By lifting exit duty on international flights, government will lose profit ‘without possibility to lower air ticket prices' - opinion

11:43 • 16.08.19

Politics

A government decision to lift the state exit duty on international flights will cause the state to lose a source of profit without any possibility for the air carriers to lower the costs for flight tickets, Hakob Tschagharyan, an advisor to Prime Minister Nikol Pashinyan for aviation affairs, said on Thursday.

According to him, the development of civil aviation in Armenia came to a stall in back in the 1990’s “after improperly trained human resources took charge of the sector”.

“To promote development in virtually any sphere, it is important, first of all, to have a special doctrine, which the Republic of Armenia hasn’t developed ever since [independence]. So we have now prepared our doctrine, outlining several targets, i.e. - acceptable state policies in the development of civil aviation, the creation of normative legislation and infrastructures, the implementation of technical regulations, economic regulations, flight safety and the protection of consumers’ interests. The doctrine covers all this, and the Government has already given its approval,” he said in an interview with Tert.am.

Asked whether the government is considering the creation of an airline with a state or national share, the advisor hesitated to give specific clarifications, highlighting instead the need of a domestic air carrier. “I cannot say whether or not an issue of the kind is now being considered as it is beyond the scope of my activity. We need the domestic airlines; that’s the problem I have submitted to the government’s consideration”.

As the heaviest blow to the domestic aviation industries, Tschagharyan cited the “open air policy” which the Armenian Government adopted in 2013, “renouncing the right to any regulatory function” in the sector. “I highlighted the importance of revising several clauses enshrined in that document,” he said, adding that the issue is presently under consideration.

At a 2017 parliament debate addressing the problems in civil aviation, Nikol Pashinyan, at the time an opposition lawmaker, expressed his strong concerns that “out of the 206 weekly flights from the Zvartnots International Airport, 105 or 53% are carried out by Russian airlines”. ‘”We have made Aeroflot and other Russian air companies a kind of national airline,” he said in his speech.

Agreeing that the situation hasn’t changed much ever since, the advisor admitted at the same time that the predominance of flights in the Russian direction should be thought as absolutely logical. “For me, it has both a logical and traditional implication; it is absolutely another matter why especially Russian air companies do that. That deals also with the Armenian air companies’ inability to access the Russian market,” he noted.

Asked to comment on the high service fares at the Zvartnots International Airport, Tshagharyan said there are now possibilities to make the services more affordable.

“The costs for a similar aircraft – with the oil price deduced – is about $100 more compared to the Tbilisi Airport. For an estimated 150 passengers, the per passenger rate increases by around $13-$15. There is now a possibility to lower the service prices. We have had meetings with the concessionary managers of the Zvartnots Airport. Also, since 2004, we had an effective document proposing the creation of an interagency commission to oversee the airport’s work. But they failed to do that over the years,” Tschagharyan said, adding that the necessary mechanisms are now being elaborated.

The advisor said he believes that the exit duty too, should have its special significance in terms of addressing the existing needs to promote the development of aviation.

“I believe that by lifting the exit duty, the state will lose that part of the profit, without the companies reducing their costs. Removing the exit duty under conditions of competition is incomparable and less insensitive to the state’s budget than it would be if there were no competition at all,” Tshagharyan added.