Georgian Airways Suffering from ‘Unhealthy Competition’

Georgian Airways Suffering from ‘Unhealthy Competition’

The FINANCIAL -- Georgia’s national carrier and the leading Georgian airline company Georgian Airways has faced a number of obstacles recently, of which the company’s General Director Iase Zautashvili names unhealthy competition, Georgia’s Open Sky policy, and Russian airline companies’ entrance as some of the most significant challenges.

Georgian Airways, also known as Airzena, is a privately-owned flag carrier that operated a variety of services from Georgia to destinations mainly in Europe and Western Asia.

Despite the challenges, the company experienced 10 percent growth in number of passengers last year compared to 2013.

Furthermore, this year Georgian Airways was again named winner of the Golden Brand Awards, in the category of Favourite Airline.

“From the beginning of our existence on the market we aimed at reaching the prestigious status we have now achieved. At present Airzena is a company in total compliance with the demands of western standards. There is nothing to change,” Zautashvili said.

“Airzena was founded in 1994 and since then we have worked very hard in order to achieve the position we hold today. Our company satisfies all the demands and standards of western markets. Georgian Airways is a company of modern standards. We are working daily on increasing our service quality and satisfying our customers’ demands,” he added.

Zautashvili claimed the main demand of travellers is their safety; the safety of the flights, also their stability, and high level of service.

“Our company’s priorities are permanent and include strict observance of flight safety standards and continuous renewal of service. In addition to this, we have very highly qualified pilots operating error-free flights. Our company has its own safety service and I personally lead the monitoring on aviation safety. Before flight every aircraft is comprehensively checked and prepared for the journey it is about to undertake,” Zautashvili said.

Today, Georgian Airways’ fleet consists of two Boeing 737-700, one Boeing 737-500, four CRJ-200, Gulfsteam G 450 and Cessna.

Georgian Airways managed to introduce new directions such as Petersburg, Samara, Vladikavkaz, Kuwait, Bagdad and Erbil.

As for flights inside the country, Georgian Airways offers flights to Georgia’s second largest city Kutaisi and the seaside city Batumi.

Predictions for 2015 are not overly positive as Zautashvili said that 2015 will be one of the most challenging years.

“This year started very difficultly in the sense that Russian state and private airline companies entered the Georgian market with the support of the local government. These Russian airline companies hampered our activities in terms of carrying out Tbilisi-Moscow flights,” said Zautashvili.

Last year Georgian Airways stopped its flights to Moscow and said it could suspend flights to other destinations too.

The company leadership protested against the Russia-Georgia contract about resuming direct flights, which Georgian Airways believed gave an unfair advantage to Russian companies.

The airline demanded equal conditions for the Georgian and Russian airlines, or the current financial loss would soon see Georgian aviation “no longer exist”.

One of the requests of the company was for Georgia to abolish a note the country sent to Russia on 8 July, 2014, where the Georgian side gave the green light to Russian companies to enter Georgia and launch regular flights between Tbilisi and Moscow.

General Director of Georgian Airways said Georgia gave 13 Russian companies permission to enter the country. Each were allowed to conduct 14 flights a week.

Direct Tbilisi-Moscow-Tbilisi flights were cut after Russia and Georgia clashed in the August 2008 war over the Tskhinvali region (South Ossetia), a breakaway region of Georgia.

Since 2011, Airzena and Russia’s Sibir Airlines have carried out direct charter flights to various cities between the two countries, including Tbilisi and Batumi. However, the airlines required consent for each flight from the relevant authorities before they could fly to their neighbour country, which complicated the process.

“Today the company is trying to maintain its market share and niche on the Georgian airline market where more than 16 foreign famous airline companies have been operating,” Zautashvili said.

Georgia’s aviation industry was set to experience a boost in June thanks to the introduction of new low-cost airline companies entering the Georgian market. Meanwhile, some of them are already in Georgia and starting operations from May.

“Cheap flights and so-called damping have a temporary effect as their price increases after local companies cancel their flights because of unhealthy competition. As a result, 95 percent of income flows from the country to foreign companies’ budgets,” warned Zautashvili.

“Georgia is an attractive country for its Open Air policy, however this policy is not useful for the economy. There is unhealthy competition on the market and it is becoming more and more difficult for us to continue our activities,” he added.


Author: Galt & Taggart