Kazakhstan 2017 | TRANSPORT | INTERVIEW

TBY talks to Blair T. Pollock, CEO of Qazaq Air, on meeting ambitious targets, increasing fleet size, and the importance of aviation to economic growth.

Blair T. Pollock
Blair T. Pollock has 23 years experience in investment banking at first at Merrill Lynch and Citigroup London and later at Troika Dialog Kazakhstan/Sberbank CIB. In April 2013, in coordination with Alpha Project and the Sovereign Wealth Fund of Samruk Kazyna, he decided to start a new domestic airline in Kazakhstan. He became head of the Qazaq Air project in February 2015 and is its founding CEO. He has an MBA from INSEAD and an engineering degree from the University of Edinburgh. He is a former Royal Air Force cadet and private pilot.

Qazaq Air is a young company, having been established only two years ago. How would you describe its journey and successes so far?

Qazaq Air has been a huge project and a wonderful opportunity. We have been successful operationally and that is the most important thing in aviation: safety, security, and successful operations. To provide some examples, in January 2016—which along with February is the worst month of the year for Kazakhstan's aviation because no one is up for traveling—we only had a 30% load factor on our aircraft. In January 2017 that number was in excess of 60%. That is great growth in the worst month of the year. Most airlines achieve just 70% load factor for the entire year. This success is the result of the increasing recognition of our company and of increasing business activity in the country, with oil prices picking up and benefiting the economy overall.

Qazaq Air had expansion plans last year in terms of fleet and passengers, with a target of 250,000 passengers. How have those plans worked out?

We set ourselves some challenging targets in our first year, but ended up carrying 215,000 passengers; we were a bit short of the target, though it was still a good result. We want to reach 450,000 passengers by 2019. We are generally conservative in our estimates, but believe that every number we put out there is reachable. We want to increase to five aircraft, up from three now. That will increase passenger numbers and will also mean we can use our aircraft more efficiently and cost-effectively. It would increase our capacity by 40%, translating into more flight hours per month, more frequencies on our popular routes, and higher efficiency of our route network.

What are your most popular routes?

The Almaty-Astana route is always popular and we do a daily flight on that one. Of course, every airline flies that route, so it is not the most exciting one. The interesting ones are, for instance, Atyrau-Aktobe and Uralsk-Atyrau, neither of which is flown by anyone else. These flights enable workers and people on rotation contracts to get home quickly and safely in much less time. The new routes we are looking at are in west Kazakhstan in particular, where we want to increase our business. We have three routes from Atyrau and want to increase frequencies on those routes. We only fly Uralsk-Atyrau twice a week and want to increase that to three times a week. We thus need to set up a maintenance base in West Kazakhstan as well. We are also looking at nearby international destinations in Russia, Central Asia, and possibly Azerbaijan now that Azerbaijan has relaxed visa requirements. That being said, we are a regional airline, not long haul. We have a range of 1,800km on our aircraft.

When will Qazaq Air start thinking in profit terms rather than cost reduction terms?

Our company is due to be privatized. To be privatized in Kazakhstan, a company should have three years of audited accounts and a decent financial history, and it needs to have at least visibility of profits in the future, even if it is not profitable at the time of going to market. We told our shareholders we will be ready to work on privatization in 2020.

How does being a state-owned company affect your operations and what is the main difference with running a private airline?

There is a great deal of paperwork and bureaucracy as a state-owned company, as there should be, because the company is spending public money. We have a “big four” accounting firm audit us, we have CSR policies, produce reports and accounts, and comply with all national corporate governance issues and so on. However, these things are important in terms of the reputation of our company and Samruk Kazyna, the company that finances us. They are all great for the long term; however, they have real costs in the short term. The plus side is that we receive financial support from the state and have no trouble raising funds. So there are pros and cons to running both a public and a private company. In our position, it is better to be state owned under Samruk Kazyna.