By Shakeh AvoyanArmenia’s civil aviation authority rejected on Friday a recent World Bank study which concluded that its protectionist policies not only restrict air travel but also impede overall economic development.
The study, officially presented late last month, listed civil aviation among lucrative sectors of the Armenian economy that have been effectively monopolized by businessmen close to the government. It said the government is keeping prices of air transport artificially high in order to benefit the Armavia national airline.
Artyom Movsesian, head of the government’s Civil Aviation Department, admitted that Armavia is enjoying privileged treatment by the state, but insisted that that is good for the country. “Why should our aviation market be controlled by a foreign carrier?” he said. “It’s better to give [control of the market] to our carriers because they pay taxes here, while foreign companies don’t.”
“This is also a matter of national security. We need to have a national airline,” he said, adding that foreign carriers rarely flew to Armenia during it war with Azerbaijan and may well do the same in the event of renewed fighting.
“We have rejected many points made by the World Bank,” Movsesian told a news conference. “We have had numerous meetings with World Bank officials and presented our financial and economic justifications.”
Armavia enjoys the state-guaranteed rights to fly to popular destinations in the former Soviet Union and Europe, having inherited most of them from Armenian Airlines, the now bankrupt state-run carrier. The company, owned by a Russian-Armenian businessmen with close government ties, has faced greater competition in recent years, with several Western airlines currently carrying out regular flights to Yerevan.
However, that has not led to a sizable reduction in air fares which World Bank experts say remain well above the European per-mile average. Their study blamed the high fares for the fact that the volume of freight shipped by air to and from the landlocked country, blockaded by two of its neighbors, fell by more than two thirds between 1997 and 2003. It said making air travel and transport more affordable will be increasingly essential for maintaining Armenia’s high rates of economic growth.