Air Astana aims to launch its new low-cost unit FlyArystan in the first half of 2019, operating from multiple bases in Kazakhstan with a view to reaching a fleet of at least 15 aircraft by 2022.
The new budget unit, which will be formally launched at an event in Almaty on 7 November, will begin operations using four Airbus A320 aircraft in a single-class 180-seat configuration.
"The first four aircraft will be A320 classics, taken from Air Astana," Peter Foster, chief executive of Air Astana tells FlightGlobal. "As the fleet grows, it will likely consist of more leased A320 classics. A decision on A320neos for FlyArystan will depend on how the present delivery and technical issues with the aircraft and engines are resolved.
"We are dependent on setting up an IT platform applicable to a low-cost distribution model. That, together with reconfiguring aircraft and ensuring that airports are ready to deliver a 30min turnaround, are the key challenges facing us before start-up." Foster explains.
The Kazakhstan domestic market was deregulated in 2011 and FlightGlobal schedules data shows SCAT, Bek Air and Qazaq Air now operate on domestic routes alongside Air Astana. While still the largest operator, Air Astana's domestic market share has fallen from 78% to 46% since 2011.
“While there are no genuine [Kazakhstan] low-cost carriers in the market yet, there are a number of international LCCs operating here – Wizz Air, Pobeda, Air Arabia, Flydubai. We fully expect Indian and southeast Asian LCCs will come before long. It’s clear that LCCs are coming to Central Asia, albeit relatively late," he says, adding: "FlyArystan will be the first genuine Central Asian LCC.”
He notes that after the carrier began its study this summer into possibly launching a low-cost carrier, the potential to develop the market became clear due to the size of the country and relatively low levels of air travel among Kazakhstan’s population.
"It has become clear there is huge untapped potential," says Foster. "So FlyArystan is on the one hand defensive, protecting ourselves against existing and new entrants, and on the other a proactive step to realise new market potential."
FlyArystan will initially focus on domestic routes and aims to roughly halve existing air fares on these services. It will operate from “multiple bases” in the country, though no cities or routes have yet been identified.
In terms of routes, Foster says "it will do what it will do", noting that the network will be market-led as opposed to centrally planned by Air Astana. "We would expect it to operate some new routes and some routes that Air Astana already operates," he says.
While it will initially focus on domestic services, Foster also sees FlyArystan developing internationally. "We expect that by the end of 2019 it will be operating international routes. Any route up to three hours' flight time is fair game. That opens Russia, countries to our south, the Caucasus and possibly Ukraine as within the LCC’s potential reach," he says.
Foster notes that Air Astana has learnt from the experiences of other network carriers that have launched low-cost units, observing those that have struggled have seen interference from the parent company.
"We are conscious of these experiences and are clear in our strategic thinking. That’s why it has been set up as a separate division with its own management team," he says.
FlyArystan will be managed by existing Air Astana senior executives and led by Tim Jordan, formerly with low-cost carriers Cebu Pacific and Virgin Australia – when it was the more low-cost focused Virgin Blue. Foster says Jordan’s experience will help FlyArystan follow a genuine low-cost model.
“We had looked at whether we should simply try to reduce cost and product on Air Astana’s shorter routes. However, we concluded that it would carry a high risk of degrading and devaluing a brand we have worked hard to establish over 16 years,” Foster says.
He also notes the decision to establish a low-cost unit helps "reconfirm the mission" of Air Astana, by "clearly separating" the low-cost unbundled product from that of the full-service carrier. "When a customer buys an Air Astana or a FlyArystan ticket, he or she will know exactly what to expect," says Foster.