High price of tickets at AZAL believed to be purchase of fuel at global prices
Why are AZAL tickets expensive?
“There is an impression that AZAL [Azerbaijan Airlines – national carrier] tickets are too expensive, but the prices are actually low. This year more than 20 thousand AZAL tickets were sold at the price of 29 euros.” This opinion was given by Deputy Minister of Digital Development and Transportation Rahman Gummetov during a discussion of the new draft law “On Aviation” at a meeting of the Committee of the Parliament of Azerbaijan.
In his speech, the deputy minister said that AZAL no longer receives funds from the state budget:
“Prices in the aviation sphere are influenced by fuel prices, cost of purchase and maintenance of airplanes, as well as other factors. AZAL no longer buys fuel at reduced prices, but at world prices. But I absolutely do not want to say that the price will remain the same.”
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“AZAL did not effectively use the funds allocated from the state budget”
Economic expert Rashad Hasanov disagrees with the opinion of the deputy minister. According to him, if AZAL were the only company providing passenger transportation services in the world, Rahman Khummatov’s statement would sound reasonable:
“The words of the deputy minister that no funds are allocated from the budget for AZAL concern today. However, until now AZAL has been financed by the state. The entire infrastructure of the enterprise, the fleet was formed at the expense of the state budget. AZAL has received many benefits and subsidies for the services it provides. Until now the company has been allocated a lot of funds, and these funds have not been used effectively. Even the head of the country has talked about it.
Most of the companies providing air passenger transportation services in the world are private. They do not receive any support from the state budget. Then why can they offer services at a lower price? What market instruments are used? It is necessary to analyze and find weaknesses. We can unequivocally say that in this case the idea that ‘AZAL prices are inexpensive’ is not accepted and can be challenged,” he said in an interview with Abzas Media.
“AZAL ticket prices are very high compared to other companies”
The economist says that today everyone can do a little research on the web and see that AZAL ticket prices are very high compared to other companies:
“Someone may say that AZAL provides better service, but if we compare with companies that provide the same level of service as AZAL, we will see that the prices are still expensive.
Prices are also based on supply and demand. If you have one flight a week in one direction, the price is high because the demand is high. But if there are two flights, demand will be distributed, there will be more offers and prices will fall.”
“In an annual report on the state budget for 2022, it is noted that funds amounting to AZN 89.5 million were allocated, and these funds were realized in full. In a report of the Accounts Chamber it is noted that AZN 63.1 million was spent this year, and AZN 26.4 million was deposited in the bank account of the joint stock company. If the funds allocated by the state were not realized in full, then how AZAL’s storage costs will affect the price of tickets is also questionable,” the expert notes.
“All of AZAL’s airplanes were bought by the government… Where are the profits?”
In August 2020, President Ilham Aliyev said at a meeting with members of the government that although AZAL was given all kinds of support, it was ineffective:
“All AZAL’s airplanes were bought by the state. All airports were built by the state. So what is the profit and income of this to the state? These airplanes were purchased, they are being operated. So where is the benefit in that? When it is paid off, do we then have to repay the loans taken under the state guarantee?”
This is not the first time Ilham Aliyev has criticized AZAL. At a Cabinet meeting in July 2015, he said that AZAL ticket prices were too high and the issue should be resolved as soon as possible. Apparently, the critical speech of the head of the country did not have a great impact on the pricing policy of the company.
Still closed land borders
Those traveling to and from Azerbaijan have felt the difference in prices, especially in the last three years. In March 2020, during the COVID-19 pandemic, the country’s borders were closed to traffic to prevent the spread of the virus. Although the bans and restrictions related to the pandemic have been lifted as the number of people contracting the virus has decreased, the country’s land borders remain closed. Currently, entry and exit to Azerbaijan is possible only by air.
Those traveling to and from Azerbaijan have felt the difference in prices, especially in the last three years. In March 2020, during the COVID-19 pandemic, the country’s borders were closed to traffic to prevent the spread of the virus. Although the bans and restrictions related to the pandemic have been lifted as the number of people contracting the virus has decreased, the country’s land borders remain closed. Currently, entry and exit to Azerbaijan is only possible by air.
In September 2021, Magomed Muradov, head of the Tourism Policy and Strategy Department of the State Tourism Agency, told Fed.az that high AZAL ticket prices also affect tourism in the country:
“The assessment of AIATA organization also shows that the decrease in prices for air tickets even by 1 percent has a “mirror” effect on the number of tourists. That is, when prices fall by 1 percent, the number of tourists increases by 1 percent,” he said.
AZAL, which has high ticket prices, is not at the top of world ratings in terms of service quality.
52nd among the world’s 100 airlines
AZAL ranked only 52nd among the top 100 airlines in the index published by Skytrax World Airline Awards in 2022.
In the index published by Skytrax World Airline Awards in 2022, AZAL ranked only 52nd among the top 100 airlines.
AZAL was not included in the index of best airlines published by airlineratings.com. The ranking included 150 airlines that received 7 stars, which AZAL did not.
“Azerbaijan Airlines (AZAL) was established in 1992. Jahangir Askerov, who had been in charge of the company since 1997, was dismissed from his post in September this year by order of the head of the country. During these years, Askerov’s name was associated not only with AZAL.
Ilgar Ismailov, the former owner of the İdeal chain of perfume stores, who is under arrest, claimed at his trial in the Court of Grave Crimes that the head of AZAL, Jahangir Askerov, and his wife Zarifa Khamzaeva, took his business from him by force. According to Ismailov, he was punished and arrested precisely for speaking out about it, appealing to state bodies and courts, and demanding restoration of his rights.”
