Armavia flies above the Russia-Georgia turbulence

By bne IntelliNews July 22, 2009

Ben Aris in Yerevan -

The deterioration in Russia's relations with Georgia has proved an unexpected boon for Armenian airline Armavia. With transport connections between the two rowing counties cut off, the main route for getting from Moscow to Tbilisi is now to fly via the Armenian capital Yerevan on Armavia. Yet even without the Russian embargo, the company was doing well and is emerging as a leading airline in the region 12 years after its founding.

In 2002, Armavia went into a strategic alliance with Sibir Air, now rebranded S7. However, the S7 stake was bought back a year later by the airline's current owner Mikhael Bagdasarov, one of Armenia's richest men, who took 100% control in May 2005. The company currently owns five Airbuses and one Boeing as well as two planes that used to belong to the president of Armenia (who now has a new Airbus).

And business is good. While most other airlines in the world have seen passenger volumes collapse in the wake of the global economic crisis, Armavia is still growing. The airline carried 647,000 passengers in 2008 and is expecting to carry 700,000 this year before reaching 1m passengers in 2010.

With demand rising, the company is still expanding its fleet. Armavia is in the process of buying two new Airbuses, which Bagdasarov will pay for out of his pocket, along with two LearJets. And earlier this year, Armavia became the first non-Russian company to buy two of Russia's new Superjet passenger planes, in a leasing deal financed by Russia's VTB Leasing. Baghdasarov has good relations with the bank and owned 30% of VTB Armenia until 2006. "We were the first to buy them as they are good planes and cheaper," says Director General Norair Belluyan. "The market is moving more slowly, but we still growing. We recently already added Zurich and Rimini in Italy to our destinations and this we plan to include direct flights to Berlin and LA [where the largest number of Armenia's Diaspora live]."

Norair Belluyan

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Armavia flies above the Russia-Georgia turbulence

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