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AIR DISPUTE, EARTHLY CONCERNS: ARGUMENT BETWEEN NATIONAL CARRIER, AIRPORT LINGERS ON IN ARMENIA
By Naira Hayrumyan
ArmeniaNow
14.03.12 | 13:35
Eduard Eurnekian (left), Mikhail Baghdasarov
Armenia's national air carrier, Armavia, is still at odds with the
country's only international airport, Zvartnots, over terms of payment
for its services despite government-mediated talks that ended in no
deal on Tuesday.
The Head Department of Civil Aviation announced early on March 13 that
after five hours of negotiations the Zvartnots administration had
agreed to make concessions to Armavia, providing conditions for the
airline's normal operation. However, in the evening Armavia issued
an official statement, saying that Zvartnots had gone back on its
promise and called off the deal.
Neither company has elaborated on the announcement, while the
negotiations appear to be in limbo at the moment. Nor have they
disclosed the details of their disagreements. Still, according to
information that has been in the public domain, Armavia is seeking
discounts for services as a national carrier. The airport insists
that it does provide discounts, but Armavia does not live up to its
obligations and now has a huge debt to the airport.
Some experts estimate that the head of Armavia, Mikhail Baghdasarov,
an affluent businessman who is a citizen of Russia, simply has
decided to drive his company into bankruptcy. According to some media
speculations, Argentinean-Armenian businessman Eduard Eurnekian, whose
corporation currently manages Zvartnots, intends to buy Armavia. Once,
at a press conference, Baghdasarov admitted that "there are influential
people who are keen on getting their hands on Armavia". He did not
elaborate on that. There is also speculation that Baghdasarov intends
to sell the company, as it requires large investments.
The problem got became public after Armavia's March 6 strike as the
airline canceled all its flights and demanded the reduction of airport
service tariffs. Baghdasarov then did not exclude that Armavia might
consider declaring bankruptcy unless Zvartnots lowered the fees for
its services by 25 percent.
Eurnekian, who took the Zvartnots airport into concession
management for 30 years in 2001, has made a huge investment in its
infrastructure. Only the construction of new terminals required an
investment of more than $160 million. Baghdasarov has not made public
the size of his investment.
Media write about the clash of interests between the two companies
that belong to different types of business ideology - Western and
Russian. Russian businesses are accustomed to enjoying support from
the government, to tax breaks, cancellation of debts, abandonment of
long-term investments and obtaining quick windfall profits.
Western-type business implies investment, advertising, pure commerce.
The Armenian government has assumed the role of a go-between in the
talks. The Head of the Department of Civil Aviation announced that
the talks resulted in the Zvartnots administration's agreement to
make some concessions and provide conditions for the airline's normal
operation. In return, Armavia reportedly would carry out flights on
its regular schedule. The parties had reportedly reached a consensus
on the issue of tariffs for services, as well as on the schedule of
payment of the airline's debts to the airport. However, Armavia later
announced that no agreements had been signed, meaning that the issue
was still not settled.
Earlier, on March 6, Armavia gave guarantees to pay debts to a Russian
air navigation company to which it owes a sizable sum. After that,
the company, Rosavianavigatsia, removed its ban on Armavia to fly
in the Russian air space that it introduced during the same day. At
present, Armavia continues to operate flights, but passengers fear
the airline may stop flying any moment.
By Naira Hayrumyan
ArmeniaNow
14.03.12 | 13:35
Eduard Eurnekian (left), Mikhail Baghdasarov
Armenia's national air carrier, Armavia, is still at odds with the
country's only international airport, Zvartnots, over terms of payment
for its services despite government-mediated talks that ended in no
deal on Tuesday.
The Head Department of Civil Aviation announced early on March 13 that
after five hours of negotiations the Zvartnots administration had
agreed to make concessions to Armavia, providing conditions for the
airline's normal operation. However, in the evening Armavia issued
an official statement, saying that Zvartnots had gone back on its
promise and called off the deal.
Neither company has elaborated on the announcement, while the
negotiations appear to be in limbo at the moment. Nor have they
disclosed the details of their disagreements. Still, according to
information that has been in the public domain, Armavia is seeking
discounts for services as a national carrier. The airport insists
that it does provide discounts, but Armavia does not live up to its
obligations and now has a huge debt to the airport.
Some experts estimate that the head of Armavia, Mikhail Baghdasarov,
an affluent businessman who is a citizen of Russia, simply has
decided to drive his company into bankruptcy. According to some media
speculations, Argentinean-Armenian businessman Eduard Eurnekian, whose
corporation currently manages Zvartnots, intends to buy Armavia. Once,
at a press conference, Baghdasarov admitted that "there are influential
people who are keen on getting their hands on Armavia". He did not
elaborate on that. There is also speculation that Baghdasarov intends
to sell the company, as it requires large investments.
The problem got became public after Armavia's March 6 strike as the
airline canceled all its flights and demanded the reduction of airport
service tariffs. Baghdasarov then did not exclude that Armavia might
consider declaring bankruptcy unless Zvartnots lowered the fees for
its services by 25 percent.
Eurnekian, who took the Zvartnots airport into concession
management for 30 years in 2001, has made a huge investment in its
infrastructure. Only the construction of new terminals required an
investment of more than $160 million. Baghdasarov has not made public
the size of his investment.
Media write about the clash of interests between the two companies
that belong to different types of business ideology - Western and
Russian. Russian businesses are accustomed to enjoying support from
the government, to tax breaks, cancellation of debts, abandonment of
long-term investments and obtaining quick windfall profits.
Western-type business implies investment, advertising, pure commerce.
The Armenian government has assumed the role of a go-between in the
talks. The Head of the Department of Civil Aviation announced that
the talks resulted in the Zvartnots administration's agreement to
make some concessions and provide conditions for the airline's normal
operation. In return, Armavia reportedly would carry out flights on
its regular schedule. The parties had reportedly reached a consensus
on the issue of tariffs for services, as well as on the schedule of
payment of the airline's debts to the airport. However, Armavia later
announced that no agreements had been signed, meaning that the issue
was still not settled.
Earlier, on March 6, Armavia gave guarantees to pay debts to a Russian
air navigation company to which it owes a sizable sum. After that,
the company, Rosavianavigatsia, removed its ban on Armavia to fly
in the Russian air space that it introduced during the same day. At
present, Armavia continues to operate flights, but passengers fear
the airline may stop flying any moment.