TBY talks to Hakan Tin, Lufthansa’s Director General for Azerbaijan, on the growth and development of the air transport sector.
TBY How have the flight frequencies and passenger volumes changed since you entered the business?
HAKAN TIN The frequency of flights has not changed in 15 years. The frequency is regulated by governmental agreements between Germany and Azerbaijan. By law we can only fly four times per week from Germany to Azerbaijan and vice-versa. This is a bilateral agreement, and so the rights for both sides are the same. That is why the frequency does not change. We are currently operating at a 72% load factor. Most of our passengers are from foreign companies, yet the amount of local passengers is growing quickly.
What is behind the increase in the amount of local passengers?
The financial power of the local population is growing. People who could not afford to travel with Lufthansa before are now able to. Another reason for the growth is that more and more Azerbaijanis are coming into prominent positions in foreign companies, and can afford to travel in various classes. This has led to more passengers choosing to travel Lufthansa, rather than cheaper airlines such as Aeroflot, Turkish Airlines, or Azerbaijan Airlines. Around four or five years ago Azerbaijanis only made up 10% of our passengers, now the number is closer to 25%.
What are your future ambitions for Lufthansa in Azerbaijan?
Lufthansa has a very good relationship with the aviation authorities here as well as the government, and so if we see the need to increase our frequencies we believe it will be possible. But for the time being there are too many market entrants. Therefore, at the moment, I do not see a need for additional capacity in the market.
How have the increased capacities impacted Lufthansa?
Lufthansa is a premium carrier. We have a real first class and a real business class, and we are the only airline with this product in the market. Our customer group is not affected in the business class and first class categories by capacity increases. Capacity increases mainly impact revenues derived from economy class. Although we have seen a slight negative effect, the recent global economic crisis created more cause for concern as companies began to initiate travel policies prohibiting flying first and business class. Our product is really unique in the market. We have in-built monitors in every seat to provide entertainment, which is not something other airlines offer.
Online ticket purchasing is still very unpopular in Azerbaijan, do you see it as a potential growth area?
Internet purchases are basically non-existent in Azerbaijan. It is a phenomenon that is similar to the situation in Russia. It may stem from a lack of trust when it comes to using credit cards online. Internet sales only represent around 1% of our total sales. To try and increase that number we offer special fares that cannot be seen in agencies, yet our outlook is not too optimistic as the 1% of tickets we sell through the internet are mostly purchased by foreigners.
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