Expert: State is to blame for Armavia’s bankruptcy

Expert: State is to blame for Armavia’s bankruptcy

Not least to blame in the current situation around the Armavia Company, national air carrier of Armenia, is the state. A similar view is also held by the deputy chairman of the Air Transport Policy Subcommittee of the Public Council of Armenia Isabella Mouradian, Armenia Today says.

According to her, one of the causes of the situation is the absence of the Air Code which has led to the current chaos where everyone does what they want.

"Of all the countries of the CIS, Armenia is the only one with no Air Code and if I'm not mistaken, Uzbekistan as well," Mouradian said.

Another cause was the signing of an agreement with Russia on the liberalisation of the air transport market which led to a breach of the pre-existing parity, she said.

"Previously only one airline company from each country was operating flights from Armenia to Russia and that was Armavia and Aeroflot. Following the agreement, another six Russian companies entered the Armenian market," Mouradian said, adding that the majority of flights are operated by Russian companies.

Another reason was the poor management of Armavia itself, she said, adding that the state is to blame in this regard as well. In particular, she stressed Armenia is one of the few countries, if not the only one, where the state does not hold any shares in the national air carrier company.

"The sale by the state of 100 per cent of the shares to an individual was a big mistake," Mouradian says.

The financial crisis that has affected airlines around the world, as well as the high rates of Zvartnots airport also led to the current situation with the company.

"We did some research and found that the rates are very high and need revising," she said, adding that this is not about rates for services that are traditionally provided by the airport, but about the supply of aviation fuel and ground handling.

"These services are generally not included in airport services and are undertaken by a number of companies. However, under the current contract in Armenia, these services are also provided by Zvartnots," she said, adding that the margin on aviation fuel is $250-300.

In view of the above problems, Mouradian said whichever company will be elected as the national air carrier, it will sooner or later be in the same situation as Armavia.

Armavia issued a statement on the termination of flights on March 29 and plans to begin bankruptcy proceedings.

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