Image: CentralAsia+Aero

In Part One, we looked at how three Kazakh carriers are entering the 2026–2028 capacity growth window. Open skies and the state’s policy of stimulating competition make this scenario not accidental, but intentional. Yet this project operates in the real economy, and the real economy has constraints that cannot be removed simply by ordering new aircraft.

DISTRIBUTION CHANNELS

In Kazakhstan, retail air-ticket sales have almost entirely moved into mobile applications. By some estimates, more than 80% of transactions now go through mobile apps, and roughly half of ticket purchases use BNPL instalments. For passengers, instalment payment is no longer a financial option; it has become part of the product. Banks have, in effect, become key distributors of air travel.

Kaspi Travel holds 50–60% of all online sales: fintech Kaspi.kz has more than 13 million active users, and instant instalment payment has become a daily consumer habit. It is telling that Air Astana has embedded Kaspi BNPL directly into airastana.com — even the flag carrier has become materially dependent on this channel. Freedom Group, through Aviata and Chocotravel, holds around 20% of the independent online market. Tickets.kz, at around 10%, specializes in complex international itineraries and buys seat blocks directly from airlines. Halyk Travel, at around 8%, is the banking-sector answer to Kaspi, growing on the strength of loyalty bonuses and the customer base of the country’s largest bank.

The offline segment is now most visibly represented by TransAvia, which operates more than 30 ticket offices and serves corporate clients and passengers who do not buy from a phone. Independent agencies have been largely squeezed out. Settlement infrastructure is separating from the Russian ecosystem more slowly than sales channels: TCH Central Asia continues to provide the ATSS settlement function for agents. At the same time, market players have effectively moved away from the Russia-based Sirena-Leonardo PSS. Aviasales remains the main Russian-language metasearch platform for Russian users in the region, while Kazakh passengers tend to open Kaspi or Freedom first.

For an airline, the conclusion is blunt: without integration into Kaspi Travel, it is almost invisible to the retail passenger, and the absence of BNPL is perceived as a weakness in the product itself. The systemic risk of this model is credit-related. A domestic ticket costs KZT 40,000–50,000, or 10–15% of monthly income for a significant share of households. In an economic slowdown or under tighter BNPL regulation, sales will fall faster than income: the passenger will not necessarily become poor — they will simply lose the payment tool they are used to.

The tour-operator segment is a separate channel with its own economics. Almost 1.5 million Kazakh citizens travelled abroad on package tours in 2025, and this audience bypasses the OTA funnel.

Package holidays are sold through traditional operators — Anex, Pegas, FUN&SUN, Kompas, Kazunion and Calypso — which charter aircraft themselves and buy seat blocks. Turkey remains the leading destination, with around 250,000 travellers in 2025, but its share is declining. Vietnam grew fivefold on the back of expanded direct services, and China’s Hainan is also growing. Hotel capacity, however, is already close to its limit.

The Turistik Qamqor system is now operational: a travel product may be sold to a Kazakh citizen only by a tour operator holding a tour code, which protects outbound travellers against operator bankruptcies. Since 28 February 2026, the issuance of tour codes for Middle Eastern countries has been suspended. The Hajj and Umrah market has moved into other formats, although it was not the key segment.

Charter and block-seat distribution is critical for FlyArystan, SCAT and potentially Vietjet Qazaqstan: seasonal operator contracts fix a substantial share of capacity in advance, before the passenger ever opens Kaspi app.

AIRPORTS AND GROUND HANDLING: LIMITED COMPETITION

There is no publicly comparable table of turnaround charges for all airports in the region, but market participants generally agree on one point: the cost of turning an aircraft around at Kazakhstan’s key hubs is higher than at the Asian airports where classic low-cost models were built. At the key hubs, competition in airport and ground-handling services is limited.

Central Asia’s largest airport – Almaty is operated by Turkey’s TAV and is part of the large Horizon investment program. Astana is being developed through Terminals Astana. Shymkent is effectively tied to SCAT’s private infrastructure. In Uralsk, the Agency for the Protection and Development of Competition investigated discriminatory pricing issues. Even where an airline’s own cost base is low, the airport component of CASK remains a hard constraint.

Climate adds another layer. Winter de-icing, autumn fog in Astana, hot-and-high limitations in the south, and seasonal schedule disruption all matter. Each item may not look critical on its own, but together they create a cost floor below which the market cannot go unless the rules of the game change.

This is why the idea of transplanting a Ryanair or IndiGo-style ultra-low-cost model into Kazakhstan does not survive scrutiny. A fare strategy cannot be built here on high seat density and fast aircraft turns alone. It also requires airport terms, frequency, distribution, schedule discipline, personnel and currency-risk control.

FUEL: AN ADVANTAGE THAT REQUIRES DISCIPLINE

Jet fuel remains one of Kazakhstan’s competitive advantages. Prices on the domestic market are below European levels, and Air Astana says it covers a substantial part of its requirements from Kazakh sources. The logic is clear: relatively cheap fuel supports national carriers and makes the country more attractive to foreign airlines.

But this model requires transparent reporting. In April 2026, Air Astana and FlyArystan were held administratively liable for submitting inaccurate data on aviation fuel volumes. The fines were small, but the size is not the point. The regulator publicly recorded incorrect data in a sensitive cost item. At current margins, every additional USD 50 per ton of fuel is not an accounting detail, but a direct hit to net profit.

GTF: A GLOBAL PROBLEM WITH A LOCAL PROJECTION

Defects in Pratt & Whitney PW1100G geared turbofan engines which power the Airbus A320neo family are a global crisis, not a Kazakh peculiarity. But the effect on Air Astana Group is especially visible: 22 unscheduled engine removals in 2025, up to 13 aircraft grounded simultaneously, and an EBITDAR impact of USD 42.3 million. Within the group, engines were redistributed between Air Astana and FlyArystan; the value of such operations in 2025 exceeded KZT 95 billion.

Pratt & Whitney has announced retrofit programs and updated solutions, but a single engine shop visit can take many months. Normalization in 2027 therefore remains more an optimistic trajectory than a guarantee. If the timeline slips, the capacity surplus window will also shift — but it will not disappear. Aircraft that are grounded today will return to the schedule sooner or later. At that point, the market will receive additional capacity on top of competitors’ Boeing MAX deliveries.

SCAT gains an objective advantage in this situation: its Boeing 737MAX fleet does not depend on the PW1100G. That does not automatically make SCAT the winner, but it gives the airline a window while A320neo operators are forced to balance schedules, replacement engines and compensation.

PERSONNEL AND REGULATION

Personnel is becoming a constraint on growth in its own right. The industry needs hundreds of new specialists every year: pilots, engineers, air traffic controllers and technicians. The shortage of engineering personnel is intensifying outflow to neighboring markets, including Uzbekistan. In October 2025, Qazaq Air pilots publicly demanded pay increases: 30% for captains and 50% for first officers.

Air Astana opened a training center in Astana equipped with L3Harris A320/321 full-flight simulators and EASA certification. Vietjet Qazaqstan has opened recruitment for foreign first officers. This is a normal response to fleet growth, but it also shows the scale of the problem: aircraft can be ordered faster than crews and the engineering base can be trained.

Kazakhstan’s regulatory architecture is dual. The Civil Aviation Committee of the Ministry of Transport is responsible for strategy, route designations, subsidies and intergovernmental agreements.

The Aviation Administration of Kazakhstan operates as an independent oversight body: Air Operator’s Certificates, airworthiness, oversight and interaction with ICAO. In September 2025, Kazakhstan passed an ICAO aviation security audit with a score of 95.7%.

Strong oversight, however, does not remove the political logic of the market. Precedents of restricting individual carriers’ access to destinations, including FlyArystan’s difficulties with major Chinese cities, show that regulatory levers can be applied selectively. For new players, this matters more than it may first appear. Open skies do not mean the absence of filters.

THE COMPETITOR ACROSS THE BORDER

In parallel with Kazakhstan, Uzbekistan is building its own aviation hub. Its population is almost twice as large — around 39 million. The absolute size of the market is still smaller: around 15–16 million passengers through airports, compared with 31.8 million in Kazakhstan. But growth rates are higher, and demand is still being unlocked.

Uzbekistan is implementing a multi-billion-dollar infrastructure program through 2030. The central project is the new Yangi Tashkent airport, with a stated capacity of 30 million passengers. Uzbekistan Airways has ordered 22 Boeing 787-9 aircraft, entering the same long-haul league as Air Astana. The Tashkent — Almaty route is already served by several carriers and has become one of the most competitive in the region.

The main question is which market will become the focus for foreign long-haul carriers and Central Asian transit. Kazakhstan has the advantage of geography and more developed airport infrastructure.

Uzbekistan has population, growth rates and a strong political impulse to open the market. This is not an abstract rivalry between two countries. It is competition between two aviation models, and it will intensify over the next five to seven years.

AIR ASTANA’S QUALITY OF EARNINGS

Air Astana Group remains a real and operationally strong carrier. It has a fleet, a route network, passenger traffic, independent audit and a clear development story. But by 2026, its investment profile can no longer be described simply as a transparent success story.

Net margin has compressed to a minimum. A significant part of the result has been supported by Pratt & Whitney compensation and one-off effects from fleet transactions. At the same time — perhaps coincidentally — corporate governance questions have accumulated: the full exit of BAE Systems, changes of CEO and CFO, a change of auditor, fines for inaccurate fuel data, and FlyArystan’s incomplete economic independence despite its formally separate Air Operator’s Certificate. The free float in shares and GDRs after BAE’s exit amplifies the market reaction to any negative news.

Under a scenario estimate, the group’s cumulative loss for 2026–2027 could amount to US$ 150–350 million. An adverse scenario — if Middle East restrictions, the PW1100G problem, tenge depreciation and 787 delays coincide — could approach USD 500 million. This is grounds for a valuation discount and for analysis not by headline EBITDAR, but through clean operating margin, cash conversion, lease burden and intra-group flows.

As the largest shareholder, the Sovereign Wealth Fund Samruk-Kazyna would in such a scenario face a choice: support the capital base, search for a new strategic investor to replace BAE, or revisit the separation model between Air Astana and FlyArystan. This is no longer a matter of presentation strategy. It is a question of business model resilience over the next two years.

WHAT FOLLOWS FROM THIS

Kazakhstan’s aviation market in 2026–2028 is not only about the risk of a fare war, but also about a deliberate choice in favor of tougher competition as a tool for developing connectivity and tourism.

Open skies, fleet orders, incentives for foreign carriers, relatively cheap fuel and state ownership in two major players have been assembled into one structure. Its objective is not to maximize the profits of incumbent airlines, but to expand access to air transport.

This is a workable strategy if carriers are separated by niche. Air Astana: network model, premium segment, long-haul routes and transit. FlyArystan: domestic and regional low-cost/hybrid segment. SCAT: the southern hub of Shymkent, Boeing fleet and MRO. Vietjet Qazaqstan: a possible Southeast Asia — Central Asia — Europe bridge. If these models diverge, the market gets competition without destroying its economics. If they converge on the same domestic routes, a fare war becomes inevitable.

There is a window for foreign capital, but it is not about winning on fares alone. The winner will not be the airline that tries to bring a copy of Ryanair into Kazakhstan, but the one that finds a niche: longhaul connectivity, a regional bridge, a specialized hub, maintenance, airport infrastructure, distribution or a narrow international segment. The Kazakh market is large enough to make money, but not cheap enough to win on price alone.

The main risk of the structure is not that it does not work. It does work. The risk is that its resilience depends on several variables at once: PW1100G, the Middle East, Boeing deliveries, the tenge exchange rate, the BNPL credit cycle, personnel and regulatory decisions. If two or three of them fail at the same time, operating models will begin to break down faster than the market can adapt.

The next eighteen months will show whether the current expansion is a managed growth strategy — or the beginning of a fare war for which the market was less prepared than expected.