Profitability of aviation business: what can be said about Kyrgyzstan?

In world practice, including in Russia, the profitability of airlines is low. On average, in stable airlines, in a good year, it ranges from 1–2%.

In Kyrgyzstan, no one calculated profitability, but judging by the old fleet and a small number of both local airlines and their flights, we can conclude that it is also low here.

Ermek Omuraliev, ex-director of the Civil Aviation Agency, speaking about the profitability of flights, believes that the issue of profitability of the airline business is relative and it is difficult to talk about any margin.

According to him, there are two reasons for this:

  1. Flights on the same air route may have a negative margin during one period and a positive margin during another period. Let’s say, Bishkek – Istanbul – Bishkek flights can have a negative margin during October – November, but have a positive margin during the end December – mid-January; have a low passenger load and, accordingly, negative margin in February – March and a positive one due to passenger load in July-August;
  2. Flights on different air routes may have different margins. The Bishkek – New Delhi flight may have a zero margin, and the Bishkek – Moscow – Bishkek flight may have a positive margin, but the airline will continue flying en route Bishkek – New Delhi – Bishkek in the hope of “rolling” the flight, that is, increasing passenger traffic through some kind of advertising campaigns, etc.; or if it has a significant number of transfer passengers who, flying on a New Delhi – Bishkek flight, intend to fly the Bishkek – Moscow flight of the same airline.

“Therefore, I think, especially recently, the margin of local airlines varies from 0% to 5-7%,” Mr. Omuraliev said.

Source – http://www.tazabek.kg/

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