Expert: Uzbekistan is developing a privatization program for “Uzbekistan Airways” 

The government is planning to remove the National Airline of Uzbekistan from state subordination and developing a detailed program for the privatization of the industry.

The future of the company and Uzbekistan as a whole will depend on how transition is conducted, who becomes an owner. Oleksandr Lanetsky, Director of Consulting Company “Friendly Avia Support” (Lithuania), lecturer at the department of aviation business management at the University of Kazimieras Simonavičius, former Vice President of avia-holding “Avia Solution Group”, stated this in an interview with the correspondent of Podrobno.uz.

Recently, it became known that in Uzbekistan, two companies will be created on the basis of the National Airline Uzbekistan Airways – the operator on airport management and the air carrier.

“If the unequivocal question should be answered good or not, then from a strategic point of view, it is an absolutely correct decision. It’s not announced yet what goals are set for this reform, but it’s good news that they began to move slowly. Division of the airport management operator and the air carrier should have happened earlier. To my mind, this issue has been delayed by 10 years,” Oleksandr Lanetsky said.

In accordance with this document, the state will keep the Center “Uzaeronavigatsiya” (CUAN), which will be transferred to the competence of the Cabinet of Ministers. The expert noted that the CUAN is the most profitable enterprise of the National Air Company.

“CUAN literally earns on the air. The subject of activity is air traffic services and radio engineering of flights. This is a common international norm when you need to pay a certain amount for using and crossing the airspace, therefore such enterprises are the most profitable in this area,” Mr. Lanetsky noted.

According to him, in developed countries, the profitability of the aviation business depends on the type and scale of activity. So, with the rare exception of airlines, 1-3% profits go beyond the boundaries, but major airports bring 20-30% per year, just like ground service.

Aircraft refueling can bring about 10-15% profit. When it comes to small airports, where passenger traffic is less than 200,000 people a year, there is no need to talk about profit. For example, in the European Union in the first half of the year, more than 80% of small airports were unprofitable.

“In Uzbekistan, large airports include the international air harbor of Tashkent, as well as Samarkand and Bukhara. There are also potentially profitable airports in Urgench and Fergana, but they do not operate yet with complete competency. Unprofitable ones are Karshi, Andijan and Namangan airports. So, the National Airline “Uzbekistan Airways” faces the question – what to do with unprofitable airports, to reform or close them,” he said.

Theoretically, according to him, if everything is done correctly, the profit of the airport holding can be up to $ 100 million per year. And its value, if it is withdrawn, for example, on the Chinese stock exchange, can be about $ 10-15 billion.

In general, according to the expert, this is a very difficult area and fundamental improvement of the aviation industry of Uzbekistan will not be easy.

“It’s clear for everyone that it’s not possible to keep the necessary financial flow for servicing, renewal, repayment of loans and etc., if the airline continues to work as it is now. My personal conviction is that the government is preparing to withdraw the enterprise from state subordination, a privatization program is being developed,” the expert noted.

Meanwhile, the presidential decree also informs that “Uzbekistan Helicopters” Limited Liability Company will be created on the basis of the state unitary enterprise “Aviation Company of special aviation works”.