Andrew Chuter/BAKU
The terminal at Baku's Bina Airport stands like a monument to the collapse of the Soviet Union's writ in Azerbaijan in 1991.The building has lain uncompleted and virtually in ruin, the funds required to complete the project having dried up several years ago with the retreat of the Moscow-based company undertaking the work.
On the face of it, the bungle at Baku is a story of decline familiar to the air-transport industries of many of the Commonwealth of Independent States. Azerbaijan, however, may be about to buck the trend. The reason is oil. The tiny nation of just 86,600km2 and a population of 7.2 million people situated on the Caspian Sea is potentially the world's third-largest oil producer.
With oil reserves estimated to be only 20% less than those of Saudi Arabia, the country is on the verge of an investment boom expected to top $60 billion over the next 30 years.
Work on exploitation of the reserves by mainly Western European and US oil companies has brought with it the start of a steady growth in international air travel and freight which the Azerbaijanis, belatedly, have recognised requires a commensurate upgrade to the nation's airports, airline and related infrastructure.
Much of the credit for the change results from a change of management at the country's civil-aviation authority. Some 18 months ago, Djanguir Askerov became director-general of the State Concern of Civil Aviation (AZAL), which includes Azerbaijan Airlines.
DIFFICULT INHERITANCE
he ex-Antonov An-2 pilot inherited a deteriorating air-transport infrastructure suffering from a combination of run-down airports, out-of-date air-traffic-control (ATC) systems and poor management, allied to the more general malaise created by a weak economy, low wages and corruption.
Many of those problems still exist, but the changes which Askerov's accession have brought about hold the promise of better things to come. "We were a monster who couldn't make a turn: now, within 18 months, we have starting moving towards international standards," he says.
His first big policy change may eventually be the most enduring. In a major management reshuffle, AZAL has been split into six separate operations: Azerbaijan Airlines; Airports; Azeraeronavigation (the national ATC operation); an in-flight catering company; and AZAL Cargo, a freight handler.
The catering company is already up and running as a joint venture with Dubai-based specialist Abela. The new operation, with purpose-built arrangements at Baku, uses Abela's expertise and cash in return for a supply monopoly lasting well into the next century.
It is a formula which the cash-starved Azerbaijanis would like to see repeated in other sectors. Talks are already in the final stages for a joint venture on passenger- and ground-handling services at Baku. Askerov says that he would also like to see a maintenance centre created in the next two or three years.
Azeraeronavigation boss Sultanov Valery Zeynaldinovich is a supporter of the Askerov policy, saying that the "-separation of the country's ATC from the rest of the civil-aviation activities has brought big gains", allowing a cut in bureaucracy and the funnelling of overflight and local ATC charges into his enterprise, rather than going to the state-owned company.
In spite of recent increases in the number of international and domestic flights and overflights - the latter alone running at around 1,600 a month and rising - Azeraeronavigation appears to be coping well, even with its old Soviet equipment. Improvements to ATC are under way, with new primary and secondary radars and a distance measuring equipment/ VOR omnidirectional radar (DME/VOR) system among the main upgrades either in place or under contract.
RE-EQUIPING NATIONAL ATC
Zeynaldinovich's most important project is the re-equipment of the national ATC centre in Baku. There are also two regional centres. Bids from ATC suppliers are already being sought, and the Azeraeronavigation director, perhaps optimistically, hopes to have the new system up and running within 17 months of contract award. This undertaking is also dependent on the wider refurbishment of the terminal area at Baku.
Other improvements are in the pipeline, with plans for satellite-communication links with neighbouring states such as Georgia, Iran, Turkey and Turkmenistan high on the list. The European Union has also funded a study into ATC co-operation among the nations in the Caucasus region - particularly for training.
While Azeraeronavigation's upgrade is under way, the position of the other key components in the local aviation infrastructure - Azerbaijian Airlines and Baku Bina Airport - have yet to progress.
Askerov has ambitious plans for the national carrier. Unfortunately, the vision and the funding are out of step for the present. Azerbaijan Airlines' ageing fleet is largely a legacy from the Soviet era. Yakovlev Yak-42s, Tupolev Tu-134s and Tu-154s, Ilyushin Il-76s and a handful of Boeing 707s and 727s make up a fleet operating passenger and cargo flights to destinations such as Delhi, Dubai, Istanbul, London and Moscow. The fleet numbers nearly 50 aircraft, but this obscures the fact that many lie parked in what has become an AZAL graveyard at the end of Baku Bina's runway.
The AZAL boss is acutely aware of the need to begin replacing the older Soviet and Boeing aircraft in the fleet, but is unable, for the moment, to provide the finance to push through the change. The immediate problem is US legislation, known as Amendment 907, blocking the granting of financial credits and guarantees to Azerbaijan by the USA.
The Congressionally inspired financial ban results from a war with Armenia over the Nagorno Karabach region in Azerbaijan earlier in the decade. An armistice has been in place since 1994 in a so-far fruitless bid to develop a peaceful solution to the problem.
The Azerbaijanis had hoped that the Amendment would be lifted following the first- ever visit by the country's president, Geidar Aliyev, to see US President Bill Clinton in Washington earlier this year. To date, however, the ban remains, keeping on ice an intention to acquire two Boeing 757s in a deal which Askerov admits involves only "15% of the finance coming from us and the remainder from Boeing and the Exim Bank".
Askerov also opened talks with Airbus Industrie over the possible use of A310s earlier this year ,and the AZAL boss says that a deal allowing delivery of aircraft in 1998 remains a possibility, whether or not the Boeing deal comes together.
ALLOCATING RESOURCES
The Azerbaijan Government is expected to "allocate resources for the acquisition of five or six aircraft" in the medium term, says Askerov. Its financial position should start to improve with the opening, earlier this month, of one of three major pipelines destined to transport crude oil to world markets.
Azerbaijan Airlines' plans focus on the upgrade of the fleet with medium-range aircraft, leaving aside the issue of upgrading regional services, now largely undertaken by Yakovlev Yak-40s. At one stage, it was being reported that the airline was to do a deal with Bombardier for the delivery of regional aircraft. Askerov, however, has other priorities, and it is likely to be several years before any real cash flows into regional operations. The director-general says, however, that it may be possible to set up a small airline operating 15- to 19-seat airliners as a joint venture to further his aspirations of turning Baku into a hub.
GROWING DEMAND
International carriers serving Baku, such as British Airways, Lufthansa and KLM, would like to see a strong regional operator offering Western-class aircraft immediately. Demand for travel by business passengers to destinations in Azerbaijan and neighbouring countries is gathering momentum as the Transcaucasian region in general looks for assistance to exploit its considerable natural wealth.
Lufthansa and British Airways, in particular, are adding services in the region, but both airlines are looking for a carrier able to provide them with the spokes to service their Baku hubs. With Azaibaijan Airlines focusing elsewhere, the only likely candidate to provide the services that the international airlines would like to see develop is private-sector carrier IMAIR.
Owned by the Improtex Group, the country's largest privately run company, IMAIR has been operating since 1995, building up a fleet of three Tu-154s - two older, leased, B variants and a newly owned M model - and three leased Il-76s.
Services are already operating to locations such as Moscow, Tashkent, Sharjah, Aleppo and Urumchi in China. IMAIR deputy executive director Nadir Safarov says: "Domestic and regional routes are under development." Minsk and Rostov head the queue, while domestic destinations such as Ganja ( from which it already operates one service) and Nakhichivan and regional routes to cities such as Ashkablad also figure in plans.
Travel to other CIS countries already accounts for 48% of the estimated 1.7 million passengers using Azerbaijan's civil airlines in 1996. Domestic passengers made up 37% of the total, and those coming in on international routes the remaining 15%. The passenger forecast for this year is around 2 million as air travel starts to recover following its collapse after the break-up of the Soviet Union. Cargo tonnages are also moving up, and the key part played by freight in the economics of air travel in the region should not be overlooked.
TRANSCAUCASIAN PROSPECTS
The European Union is also conducting a study into the prospects for Transcaucasian airline co-operation, but, at their present stage of development, the nations in the region are probably not ready to consider seriously merging their air-transport interests, regardless of the economic logic of such a move. In particular, the thorny question of who gets the hub would prove hopelessly divisive.
The Azerbaijanis see Baku's Bina Airport as an ideal location. That is not a view shared by others in the region, not least because the airport is in such a state of decay. Even IMAIR, which, as a local company, has to be diplomatic, describes Bina in a brochure as having "poor possibilities and out-of-date technical conditions in the ground-handling sector". The reality has been much worse, with severe shortages of ground-handling equipment and poorly motivated and paid staff working in a dilapidated airport - although pilots say that the runways are in a fair condition.
The outlook for airlines and passengers, however, is much brighter, with a Turkish/UK programme to refurbish the international terminal at Bina expected to get under way in December with funds provided by the European Bank of Reconstruction and Development. Bourg-Enka of Turkey is responsible for the civil works and Siemens ATM Airports is acting as systems integrator responsible for items such as security, airbridges, baggage handling and check-in desks. The two-phase programme should see Bina upgraded to international standards towards the end of 1999. Only then will Azerbaijani aspirations have a real chance of realisation.
Source: Flight International
