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Kazakhstan: Airlines Warn of Price Increases as Taxes Rise

Officials say they are listening to foreign carriers, but insist the airport taxes are reasonable. 

Some prominent international air carriers working in Kazakhstan last week formed a united front to voice discontent about a hike in tax rates at the country’s airports, warning that it will lead to higher ticket prices.

In June 2017, the authorities scrapped the regulation of tariffs that airports can charge airlines, a move that has had palpable inflationary results. Charges levied for landing, taking off and security have risen across the board, from between 6 percent and 100 percent.

An arguably more grievous potential outcome is that foreign companies will continue to boycott Kazakhstan altogether. A representative for state-run Air Astana, Ibrahim Canliel, said at a news conference this week that “in the last few years, many airlines, like Austrian Airlines, Asiana and KLM have scrapped their flights to Astana.” Poland’s LOT has reduced the number of flights it offers and Finnair has suspended its route, he said.

The government is adamant tariffs are not the issue.

Investment and Development Minister Zhenis Kasymbek said on January 23 that airport levies in Astana are lower than at the city’s main peers. Costs have not changed for the past 10 years, he said.

By way of comparison, Kasymbek pointed to examples of neighboring countries.  

“Even now [after the tariff increase], Astana charges $6 per ton for landing and takeoff. At Domodedovo [in Moscow] it is $11.50, in Tashkent it is $19.8, in Bishkek it is $18,” he said.

Kasymbek shrugged off claims that any routes were scrapped because of the tariffs, noting that those decisions had been taken long before there was any talk of increases.

All the same, the government is showing willingness to compromise. Prime Minister Bakytzhan Sagintayev ordered his No. 2, Askar Mamin, to study the petitions of airline companies and to consider their interests “as a war for flights is underway between companies and countries.”

Kazakhstan is in a tough negotiating position. Its position militates against it posing much of a prospect as a hub and local demand is ultimately limited. If Astana wishes to develop its tourist sector further and to give its increasingly adventurous population more options on traveling internationally, however, something somewhere will have to give.

Kazakhstan: Airlines Warn of Price Increases as Taxes Rise

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