News Content

CIS challenging, but there's scope and hope for air cargo as oil flows

DELEGATES at the Caspian Air Cargo Summit in Baku heard that the Commonwealth of Independent States (CIS) will provide big opportunities for the air freight with the growth in oil and gas output, but won't always be easy.

The CIS currently accounts for 16 per cent of the world's oil and gas output - 20 per cent with Iran included - and the region has 7.5 per cent of global oil reserves.

"The region is self-sufficient in feedstock, but there are constraints in refining and transport," said Gaffrey, Cline & Associates consultant Mark Mozur. "The output in Azerbaijan is increasing to 1.5 million barrels a day in 2015, which will be maintained up to 2035."

Coyne Airways director Liana Coyne said that many countries in the region needed to change their air freight policies to boost business. The airline has operated in the region for some 20 years and has a hub in Tbilisi, Georgia, according to London's Loadstar.

"It can be a challenging environment," she said. "The cost of doing business in airports, including the price of fuel and handling, can be high."

She added that issues such as sanctions in Iran, restructuring and "royalty" payments in Iraq and restrictions on foreign carriers, as well as high trucking costs in Kazakhstan and restricted access in Uzbekistan, all created difficulties for carriers operating in the CIS. "Some of these restrictions mean older Russian aircraft have to be used - they can be expensive." She called on all governments in the region to offer some tax relief.

Azerbaijan itself saw 43,000 tonnes of air freight in 2011, of which some 72 per cent was carried by domestic carriers, according to Oxford Economics. About 88 per cent of this trade was with Europe, 10 per cent with the Middle East and Africa, while Asia accounted for two per cent.

Silk Way Airlines, which operates seven IL-76s, three AN-12s, three B747-400Fs and two 767-300Fs, is the leading cargo carrier in the country, and saw volumes rise 40 per cent last year. The airline has invested significantly in facilities at Baku and is expected to enjoy much of the growth from the oil business in Azerbaijan, which will produce revenues of some US$20 billion by 2024.

According to research from Boeing, trade from Europe to CIS countries will grow 5.1 per cent each year, and from the CIS to Europe will increase six per cent annually - although from a low point.