Story of the Unflown Airport – Zagatala International Airport

It always seemed odd to me that a country like Azerbaijan with small area/population and underdeveloped tourism sector has 6 international airports. To add insult to the injury, the government recently announced the construction of another international airport in Fuzuli. There are even rumors of one more airport to be built in Kalbajar in the near future. Considering all these, I decided to take the specific example of Zagatala and showcase why such projects are likely to bring minimal benefit at best.

The construction of the Zagatala International Airport (ZTU) started in 2006 and it was officially inaugurated in 2008. When adjusted for inflation, the government has spent 67.1 million manats for this project. Furthermore, an additional 29.1 million was allocated in 2017 for reconstruction of the airport following the earthquakes in the region. That means, notwithstanding the expenditures related to its operation, ZTU costed the state budget 96.2 million manats. In contempt of its large cost, Zagatala International Airport has been utterly useless in the last 12 years, serving only a handful of passengers on Zagatala – Baku route in 2008-2009 before regular flights were cancelled altogether. Since then, no regular flights have been carried out to or from Zagatala, and it is not hard to comprehend why.

In order to understand why ZTU is such an unproductive airport, we first need to look at demand for aviation. Generally, we can divide the aviation sector into two: cargo and passenger. Carrying goods with airplanes is exceedingly expensive when compared to alternatives such as automobiles, trains, and ships. For that reason, cargo planes should not even be considered for Zagatala, as the region lacks the necessary economic development and purchasing power. That leaves us with passenger transportation, which will be the main focus of my post today. Overall, we can also divide avia travel for passengers into two parts, international and domestic. Let us start with international passenger flights.

ZAGATALA AIRPORT AND INTERNATIONAL FLIGHTS

There can be 4 reasons for people to travel from foreign locations to Zagatala Airport: (a) transit, (b) visiting friends and relatives, (c) business/work related trips, and (d) international tourism.

ZTU has no potential for transit flights, as its geographic location is quite a competitive area for transit aviation. That is because the central airport of one of the largest airlines in the world, namely Turkish Airlines (TA is #1 worldwide for number of international destinations served), is close by (in relative terms, of course). Presence of Istanbul International Airport means that ZTU cannot compete as a transit airport in connecting Europe with Asia and the Middle East. This is blatantly clear, as even the largest airport of Azerbaijan, Baku’s Heydar Aliyev International, has no significant transit passengers.

With transit out of the way let us take a look at aviation demand stemmed from people visiting friends and relatives. These are mostly the people who have emigrated from Azerbaijan to places such as Russia, Turkey, European Union, and United States. The biggest candidate for serving these people is Istanbul – Zagatala route, as the former is well-connected to all major cities in Europe and Asia. In order to support regular international flights to Zagatala, there needs to be at least 150-200 passengers on a weekly basis. Although the number of emigrants from the Sheki – Zagatala region is not small, I do not think it is enough to support a weekly flight to Zagatala year-round. For instance, those who wishes to visit their friends and relatives in Zagatala – Sheki region can also fly to Tbilisi airport, which is not that far away. There are two big advantages of flying to Tbilisi. First is convenience, because Tbilisi International Airport has direct flights to cities such as London, Paris, Munich, Warsaw, Kiev, Minsk, Ankara, Athens, Amsterdam, Riga, Vienna, Brussels, Prague, and couple of others. Second advantage is price. Flights from Tbilisi are much cheaper than Baku and it is common for Azerbaijanis to travel from Baku to Georgia in order to fly to Europe, which is something that I have done myself. Considering these factors, I believe that most of the Azerbaijanis who are originally from Sheki – Zagatala region will opt for flying to Tbilisi than flying to Zagatala, given that the latter is connected to large hub airports such as Istanbul. Hence, I hold that people visiting friends and relatives cannot give the required demand to sustain weekly international flights to/from ZTU.

The third factor that could support international travel to Zagatala is people who are flying for business related reasons. This is highly unlikely, because Sheki – Zagatala region lacks the fundamental components from which the international business travel is derived. The business entities in the region remain rather rudimental, mostly concentrated on the agricultural sector. The few factories and companies that operate in light industry do not have any noteworthy international partners with whom they do regular business with. That is because Azerbaijan still possesses heavy international trade barriers, lacks the required human capital, hangs to its Soviet heritage of corruption, and the country as a whole is macroeconomically unstable, all of which discourages foreign investors and business partners. Therefore, I believe that work related international travel cannot contribute to aviation demand for Zagatala International Airport.

Lastly, we come to the argument that was cited at least a thousand times by government officials when the airport was built and re-opened: “foreign tourists”. Although 12 years has passed since its inauguration, the airport is yet to have a single international passenger flight. To be frank, there is nothing surprising here. Just nearby is the country of Georgia with a much more developed and well-advertised tourism sector than Azerbaijan. Its gradual movement towards the western institutions also makes Georgia a much-preferred tourist destination for Europeans when compared to Azerbaijan. Although there is a small number of foreign tourists that visit Sheki – Zagatala region each year, their number is minuscule than what is needed for supporting weekly flights to ZTU. Hypothetically, the best candidate route for Zagatala’s “foreign tourist” argument is Istanbul – Zagatala. That is because of Istanbul’s connectivity, as mentioned above, thus potential tourists can fly to ZTU using Istanbul as a transit.

Yet here arises another difficulty for Zagatala Airport: its direct rival, namely Kutaisi International Airport, already serves direct flights to 21 cities of Europe (such as Vienna, Prague, Berlin, Warsaw, Dortmund and so on) with lowcost airlines such as Wizz Air. Apart from the convenience of flights, one also needs to acknowledge that it is much cheaper to fly to Kutaisi than to Zagatala (in a hypothetical situation, given that the operator is AZAL). Thence ZTU loses to Kutaisi both in affordability and accessibility from the perspective of tourists wishing to visit the Caucasus region. It is easy to perceive why no foreign tourist would be flying to Zagatala, but one surely wonders, how did the government not foresee this? When it is evident (even more so back in 2006 when the construction of the airport began) that foreign tourists cannot support international flights to Zagatala, why did the officials keep on justifying this extravagant project?

By now it is apparent that Zagatala International Airport carries little to no international potential. Let us turn our focus to domestic flights.

ZAGATALA AIRPORT AND DOMESTIC FLIGHTS

The only potential route that we need to look in this case is Zagatala – Baku. That is because, the location of Ganja and Qabala airports are too close to Zagatala itself and Lankaran/Nakhchivan lacks the necessary population and purchasing power in order to support scheduled flights to or from ZTU.

As a matter of fact, flights to Baku from Zagatala did exists briefly back in 2008-2009 when the airport was newly built. There were 3 flights per week using ATR planes. Back then, one-way ticket costed 52 manats, adjusted for inflation, that makes 89.97 manats (52.9 USD) today. There is no information online about the number of flights and passengers served, but it is highly likely that the planes were almost empty with only a handful of passengers during these flights, otherwise they would not have been cancelled so quickly.

In order to understand why people did not fly from ZTU, we must recognize the role of the competition that it faces, particularly from automobiles. For that purpose, I have prepared the graph below. The gray bars represent the total travel time to cities such as Shaki, Qakh, Zagatala, and Balakan from Baku by flying to Zagatala International Airport. That travel duration also includes time spent for travelling to Haydar Aliyev International from center of Baku, going through the necessary procedures before boarding, flight time, going through necessary procedures on landing, and travelling to respective city centers from ZTU. The yellow bars, on the other hand, represent the travel duration from Baku to the same 4 cities using a taxi (there are many taxis that gather in different parts of the city and once 3-4 passengers have come, they depart for their common or close destination. I have included 30 mins as “waiting time” for four passengers to gather). The blue line represents the price difference between flying and taking a taxi, in other words how much more expensive is the plane option.

Diagram 1: Competitiveness of Zagatala Airport in domestic flights

Source: Google Maps, Waze, Taxi Companies, Azərtac, Author’s calculations

According to the diagram, for those wishing to travel to Zagatala from Baku can save 2 hours and 10 minutes (compared to taxis) by taking a plane, but they will have to pay 74 manats extra for that privilege. People traveling to Balakan must pay 77 AZN extra for flying, which will save them 2 hours and 7 minutes. The corresponding figures for Qakh are 85 AZN and 1 hour and 15 minutes. Those travelling to Shaki face the most disadvantageous choice, as the difference in travel time between flying and taking a taxi is only 11 minutes. For that 11 minutes, they have to pay 105 AZN more. For all other cities of Azerbaijan, including Oghuz, taking a taxi from Baku is actually faster than flying to Zagatala (also, there is another international airport in Qabala, which is close to Shaki and Oghuz, further diminishing the potential demand for ZTU).

Let us take a moment here and think. The Zagatala Airport is the most competitive for the city of Zagatala, naturally, due to its proximity to the city center. Even in that case, there are very few people in the region who would pay 74 AZN extra for getting to his/her destination 2 hours and 10 minutes faster. For the majority of the people, there is no question here, paying 74 manats more is not worth it by any means. 74 manats might look small at first, but we need to consider that it makes up 22% of average monthly salary in Zagatala. Would you pay 22% of your monthly salary for getting to your destination 2 hours and 10 minutes faster? I think the overwhelming answer will be no. The only justifiable instance is emergencies, but flying does not provide a benefit here either, simply because the plane departs only 3 times a week, making it highly unlikely that the timing of flight and an emergency situation will coincide. For people of Shaki, the choice is so absurd that we can claim that there is no choice. The 11 minutes faster flying option costs 29% of the average monthly salary…

As I mentioned above, apart from the cost and duration of flying, we also need to consider the convenience of flight times. The Zagatala – Baku plane used to fly three times a week. On the contrary, you can find taxis from Baku to these cities almost every hour of every day. When we take all of these factors into account, it is only natural that nobody was taking the plane from Zagatala to Baku or back.

ZAGATALA AIRPORT AND STRATEGIC POTENTIAL?

One of the more unconventional arguments that I have heard for Zagatala Airport is its “strategic/military purpose”. Firstly, you do not need to build a 100 million manats worth international airport for military purposes. Secondly, landing strips have been already present both in Shaki and Balakan since Soviet times. Thirdly, Azerbaijan’s area is quite limited, and a military jet departing from Ganja/Yevlakh can reach the skies of Zagatala in about 15-20 minutes. In that case, what strategic purpose can Zagatala Airport possess?

CONCLUSION

Upon analyzing its domestic and international potential, I have come to the conclusion that the Zagatala – Shaki region is not capable of providing the necessary demand for aviation in order to keep regular passenger flights to and from Zagatala International Airport. The major factors supporting my rationale are: (a) high competitiveness (in relative terms) of aviation in the region (particularly the Tbilisi and Kutaisi airports), (b) underdevelopment of business environment in the region, (c) low number and insignificant purchasing power of the population, (d) still primitive tourism sector, especially when compared to neighboring Georgia, and (e) automobile/taxi travel being far more affordable and convenient for domestic travel. The fact that no passenger flight has been conducted from the airport during the last 10 years or so further supports my arguments.

A natural question arises, why has the government spent 96 million manats for a project like this? Have not any agency or government institution conducted even the slightest of an analysis before deciding to finance this extravagant project? Because even in a very fundamental research it should have been found that the airport has no potential. Would it not have been better if that 96 million manats been used for a more beneficial purpose, a different investment that would create more economic activity and employment opportunities? Or even better, would it not have been better if that 96 million manats been saved in State Oil Fund, to be spent at a future date when we find a sustainable way of utilizing it?

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