Jul 23, 2013

State v. Armavia: Government sues “national carrier”

The government, as represented by the State Revenue Committee, filed a lawsuit against Armavia company for unpaid air taxes in mid spring, upon which the Administrative Court is starting a trial end of July. According to Datalex judicial information system, the plaintiff is demanding a compensation of 7.36 billion drams ($17.5 million) from Armenia’s national carrier which declared bankruptcy in early April.

On April 19, the court granted an injunction on the air company property and finances as motioned by the plaintiff. The preliminary court hearings were held in mid June and early July. Finance minister David Sargsyan stated during a parliament session that Armavia is indebted also to others, which in turn have filed respective lawsuits against the company.

The minister says the state has not done final calculation of the company’s obligations to the state.

In late March Armavia cancelled all its flights and started the bankruptcy process, but has not filed the bankruptcy petition to the court.

Earlier the company had publicized its debt and penalty lists, according to which it owes 5.5 billion drams (around $13.8 million) in air tax, and the penalty amounts to 16.2 billion drams (over $40.5 million). For two years since 2010 the national carrier was falling deeper into debts, totaling to 24.3 billion drams (around $60.7 million) it owes the state budget. The company, however, claims that only 7 billion drams from it is the actual debt, the other 17 billion are the result of penalties applied to it over a three-year period.

Armavia has submitted a ‘rehab’ program to the Public Council, which further submitted it to the government. The executive body has given no response so far.

Meanwhile Prime Minister Tigran Sargsyan has signed the concept paper on the tender of Armenian airline licenses, which implies a selection of three Armenian carriers registered in Armenia. This way the government hopes to achieve a competitive field in the sphere of civil aviation. The chief executive has also approved a stage-by-stage liberalization policy for air transportation. A number of discussions have been held by the government, the Public Council and the General Department of Civil Aviation (adjunct to the RoA Government) to assess the prospects and the potential of developing the field.

Chief of the Civil Aviation department Artyom Movsesyan says various approaches have been suggested, that can be roughly grouped under three main objectives: have a state or partially state air carrier, the government should take up“open sky” liberalizationand stage-by-stage liberalization policies.

Source: armenianow.com

Jul 21, 2013

U.S. Firm Contracted To Assist In Armenian Aviation Reform

The Armenian government has hired a U.S. consulting company to offer advice on its plans to open up Armenia’s aviation sector to more domestic and foreign airlines.

The government’s National Competitiveness Foundation signed a corresponding agreement with McKinsey & Company in Yerevan on Thursday. Under the agreement, McKinsey will assist in the planned “gradual liberalization” of the sector that was announced by the government last month following the bankruptcy of the Armavia national airline.

The private carrier ran up massive debts to airports, fuel suppliers and other service providers despite having enjoyed exclusive rights to international flights to and from Armenia for almost a decade.

A liberalization strategy drafted by Armenia’s Civil Aviation Department and approved by Prime Minister Tigran Sarkisian’s cabinet last month envisages that Armavia will be replaced by up to three other Armenian airlines to be selected soon. Officials said on June 6 that the government will call a relevant tender within a month.

The head of the department, Artyom Movsesian, told RFE/RL’s Armenian service (Azatutyun.am) that the tenders have been postponed until after McKinsey submits concrete proposals on aviation reforms. He said the delay was suggested by that Armenia’s foreign partners.

In Movsesian’s words, only one Armenian company has applied for flight permissions so far. The company, Air Armenia, has transported only cargo by air until now.

Andre Andonian, a senior McKinsey executive who signed the agreement, said the U.S. consultancy will look into the aviation experiences of Armenia’s neighbors as well as Latin American countries, notably Chile and Peru. “We will talk to all relevant partners in Armenia and abroad and will come up with a balanced approach and the best option,” he said at the signing ceremony attended by Sarkisian.

Several European, Russian and other foreign companies have increased the frequency of their flights or launched new services to Armenia since Armavia terminated flights to Europe, the former Soviet Union and the Middle East on April 1. The Argentine operator of Yerevan’s Zvartnots airport welcomed these developments in May, saying that they will reduce the relatively high cost of air travel to the country.

Andonian said that the Armenian aviation sector continues to be characterized by a lack of competition.

Source: azatutyun.am