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Armavia Reimagined: Solutions for a Successful Armenian National Carrier
http://hetq.am/eng/news/24996/armavia-reimagined-solutions-for-a-successful-armenian-national-carrier.html
22:46, March 31, 2013
By Raffi Elliott
A history of problems:
The brief time since Armenia's regaining of independence has been
rather turbulent for its small aviation industry.
As the USSR fell apart, Armenia, having been a constituent republic
received a number of former Aeroflot jets which formed the basis for a
new Armenian national carrier, Armenian Airlines, which served a
number of routes to Russia and continental Europe.
However, environmental restrictions within the European Community
meant that the soviet-era fleet would no longer be able to fly its
European routes, effectively condemning the new airline to bankruptcy.
This failed first attempt was shortly followed by a second, albeit
controversially short-lived venture; Air Armenia's assets were
opaquely liquidated to form the new, privately-run, supposedly
publicly-traded, Armavia.
Armavia, officially managed by the Russian-Armenian oligarch Mikhail
Baghdasarov was able to lease, and later purchase, a small fleet of
second-hand airbuses, allowing it to expand its routes into the EU and
Russia, as well as serving some middle-eastern destinations, such as
Dubai, Aleppo and Beirut. despite a few accidents, Armavia
essentially flew with a descent record.
Despite apparent successes, it soon became apparent that Armavia was
being plagued by financial issues, incompetent management, and
inefficient use of resources; with more flights being cancelled, and
others being delayed as a result. The company's true financial
situation began to surface when, being the first recipient of the
Russian-Italian made Sukhoi Superjet, it soon had to return its
purchase, as well as cancel a second order for a second one.
This was followed by a drastic reduction of routes. Armavia further
caused controversy, when they cancelled their flight to Aleppo, only
to reinstate it with grossly inflated ticket prices, which most of the
ethnic-Armenian refugees fleeing the Syrian Civil War could not
afford.
A recent dispute between the failing airline and the
Corporacion-America-managed Zvartnots Airport over gate fees further
raised speculation of imminent bankruptcy; and, as an "ArmeniaNow"
article pointed out, fully embodied the stark contrast between a
western-style properly managed corporation (such as the Airport), and
a soviet-style oligarch run and operated company which relies on
kick-backs and government favouritism to survive.
Today, Armavia flights are routinely between 2 and 3 hours late or
sometimes cancelled, to the great discomfort of travellers, and its
future is uncertain. As of March 30th, Armavia has already filed for
bankruptcy.
Challenges and Solutions
Other than the obvious factors such as the endemic results of
oligarch-style mismanagement, which plagues most other sectors of the
Armenian economy, the most glaring problem is that Armavia simply
missed its mark. the airline failed to establish its niche. it flies
against tough competition in very crowded routes such as
Yerevan-Moscow, Yerevan-Sochi, Yerevan-Krasnodar, and so on, which are
served extensively by a number of domestic Russian airlines, without
offering a competitive edge such as better service, cheaper airfare,
customer loyalty points or anything. As far as most labour migrants
are concerned, it is a soviet airline like all the others. The
Yerevan-Dubai route, for example, is served by both Armavia and
Emirates subsidiary: FlyDUBAI. The difference in Ticket-price is
almost minimal (usually less than 50 Euros), yet FlyDUBAI offers
outstanding customer service, friendly staff, both on the phone, and
on the plane, as well as online booking. Armavia offers none of
that…well worth the extra 50 Euros….
Low-Cost People Mover?
Second, Armavia totally fails to make proper use of its logistical hub
in terms of boosting number of travellers. There is a gross
miscalculation in their mission statement: Yerevan does not have to be
a FINAL DESTINATION, as much as it could also serve as a transit
station. Granted, Zvarnots airport (which recently won an award for
the best-managed airport in Eastern-Europe by the way) DOES have
higher-than-average gate fees, which, with some negotiations, could be
brought down, but the point is that the aerodrome is equipped to
handle almost all aircraft flying in the world today, and the
facilities could handle much larger volume than it does today. This,
coupled with Armenia's suitable geographical location as a transit
point between east and west would allow the company to compete in a
new airline market: that of low-cost alternative.
If people could travel from Western Europe, or North America to
South-East asia for several hundred dollars less than one of the major
airlines, they would certainly not mind a layover in Armenia; and
similarly, Hotel managers, tour companies and various other Armenian
businesses wouldn't mind the extra customer base. Seems like a win-win
for all.
It wouldn't be difficult for Armavia to pull this off. It would be as
simple as following the Ryanair, or EasyJet model of avoiding large
airports in favour of smaller, regional airports, where gate fees are
much lower, serve better quality meals for a small fee, charge for
luggage, or extra leg room and so on.
Brand Recognition
One of the most irritating parts about Armavia, is the fact that the
first 3 letters in the name correspond to the name of the Republic of
Armenia. Right now, there is no greater shame than having such an
airline serving as Armenia's national air carrier. I'm also sorry to
say that hiring Gerard Depardieu, who has recently lost his marbles,
and began prostituting himself to the whims of a number of post-soviet
dictators does nothing to help raise brand awareness.
Maybe Armavia would do well to hire a public relations firm, rebrand
itself as safe, reliable and cheap alternative to Emirates of British
Airways, and advertise themselves as such.
Freight-Traffic Development
Being based in a tiny, landlocked country which is being blockaded on
two sides, it comes as a total shock that Armavia hasn't yet developed
a cargo division. the solution seems obvious: buy freight aircraft and
start flying cargo in and out as a way to make extra cash.
Of course, none of these changes could be implemented until the
management problem is resolved. the practice of hiring and promoting
based on nepotism and kick-backs needs to cease immediately, as such
positions which be awarded on the basis of meritocracy. This would
allow a competent management team to properly oversee company
operations.
To recap: if Armavia one day decides to get its act together, it could
very easily rise from the grave through a simple formula of hiring a
competent management team, finding its niche, and gaining the
competitive edge by rebranding itself as a safe, reliable, low cost
airlines which can connect the world. That way, Armenians will finally
regain their pride in their national carrier....oh, and maybe have an
ARMENIAN version to their site for a change...
Raffi Elliott is a Yerevan-based Canadian-Armenian political
commentator who frequently writes about Armenian social, political and
economic trends on his blog: www.mshak.org
http://hetq.am/eng/news/24996/armavia-reimagined-solutions-for-a-successful-armenian-national-carrier.html
22:46, March 31, 2013
By Raffi Elliott
A history of problems:
The brief time since Armenia's regaining of independence has been
rather turbulent for its small aviation industry.
As the USSR fell apart, Armenia, having been a constituent republic
received a number of former Aeroflot jets which formed the basis for a
new Armenian national carrier, Armenian Airlines, which served a
number of routes to Russia and continental Europe.
However, environmental restrictions within the European Community
meant that the soviet-era fleet would no longer be able to fly its
European routes, effectively condemning the new airline to bankruptcy.
This failed first attempt was shortly followed by a second, albeit
controversially short-lived venture; Air Armenia's assets were
opaquely liquidated to form the new, privately-run, supposedly
publicly-traded, Armavia.
Armavia, officially managed by the Russian-Armenian oligarch Mikhail
Baghdasarov was able to lease, and later purchase, a small fleet of
second-hand airbuses, allowing it to expand its routes into the EU and
Russia, as well as serving some middle-eastern destinations, such as
Dubai, Aleppo and Beirut. despite a few accidents, Armavia
essentially flew with a descent record.
Despite apparent successes, it soon became apparent that Armavia was
being plagued by financial issues, incompetent management, and
inefficient use of resources; with more flights being cancelled, and
others being delayed as a result. The company's true financial
situation began to surface when, being the first recipient of the
Russian-Italian made Sukhoi Superjet, it soon had to return its
purchase, as well as cancel a second order for a second one.
This was followed by a drastic reduction of routes. Armavia further
caused controversy, when they cancelled their flight to Aleppo, only
to reinstate it with grossly inflated ticket prices, which most of the
ethnic-Armenian refugees fleeing the Syrian Civil War could not
afford.
A recent dispute between the failing airline and the
Corporacion-America-managed Zvartnots Airport over gate fees further
raised speculation of imminent bankruptcy; and, as an "ArmeniaNow"
article pointed out, fully embodied the stark contrast between a
western-style properly managed corporation (such as the Airport), and
a soviet-style oligarch run and operated company which relies on
kick-backs and government favouritism to survive.
Today, Armavia flights are routinely between 2 and 3 hours late or
sometimes cancelled, to the great discomfort of travellers, and its
future is uncertain. As of March 30th, Armavia has already filed for
bankruptcy.
Challenges and Solutions
Other than the obvious factors such as the endemic results of
oligarch-style mismanagement, which plagues most other sectors of the
Armenian economy, the most glaring problem is that Armavia simply
missed its mark. the airline failed to establish its niche. it flies
against tough competition in very crowded routes such as
Yerevan-Moscow, Yerevan-Sochi, Yerevan-Krasnodar, and so on, which are
served extensively by a number of domestic Russian airlines, without
offering a competitive edge such as better service, cheaper airfare,
customer loyalty points or anything. As far as most labour migrants
are concerned, it is a soviet airline like all the others. The
Yerevan-Dubai route, for example, is served by both Armavia and
Emirates subsidiary: FlyDUBAI. The difference in Ticket-price is
almost minimal (usually less than 50 Euros), yet FlyDUBAI offers
outstanding customer service, friendly staff, both on the phone, and
on the plane, as well as online booking. Armavia offers none of
that…well worth the extra 50 Euros….
Low-Cost People Mover?
Second, Armavia totally fails to make proper use of its logistical hub
in terms of boosting number of travellers. There is a gross
miscalculation in their mission statement: Yerevan does not have to be
a FINAL DESTINATION, as much as it could also serve as a transit
station. Granted, Zvarnots airport (which recently won an award for
the best-managed airport in Eastern-Europe by the way) DOES have
higher-than-average gate fees, which, with some negotiations, could be
brought down, but the point is that the aerodrome is equipped to
handle almost all aircraft flying in the world today, and the
facilities could handle much larger volume than it does today. This,
coupled with Armenia's suitable geographical location as a transit
point between east and west would allow the company to compete in a
new airline market: that of low-cost alternative.
If people could travel from Western Europe, or North America to
South-East asia for several hundred dollars less than one of the major
airlines, they would certainly not mind a layover in Armenia; and
similarly, Hotel managers, tour companies and various other Armenian
businesses wouldn't mind the extra customer base. Seems like a win-win
for all.
It wouldn't be difficult for Armavia to pull this off. It would be as
simple as following the Ryanair, or EasyJet model of avoiding large
airports in favour of smaller, regional airports, where gate fees are
much lower, serve better quality meals for a small fee, charge for
luggage, or extra leg room and so on.
Brand Recognition
One of the most irritating parts about Armavia, is the fact that the
first 3 letters in the name correspond to the name of the Republic of
Armenia. Right now, there is no greater shame than having such an
airline serving as Armenia's national air carrier. I'm also sorry to
say that hiring Gerard Depardieu, who has recently lost his marbles,
and began prostituting himself to the whims of a number of post-soviet
dictators does nothing to help raise brand awareness.
Maybe Armavia would do well to hire a public relations firm, rebrand
itself as safe, reliable and cheap alternative to Emirates of British
Airways, and advertise themselves as such.
Freight-Traffic Development
Being based in a tiny, landlocked country which is being blockaded on
two sides, it comes as a total shock that Armavia hasn't yet developed
a cargo division. the solution seems obvious: buy freight aircraft and
start flying cargo in and out as a way to make extra cash.
Of course, none of these changes could be implemented until the
management problem is resolved. the practice of hiring and promoting
based on nepotism and kick-backs needs to cease immediately, as such
positions which be awarded on the basis of meritocracy. This would
allow a competent management team to properly oversee company
operations.
To recap: if Armavia one day decides to get its act together, it could
very easily rise from the grave through a simple formula of hiring a
competent management team, finding its niche, and gaining the
competitive edge by rebranding itself as a safe, reliable, low cost
airlines which can connect the world. That way, Armenians will finally
regain their pride in their national carrier....oh, and maybe have an
ARMENIAN version to their site for a change...
Raffi Elliott is a Yerevan-based Canadian-Armenian political
commentator who frequently writes about Armenian social, political and
economic trends on his blog: www.mshak.org