PROGRESS, BUT NO ETA FOR TURKISH AIR IN TAJIKISTAN

UNCLAS DUSHANBE 002130

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E.O. 12958: N/A
TAGS: PGOV PREL EAIR ECON TI
SUBJECT: PROGRESS, BUT NO ETA FOR TURKISH AIR IN TAJIKISTAN

REF: Dushanbe 1786


1. Turkish Airlines (TKA) has moved one step closer to
introducing a new Istanbul-Dushanbe. The Turkish Ambassador
Altay Cenziger reported a framework agreement was signed
December 23, allowing Turkish Airlines to conduct technical
assessments and preparations for the new route. He estimated
flights could commence late January or early February, likely
not/not coinciding with President Rahmonov's visit to Turkey
January 15-19. The deal, part of an economic Partnership and
Cooperation Agreement, gives Turkish Airlines one weekly flight
and allows Tajikistan State Air (TSA) to continue operating its
own Dushanbe-Istanbul route.


2. Despite the positive breakthrough, the agreement was over
two years in the making, with much frustration and haggling on
both sides. Cenziger had previously expressed frustration and
bewilderment at the Tajiks' inflexibility, and commented in
early December that this was TKA's last attempt to enter the
Tajik market--if it did not succeed, the Turks would stop the
TSA flight to Istanbul. Turkish Airlines does not anticipate

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making a profit on the initial flights, but hoped that three
flights a week would eventually bring a larger customer base to
TKA's connecting flights in Istanbul.


3. Firdavs Mukhtarov, head of TSA's Marketing Division,
observed Turkish Airlines had played hardball, and should not
expect TSA to give it three flights a week, thus undercutting
TSA's own lucrative Dushanbe-Istanbul flight. The Tajiks still

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smart from Turkish Airlines' cancellation of a planned TSA
Istanbul-Munich route (reftel).


4. In a December 23 meeting, Mukhtarov dismissed rumors that
Munich Airport was going to prevent TSA from landing its aging
Tupelovs. (NOTE: The international community relies heavily on
that flight as the only direct connection to Europe. END NOTE)
He observed the Dushanbe-Munich route did not benefit Tajiks,
who rarely receive tourist visas for Europe. However, TSA would
continue to operate the flight for the foreseeable future.


5. Internal competition and corruption blocked reform more than
any external factors, according to Mukhtarov. The head of the
department that sets prices has no business plan, no model for
determining costs or profits. Another source in TSA confirmed a
recent new report that on any given TSA flight, 10-30% of seats
were automatically reserved for VIPs, often under the name
Rahmonov or Ubaidalloyev, Dushanbe's powerful mayor. Asked
about the implementation of an electronic ticketing system
linked to the international reservation system, Mukhtarov
smiled. "It should be done December 31." Would it be actually
operational in a week? Silence. Some have speculated that the
electronic system would make pricing and reservations
transparent, thus eliminating a source of under-the-table income
and special favors.


6. The European Bank for Reconstruction and Development (EBRD)
recently announced a $5 million loan to help TSA lease two new
aircraft. Mukhtarov knew of no serious plans to lease Boeings
with the assistance.


7. COMMENT: The international community continues to hold its
breath at the thought of a Western carrier coming to Dushanbe,
but the forces working against change within TSA present the
real barrier to reform. There exists a catch-22: only a Western
carrier that threatens TSA's market share will force TSA to meet
international standards of business and customer service. But
given TSA's control of airline industry, and the very limited
profits for any Western carrier willing to fly to Tajikistan,
few carriers aside from Turkish Airlines have any interest in
Tajikistan.


8. COMMENT CONTINUED: The other longstanding catch is that
international businessmen will not fly to Dushanbe without a
Western-style hotel here. Local wisdom says an
international-class hotel will not open until Western carriers
bring the businessmen. There finally seems to be some movement
on all of these fronts, but it has been painfully slow. END
COMMENT.

ARMBRUSTER


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