Published: Wednesday, October 11, 2017

Azerbaijan’s link to the global market

After redefining its government structure through a Constitutional amendment in September 2016, the oil-and-gas rich nation of Azerbaijan in the Caucusus region is setting its sight in reforming and further diversifying its economy.

Accelerating reforms to improve the environment for private sector development after the fall of oil prices and cracks in the financial sector globally in recent years require prudent decisions and calculated investments that would yield to tangible results.

26 years since becoming independent from the Union of Soviet Socialist Republics (USSR) after the collapse of the communist regime in 1991, Azerbaijan has successfully written its modern-day history with remarkable success, its economy in particular.

“In the economic sphere, we could talk a lot about our achievements, but we can also cite one fact: according to the latest report of the Davos World Economic Forum, the Azerbaijani economy is ranked in 37th place in the world in terms of competitiveness. This is the first place in the CIS and a fairly serious place in the international arena,” Azerbaijan President Ilham Aliyev was quoted as saying in an interview with Sputnik Azerbaijan on the occasion of the country’s 25th anniversary in 2016.

“…there are horizons ahead of us, we are confidently moving forward, and I am sure that the next quarter of a century will also be a period of rapid development.”

The country has kept its 37th spot in the 2016-2017 Global Competitiv-eness Index scoring high on macro-economics, education and healthcare reforms.

Aviation and air freight investments

With aviation and air cargo industries crucial to the country’s economic agenda, the government is investing heavily on them.

Azerbaijan launched last month Buta Airways, the country’s first budget airline established under the Azerbaijan Airlines CJSC (AZAL), designed to help spruce up Baku’s tourism industry.

The government ordered eight Embraer 190 aircraft for Buta Airways which will fly from Baku to Moscow, Kyiv, Antalya, Kazan, Mineralnye Vody, Tbilisi and Tehran. The maiden flight commenced on September 1 and routes to Istanbul and St. Petersburg and from Ganja are scheduled to begin on October 29.

The minimum tariff will be Euro 29 for one-way ticket for all flights.

The country’s flag carrier, Azerbaijan Airlines, separately flies to more than 20 cities in 13 countries and is considered one of the leaders in the region.

On the cargo side, the government has also poured in support and investments to Silk Way West Airlines, a leader in scheduled and charter cargo flights with a route network to more than 50 destinations worldwide.
Silk Way West Airlines, a subsidiary of Silk Way Group which had grown to 23 companies since it was formed in 2006, offers full-range cargo services, including ground handling, storage and charters to any part of the world.
The company which has an office in Dubai, home to the International Humanitarian City, the largest humanitarian logistics hub in the Middle East, also transports international aid for various nongovernment organizations as well as UN cargo intended for relief, apart from dealing with general cargo.

“Silk Way West has extensive experience in areas not serviced by other airlines, such as Afghanistan and Iraq, in addition to regular flights on intercontinental routes that extend throughout Asia and Europe from our centrally located hub in Baku. We work with government and non-government organizations from all over the world to provide dedicated solutions to any request, no matter how complex,” the company stated on its website.
On September 24, Silk Way West Airlines launched its first flight out of Hong Kong to Chicago, via a fully loaded Boeing 747-8F plane, the first of the many new routes it plans to open to further grow its network. A second trans-Pacific flight is also being mulled.

Trade relations between China and Azerbaijan continue to improve as activities in the so-called One Belt, One Road project that connects China to Europe and Asia grow.

Kamran Gasimov, CEO of Silk Way West Airlines, thanked the Azerbaijan government for its continued support to the company since it was established in 2012.

“Our government gives aviation and cargo the highest priorities. As a small nation, this is very important in economic stability. Without the big support of the Azerbaijan government, we will never be able to achieve what we have in the past few years. Today, we have one of the biggest fleet in the region with the highest capacity,” said Gasimov, a veteran in the aviation industry.

In an interview on the sidelines of the four-day Air Cargo Europe held in Munich, Germany early this year, the CEO also noted cargo business in the Caspian region is getting better with e-Commerce picking up in Azerbaijan, Georgia and Russia.

Gasimov said the global aviation and air freight industries, in general, have warmed up with Silk Way West Airlines, thanks to its good track record in providing reliable and fast delivery services.
“This is very encouraging and promising and a great incentive for our people,” he said.
Silk Way West Airlines currently has five Boeing 747-8 and two more aircraft are scheduled for delivery before the high season kicks in.

In its 2016 World Cargo Forecast, Boeing listed Silk Way West Airlines as the top carrier pursuing diverse cargo growth strategies in the world.

Investing on facilities

Based out of Heydar Aliyev International Airport, Silkway also boasts of modern cargo terminal facilities through the International Logistics Center spread over 12,800 square meters of land.

ICT has a 30-ton and 14-ton scales allowing it to store 2,200 ton or 5,800 cubic meters of palletized cargo.
The total cargo capacity of the center is 1,200 tons or 7,000 cubic meters per day, or 430,000 tons or 2.5 million cubic meters per year, the government said.

The only one in the South Caucasus, ILC can store and process all kinds of perishables, plants, animals and pharmaceuticals included, that require temperatures from -18 to +20 degrees.

Gateway to the world

With good infrastructure and strong investments on areas that promote socio-economic development, Azerbaijan plays an important role not just on the health of its economy but the whole Caucusus as well as the gateway between the East and the West.

In 2006 and 2007, Azerbaijan demonstrated its ability to become an economic powerhouse in the region with rapid increase in its oil production causing its GDP growth to shoot exponentially.

“Azerbaijan is trying to benefit from regional connectivity initiatives to boost transit and trade. In particular, the country is one of the sponsors of the East–West and North–South transport corridors. Construction of the Baku–Tbilisi–Kars railway line, which will connect the Caspian region with Turkey, is expected to be completed in July 2017,” World Bank said in its latest economic report about Azerbaijan.

“The Trans-Anatolian Natural Gas Pipeline (TANAP) and Trans-Adriatic Pipeline (TAP) will deliver natural gas from Azerbaijan’s Shah Deniz gas field to Turkey and Europe. The Government has embarked on reforms that will accelerate banking sector resolution and improve the business environment—critical ingredients for restoring public and investor confidence,” it added.

Italy, Germany, Russia, Turkey and the United States, are the top five trading partners of Azerbaijan, government data showed, with oil and gas exports accounting for about 35 percent of the country’s GDP.

Aviation, air freight and other modes of transportation for exporting and importing goods will shape the course of its diversified future economy.