeat) and occasionally imbibe in a few shots of Snow Queen and kumis (fermented mare’s milk) – a nasty combination, we can assure you – in the evening. Plus ça change, as the Kazakhs don’t say.