GROWING WINGS
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.
BIOGRAPHY
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.
GROWING WINGS
TABLE OF CONTENTS
Guest Speaker
Rt Hon Sir Alan Duncan, State for Foreign and Commonwealth Affairs, United Kingdom
TBY talks to the Rt Hon Sir Alan Duncan MP, Minister of State for Foreign and Commonwealth Affairs of the United Kingdom, on the importance of Kazakhstan for the UK as a strategic partner in Central Asia and the variety of ventures that are improving economic cooperation between the two.
read articleInterview
Doris Bradbury, Director, American Chamber of Commerce (AmCham) in Kazakhstan
TBY talks to Doris Bradbury, Executive Director of the American Chamber of Commerce (AmCham) in Kazakhstan, on strategies for supporting growth, developing supportive structures for SMEs, and creating a more sustainable agriculture sector.
read articleInterview
Ermek Sakishev, Chairman , Investment Fund of Kazakhstan (IFK)
Ermek Sakishev began his career in 2005 at the Ministry of Economics and Budget Planning as a Lead Specialist. From 2005 to 2007 he worked at various private companies. From 2008 to 2011 he worked in the Administration of the President in various roles, from expert up to sector leader of the Social and Economic Monitoring Department. In 2011, he became the Director of the Innovative Policy Department of Samruk-Kazyna. From 2012 up to 2014 he occupied managerial positions within the private sector, becoming Deputy Chairman of the Board at Baiterek Development in 2015.
read articleReview: Banking
A Crowded, but Orderly House
Imprudent business practice during boom times, volatile commodity prices, and currency turmoil have sent lasting shivers through Kazakhstan's banking sector. Yet bold remedial moves from the authorities have brought relative recovery to a listing economy.
read articleInterview
Alina Aldambergen, Chairman of the Management Board , Kazakhstan Stock Exchange (KASE)
TBY talks to Alina Aldambergen, Chairman of the Management Board of the Kazakhstan Stock Exchange (KASE), on the launch of commercial bonds, upgrading the image the exchange, and the strategy for achieving that.
read articleInterview
Davron Rustamkulo, Member of the Supervisory Board , RG Gold & Chief Investment Officer of Verny Capital
TBY talks to Davron Rustamkulov, Member of the Supervisory Board of RG Gold & Chief Investment Officer of Verny Capital, on RG Gold's goal of becoming a top mining player, future expansion plans, and the role of mining in Kazakhstan's development.
read articleFocus: Industrial Development
The Spiid Of Development
In 2014 Kazakhstan launched a five-year industrial development plan with the purpose of fostering growth of the industrial, mining, and manufacturing sectors. These areas, among others, were identified as being key to achieving the country's long-term vision of economic diversification.
read articleInterview
Aibat Akhmetalimov, Managing Director, Philip Morris Kazakhstan and Central Asia
TBY talks to Aibat Akhmetalimov, Managing Director of Philip Morris Kazakhstan and Central Asia, on introducing non-combustible products, remaining competitive in a health-conscious world, and the company's vision for a smoke-free future.
read articleFocus: ABU DHABI PLAZA
To The Steppes
A striking high-rise complex, funded and managed by UAE-based developers and constructors, will be launched in the heart of Astana in 2017, further contributing to the young capital's fascinating skyline and state-of-the-art architecture, as well as its growing status as an international hub.
read articleInterview
Arman Aldabergenov, General Director of Kazakhstan and Central Asia , Lactalis
TBY talks to Arman Aldabergenov, General Director of Kazakhstan and Central Asia of Lactalis, on the success of the company in the country, challenges in the agriculture sector, and expectations for 2017.
read articleFocus: Organic Growth
Soil & Grass
With vast natural pastures, Kazakhstan is extremely well positioned to become a major producer of organic agricultural products. As agriculture demonstrates increasing potential to become a driver of the economy, the government's new legislation on organic farming will boost the country's production and export of quality organic products.
read articleFocus: ECOTOURISM
So Good It Yurts
Kazakhstan is looking to make its mark as the region's main tourist destination. Out of the nine “stans," Kazakhstan is the largest and most topographically diverse, boasting miles of steppe, desert, and mountains, making it the perfect destination for an ecotourism industry.
read articleFocus: Mega Silk Way Mall
Mega Silk Way
A new iconic shopping mall incorporated in the state-of-the-art Expo architectural framework opens in 2017 and is set to be the symbol of the exhibition and of Kazakhstan's new flourishing retail industry, with positive effects on employment and the economy.
read articleReview: Doing Business
Sweet and Tenge Delight
Though Kazakhstan's macroeconomic outlook has suffered enormously in the past few years from the collapse in oil prices and currency devaluation, its political leadership strengthened long-term ties with the Russia, the West, and China and drastically increased the ease of doing business.
read articleReview: Accountancy
Precipitating A New Age of Oil & Gas Investment
Anthony Mahon, Partner of Caspian Energy and Resources Leader of Deloitte Kazakhstan, on the importance of creating a secure investment environment and updating the tax regime to attract investors to the extractive industry.
read article
