Central Asia is a region consisting of five former Soviet republics: Kazakhstan, Uzbekistan, Kyrgyzstan, Tajikistan and Turkmenistan.
Despite its favourable geographic location in the middle of the air routes connecting Europe and Asia, this corner of the world is yet to unlock its potential as an international aviation hub, a vision that local authorities first announced plans to realise almost 30 years ago.
There are several reasons hindering development, but an unstable economic and political environment that has scared off foreign investors is generally considered to be one of the main constraints. As a result, business has been tough for local FBOs and ground support service providers over the past few years.
“It is not an exaggeration to say that the prices for ground support services at Kazakhstan’s airports are among the lowest in the region, but it is worth noting that the costs of maintaining airport infrastructure are considerable,” commented Abul Kekirbayev, a freelance consultant working with the Kazakhstan Civil Aviation Association.
Kazakhstan's 18 airports are classified according to the International Civil Aviation Organization's standards, but the state of their infrastructure is dire.
“Most regional airports require significant investments in ground infrastructure, and the lack of facilities is another headache for airfield owners. For example, the runway at the capital’s airport has not undergone major renovation for over 20 years. The situation is similar at some promising regional airports,” Kekirbayev said.
Nevertheless, in 2024 Astana Airport was ranked the best airport in Central Asia for the third consecutive year by Skytrax, which indicates that the situation is the same or usually even worse in the rest of the region.
Despite these challenges, there has been significant traffic growth across the region, particularly in Kazakhstan and Uzbekistan, signaling significant opportunities ahead.
Since the COVID-19 pandemic subsided, the ground operations market in Uzbekistan, Central Asia's second-largest economy, has seen impressive growth, said Batyar Nomosbayev, CEO of Delta Global.
Solutions is a logistics and ground handling support company headquartered in Tashkent, Uzbekistan, with offices in Singapore and London.
“In the post-pandemic period, the ground handling services sector is showing steady growth as the number of air flights to and from Uzbekistan is increasing, contributing to increased demand for efficient cargo handling and handling services at airports,” Nomodzbayev noted.
Seize the opportunity
The growth over the past few years can be attributed, at least in part, to the conflict in Ukraine.
In early 2022, Russia's aviation industry was one of the first to be hit by major sanctions from the European Union and G7 countries. Russia's retaliation saw the closure of Russian airspace to most Western airlines and the interruption of several major international air routes.
The Russian airspace closure is having a severe impact on the aviation industry, with some flights between Europe and Asia having to add several hours to flight times due to airspace avoidance.
But for Central Asia, this was a time of great opportunities. Speaking about the significant consequences of the geopolitical situation in the aviation sector, Kekirbayev noted that in 2023, Kazakhstan's national aviation service provider ANO served 415,000 flights, including 308,000 with foreign airlines.
“These figures are record-breaking for the entire period since Kazakhstan's independence,” Kekirbayev said.
The surge in connecting flights has hit Kazakhstan's airports, which Kekirbayev said were struggling to meet growing demand and were essentially crippled by a shortage of jet fuel in Kazakhstan's domestic market.
Kazakhstan is considering a range of measures to address jet fuel shortages and capture existing shipping opportunities. In October 2023, the Kazakh Ministry of Energy announced it was considering plans to start importing non-Russian fuel, particularly from China.
Kazakhstan's refineries claim to be ready to meet domestic demand for the jet fuel sector, but in reality they are only meeting two-thirds of the actual demand, said Nurlan Zhumagulov, executive director of consultancy Energy Monitor Foundation. To some extent, this is likely linked to the sharp increase in air traffic to and from Kazakhstan over the past two years.
But Kazakhstan and Kyrgyzstan are members of the Russia-led trade bloc, the Eurasian Economic Union (EEU), and the terms of their membership require them to negotiate fuel imports from third countries with the Eurasian Economic Commission.
Historically, EEU member states have made up for shortfalls in fuel supplies through imports from Russia, and Zhumagulov believes Kazakhstan needs to diversify its fuel suppliers, warning of a possible disruption to Russian imports, especially given ongoing drone attacks on Russian refineries.
bear the brunt of the sanctions
However, the impact of the Ukrainian conflict has not only been positive for Central Asian airports.
Anna Belykh, a spokesperson for Ador Aero, a ground handling company based at Manas Airport in Kyrgyzstan, said the situation in Ukraine was having a major impact on operations in a number of ways.
First, Berg pointed out that Western sanctions against Russia's banking system are affecting remittance and foreign currency exchange operations.
Russia-related flights, including business jets, traditionally made up the majority of traffic at Kyrgyzstan's three airports. Since 2022, Visa and MasterCard credit cards issued by Russian banks have not been accepted outside the country. Until recently, Russian customers could pay for airport services using the Russian-designed Mir payment system; however, this loophole was closed in April 2024 after the United States imposed sanctions on the Russian system operator.
Since April, all Kazakhstan's banks have been disconnected from the Mir system, reportedly making payment issues more difficult for Russian customers.
But the impact of the sanctions doesn't end there: Nomosbayev clarified that the conflict in Ukraine and restrictions on Russian companies and individuals have led to changes in operational protocols to ensure compliance with international regulations and to avoid direct or indirect involvement in sanctioned activities.
“This includes stricter inspection and monitoring of cargo and passenger flights. Growing security concerns have led to stricter safety and security measures being implemented at Uzbekistan's airports,” Nomosbayev explained.
Delta Global Solutions has also put in place a binding sanctions compliance policy for the company and its partners to ensure compliance with international regulations and mitigate the associated risks, Nomodzbayev said.
For Central Asian companies, the risks of not complying with Western sanctions are high, with consequences including the destruction of relationships with customers and suppliers, as well as being cut off from the global financial system, including transactions in US dollars, according to Delta Global Solutions.
In addition, some Central Asian airports and ground support providers are having problems importing equipment and spare parts due to Western sanctions against Russia.
Belikh cited supply disruptions as the main challenge related to sanctions. In previous years, Central Asian companies purchased necessary materials from Russian wholesalers, but the situation changed when sanctions were imposed. Now, Russian companies are trying to source necessary products and technologies through third countries, including in Central Asia, forcing local industries to make difficult choices. While Russian partners are willing to pay high prices, unexplained surges in deliveries could raise suspicions among Western suppliers.
Nomodzbayev acknowledged that sanctions compliance had complicated the supply of equipment and parts to Kazakh companies.
As market participants noted, Western suppliers are also fearful of secondary sanctions and are stepping up monitoring of their supply chains to ensure that products they sell to Central Asia do not end up on Russian territory.
Despite the challenges, the traffic growth seen over the past few years is expected to continue, especially in Kazakhstan and Uzbekistan, while the through capacity of major airports is already close to maximum.
“After the pandemic, Kazakhstan's aviation industry is showing a stable growth rate of about 20 percent per year. In particular, air transport is growing and Kazakhstan is becoming an attractive country for connecting flights. There is no doubt that the current geopolitical situation has made its own adjustments, but the fragile infrastructure of regional airports has reached the limit of its capabilities and can no longer accommodate the increasing flows,” Kekirbayev explained.
Uzbekistan's largest airport, Tashkent, is expected to reach its peak in 2027, after which traffic growth will be impossible without comprehensive capacity expansion.
Central Asia's airports have long lacked funds for modernization, and strained national budgets have not been able to make up for the gap.
Kekirbayev said that currently, Kazakhstan's airports, with the exception of Astana and Almaty, are chronically unprofitable. Shymkent, Aktau, Atyrau and Aktobe airports are in a slightly better situation, handling more than one million passengers per year.
However, most airports have not been able to secure investment in airport infrastructure.
“The authorities are looking for solutions to these issues, including transferring the airports under the control of private investors,” Kekirbayev said.
In January 2024, Kazakhstan's Minister of Transport Marat Karabaev said authorities were considering transferring all of Kazakhstan's airports under the control of foreign companies. The international experience is expected to be a game changer for Kazakhstan's inefficient and loss-making airport industry.
Some positive changes have already been seen in the field of ground support services. Kekirbayev said the government has embarked on the European model to promote competition at major airports. In rules last revised in April 2024, authorities stipulate that, where technically possible, airport operators must allow ground service providers independence from the airport operator and airlines.
Although obstacles remain on the road to a more competitive environment, market participants are encouraged that overall development is moving in the right direction.
Positive changes are also expected in Uzbekistan, where, under a plan adopted in 2023, authorities will transfer four airports – Andijan, Namangan, Bukhara and Urgench – to private management. Uzbek President Shavkat Mirziyoyev gave the green light to the project, citing the success of Samarkand airport, which was handed over to privately owned Air Marakanda and saw passenger numbers increase by 150% in just a few years.
“Uzbekistan's ground support sector is currently undergoing active development and modernization. Significant investments in infrastructure and technology, as well as efforts to improve staff qualifications and services at regional airports, reflect our country's commitment to raising the quality of ground and flight support for aircraft,” Nomodzbayev said.
“There are plans to modernise Manas airport, including increasing the number of specialised and ground support facilities. This will increase the airport's capacity and improve the quality of passenger services,” Berikh said.
While the Ukraine crisis has had a negative impact on most of the former Soviet and European economies, it has also created unexpected opportunities for Central Asia.
