A tender for the sale of 49% to 100% of a Kazakhstan airline by the state’s sovereign wealth fund Samruk-Kazyna is likely to rouse the interest of Gulf peers in Qatar and the UAE amid a competition for influence in Central Asia’s biggest economy.

The US$71 billion Samruk-Kazyna has launched a two-stage tender process with an minimum price of KZT10.2 billion (US$22.4 million) for Qazaq Air’s entire share capital; bidders are required to provide a security deposit of KZT173.4 million (US$0.38 million). Initial applications must be submitted by 28 September and the results of the tender for the second stage will be determined on 15 December. The decision to privatize was made under the direction of Samruk-Kazyna’s new CEO Nurlan Zhakupov, who was appointed earlier this year by Prime Minister Alikhan Smailov.

The Astana-based airline was established in 2015 and has a small fleet of turboprops. The carrier said, “Attracting a private investor is aimed at creating new opportunities for the development of the Kazakhstan air transportation market, including expanding the geography of Qazaq Air flights, increasing the fleet and introducing innovative solutions.”

While the airline is small, it is profitable and has potential for strong growth in a rapidly expanding Central Asian market. In 2022, it operated to 22 destinations (16 domestic, 6 international) and transported 561,000 passengers with a load factor of 82%, generating a revenue of $44.3 million, according to Aviation Week.

In 2022, Kazakhstan’s six airlines saw record 17% growth in passengers to 11 million. Qazaq Air reported an operating profit last year, and states that the Kazakh market is demonstrating “record growth” in passenger traffic. At present, domestic airlines have 104 international routes with an average of 477 flights per week, but new international routes are planned and the government is keen to see some capital infusion into Qazaq Air by a strategic investor to exploit the growth opportunities, according to Astana Times. New routes are planned this year to Karachi, Kuala Lumpur, Lahore, Mumbai, Muscat, Paris, Prague, Samarkand, and Tel Aviv.

Added to the commercial potential is the rising geopolitical interest. Qatar and UAE have tended to use soft power to gain geopolitical influence via economic and cultural relations and Central Asia is no exception. SWFs from both countries have pledged billions to Kazakhstan’s infrastructure. Qatar’s Qatar Airlines could place a bid, encouraged by its owner the Qatar Investment Authority (QIA), while the Investment Corporation of Dubai’s (ICD) stakes in Emirates and flydubai, or ADQ's in Etihad Airways could prompt it to make a move to acquire Qazaq Air. The Oman Investment Authority (OIA) could also gain an interest via Oman Air to expand operations through acquisition.

Related funds Samruk Kazyna
Related tags Kazakhstan