Brief Overview of Civil Aviation in Uzbekistan

Due to?its strategic location at?the crossroads of?Europe and Asia, Uzbekistan has a?long and rich history of?trade and commerce. Today, the country has the potential to?become a?major modern aviation hub in?the region due to?the rapidly growing aviation sector.

1. State Policy

The impetus for the development of?commercial civil aviation was given by?the President of?Uzbekistan Shavkat Mirziyoyev in?2017. At?that time, flights in?Uzbekistan were operated only by?the National Airline "Uzbekiston Khavo Yullari" ("Uzbekistan Airways"), which was established in?1992 by?the Decree of?President Karimov and inherited the functions and facilities of?the Soviet "Aeroflot". At?that time, the airline’s fleet consisted of?31 aircraft, and regular flights were operated to?40 cities around the world. Moreover, the structure of?Uzbekistan Airways included all airports of?the republic, a?handling company for aircraft ground service and a?number of?other divisions. Such structure provided Uzbekistan Airways with a?monopoly position in?the domestic market and significant preferences in?the international market. Thanks to?President Mirziyoyev, a?decisive course was taken towards the de-monopolization of?the republic’s civil aviation. An?important step on?the part of?the Uzbek leadership in?2019 was the allocation of?11 international airports of?the republic (Tashkent, Samarkand, Bukhara, Navoi, Andijan, Namangan, Ferghana, Nukus, Urgench, Termez and Karshi) under the management of "Uzbekistan Airports" Company. It?also included subsidiaries?— Uzbekistan Airport Handling (UzPort) and Uzbekistan Airports Cargo. This step allowed to?give a?significant impetus to?the modernization and development of?Uzbekistan’s airports. The Government’s commitment to?invest in?modern airport infrastructure is?one of?the key factors in?the growth of?Uzbekistan’s aviation sector. These investments have helped improve the country’s connectivity with the rest of?the world and allowed the country to?attract more international flights and passengers. In?addition, an?Open Skies regime for foreign air carriers has been introduced at?several airports. The policy of?liberalization and the creation of?broad opportunities for the private sector in?the air transportation market has turned Uzbekistan into one of?the fastest growing aviation markets in?the world. While maintaining the leading role of?Uzbekistan Airways, the number of?airlines has already reached 15, including 10 private ones. During seven years since the beginning of?the industry de-monopolization, the number of?flights has doubled, the number of?passengers served at?the airports of?the republic has increased from 3.9 million people in?2017 to?more than 10 million people in?2023. By?the end of?2023, the number of?international air routes exceeded 200, which is?70% more than in?the pre-pandemic 2019, when flights from Uzbekistan were carried out to?116 international destinations. The Ministry of?Transport of?Uzbekistan expects that the number of?air passengers in?the country will exceed 13 million people by?2025. In?2023, six new airlines were established in?Uzbekistan, and 28 new aircraft were purchased during the year. The total fleet consists of?75 aircraft and is?expected to?exceed 100 aircraft by?the end of?2025.

Due to?the transfer of?Samarkand Airport to?private management and its radical reconstruction, passenger traffic increased fourfold and reached 1 million passengers. The creation of?a?public-private partnership between the state-owned Uzbekistan Airports and the private Air Marakanda has become a?pilot project on?the basis of?which other airports in?Uzbekistan will be?privatized. It?is?planned that in?2024 the airports of?Bukhara, Namangan, Urgench and Andijan will be?transferred to?private management and will be?modernized. Uzbekistan’s development strategy until 2030 provides for a?fourfold increase in?air transportation. In?this regard, at?a?meeting with President Shavkat Mirziyoyev at?the end of?February 2024, it?was noted that last year’s growth of?11.6% was insufficient, in?order to?achieve the goal set in?the strategy, the annual growth rate in?the industry should be?at?least 20%. Also, among the problems, it?was pointed out that the number of?both domestic and international flights is?not enough to?meet the existing demand. The main part of?flights still falls on?the airports of?Tashkent and Samarkand. Airports' aircraft and passenger service capabilities are limited, with additional services accounting for only 7% of?their total revenue. The transit potential of?Tashkent, Navoi and Namangan airports is?not being fully utilized. The need to?increase competitiveness, introduce additional services at?airports, develop aircraft maintenance at?Navoi Airport and make full use of?its potential was emphasized. The meeting also discussed the issues of?attracting foreign qualified specialists to?state-owned airlines, as?well as?improving staff training. It?is?planned that the number of?flights will be?increased by?20% this year. To?increase the availability of?air transportation, measures are envisaged to?reduce costs in?the industry by?20%. It?is?planned to?modernize the aircraft fleet, sell old aircraft with high fuel consumption and replace them with modern fuel-efficient aircraft. It?is?expected that a?significant reduction in?fuel consumption will be?achieved by?choosing the optimal flight routes to?72 destinations. Unused and unprofitable assets will be?put up?for sale. The process of?obtaining an?international credit rating for the national airline Uzbekistan Airways and its IPO will also begin. Attracting investments is?necessary for the development of?the national air carrier in?the face of?growing competition from both international and private local airlines. In?addition, Uzbekistan cannot afford to?lag behind its strong neighbor, Kazakhstan, where the initial public offering of?shares of?the largest carrier, Air Astana Group, has recently been quite successful. The details on?the possible timing and parameters of?the Uzbekistan Airways IPO are not yet available.

2. Short List of Uzbekistan Airlines

Uzbekistan Airways, the largest state-owned airline, serves almost 50 destinations and has a?fleet of?42 aircraft, including ten Airbus A320neo, five Airbus A321neo and five Boeing 787?8. Uzbekistan Airways also has a?low-tariff division, Uzbekistan Airways Express, which operates four aircraft from its fleet.

Uzbekistan Airways Fleet as?of?March 2024

Aircraft TypeActiveInactiveTotalAvg. AgeConfigCapacityAirbus A320-2141011112.5Y174|C12Y1381446Airbus A320-251N10102.4Y168|Y186|C12Y1381476Airbus A321-253NX551.8C16Y172940Airbus A330-2431114.6C18Y248266Boeing 767-33PER(BCF)11227.3CargoBoeing 767-33PER42613.7C15Y232|C18Y2461499Boeing 787-8 Dreamliner775.8C24Y222|C24Y2461524Total384428.97151

Since June, Uzbekistan Airways has received five new mainline Airbus A320neo, four of?which are mono composed for 186 passengers, to?meet the noticeably increased demand for air transportation. To?increase the carrying capacity, the Uzbek flagship resorted to?short-term wet leasing for the first time?— during seven months it?used two wide-body long-haul Airbus A330?200. The increase in?the fleet allowed Uzbekistan Airways to?achieve record operating performance. Passenger traffic increased by?19% year-on-year and exceeded 5 million people for the first time. According to?preliminary estimates, in?2023, the airline sold 5.5 million tickets, completed 32.1 thousand flights, and transported more than 50.4 thousand tons of?cargo. 10 new regular destinations were opened: from Tashkent to?Munich, Ankara, Grozny, Omsk, Nizhny Novgorod, Blagoveshchensk and Khabarovsk: from Ferghana to?Jeddah; from Namangan to?Nizhnevartovsk; from Samarkand to?Kazan. In?the winter schedule of?2023/24, Uzbekistan Airways increased the number of?flights to?Russia from its so?called "Eastern Hub", which includes two airports in?the Ferghana Valley, the most densely populated region of?Uzbekistan?— Ferghana and Namangan. Russia remains the main foreign market for Uzbekistan Airways due to?the strong flow of?labor migration and the presence of?a?significant diaspora. In?total, Uzbekistan Airways flies to?18 Russian cities in?the winter season, which accounts for more than 40% of?all its international destinations. The Eastern Hub is?a?joint project of?the Uzbekistan Airports airport operator and Uzbekistan Airways, launched with the support of?the Ministry of?Transport of?Uzbekistan in?the summer of?2021 from Ferghana, further developed by?flights from Namangan in?early 2022. The project involves the implementation of?direct budget flights to?Russia for residents of?the Ferghana Valley. The flight operator from Namangan is?Uzbekistan Airways Express, a?division of?Uzbekistan Airways, which provides a "no-frills" service and operates aircraft with a?fully economy class layout. The most intriguing developments took place in?the domestic market. In?the summer of?2023, two Czech Let L-410 UVP-E20 aircraft with a?capacity of?19 passengers for local transportation were added to?Uzbekistan Airways fleet. The airline has an?option to?purchase two more aircraft of?this type. It?is?planned that L410 will operate flights to?Zaamin, Zarafshan, Shakhrisabz and Sokh. Uzbekistan Airways' regional transportation development strategy remains unclear. Apparently, the airline ordered the L-410 to?compete with the low-tariff startup airline Silk Avia, which started flights in?April 2023 as?a?subsidiary of?Uzbekistan Airports. The airline operates scheduled, mostly domestic, flights on?three 70-seat ATR 72 turboprop aircraft. Back in?late 2022, in?the process of?creating Silk Avia, Rano Juraeva, the then CEO of?Uzbekistan Airports (and Head of?the Airline), proposed that the regional Silk Avia replace the mainline full-service Uzbekistan Airways on?local air routes, allowing the latter to?free up?its aircraft for flights abroad. In?turn, due to?synergy with airport holdings, it?became possible to?develop transportation on?low-profit air routes, which would be?unprofitable for other airlines to?fly. However, in?the context of?increased attention to?the development of?intra-republican flights by?the President of?the country, already in?summer Uzbekistan Airways and Silk Avia began to?compete with each other, including on?the popular Tashkent-Samarkand air route. In?August 2023, in?accordance with the decision of?the general meeting of?shareholders of?the state company Uzbekistan Airports, the employment contract with Rano Jurayeva, Chairman of?the Board of?Uzbekistan Airports, was terminated. The reasons for this decision remained unknown. At?the same time, the Ministry of?Transport of?the Republic noted that "during her work, Rano Dzhuraeva contributed to?the development of?airport infrastructure, enhancement of?the company’s management system and improvement of?its financial and economic indicators." In?October 2023, President of?Uzbekistan Shavkat Mirziyoyev signed a?Decree according to?which Silk Avia comes under the management of?Uzbekistan Airways, though not directly, but through its subsidiary Uzbekistan Helicopters, which received 100% of?Silk Avia shares. The new owner retains the brand and is?obliged to?continue expanding the airline’s fleet in?accordance with the agreements already reached. After Silk Avia transferred to?Uzbekistan Airways, the companies received 88.3% of?all domestic flights. Prior to?that, according to?the Ministry of?Transport of?Uzbekistan, flights were distributed as?follows: Uzbekistan airways?— 55.9%, Silk Avia?— 32.4%, Qanot Sharq?— 3.6%, Humo Air?— 3.6%, Centrum Air?— 2.7%, Panorama Air?— 1.8%. As?you can see, Silk Avia was the only serious competitor of?Uzbekistan Airways in?the domestic market. "The goal of?Uzbekistan Airways, consistent with the strategy of?the "New Uzbekistan", is?to?ensure the availability of?air travel and the development of?domestic tourism in?the republic. We?plan to?achieve this by?developing aviation links between the country’s cities on?turboprop aircraft of?the ATR type," said Shukhrat Khudaikulov, Chairman of?the Board of?the national carrier. By?March 2024, Silk Avia’s fleet had grown to?five ATR 72?600 aircraft. The airline received the fourth and fifth aircraft directly from the manufacturer in?Toulouse (France). Currently, the airline connects nine cities of?Uzbekistan: Tashkent, Bukhara, Karshi, Navoi, Namangan, Samarkand, Termez, Ferghana and Urgench.

The first private airline of?Uzbekistan, Qanot Sharq, whose name translates as "Wings of?the East", started flights in?September 2021, and operates two "classic" narrow-body A320ceo (both with an?average age of?17 years) and two newly upgraded A321neo, all under a?leasing contract with ALC. In?November 2023, Qanot Sharq received its first wide-body Airbus A330?200 passenger aircraft with Rolls-Royce Trent 772B-60 engines. The 12- year-old aircraft was leased from the carrier’s long-time partner, the American company Air Lease Corporation (ALC). In?two years since the launch of?its first passenger flight on?the Tashkent?— Moscow (Vnukovo) route, Qanot Sharq has transported about 118 thousand passengers on?this route by?October 2023 and performed more than 780 turnaround flights. In?addition to?Tashkent, the airline operates narrow-body Airbus A320 family aircraft to?Vnukovo from Bukhara, Samarkand and Ferghana. There are two Airbus A320, two Airbus A321neo and one Airbus A330?200 in?the Qanot Sharq aircraft fleet.

Aircraft TypeActiveInactiveTotalAvg. AgeConfigCapacityAirbus A320?2002217.9Y174348Airbus A321neo221.4Y240480Airbus A330?2001112.8C18Y247265Total50510.31093

Air Samarkand is?not based in?the capital Tashkent, but in?Samarkand, and began its activities with the operation of?wide-body aircraft. Air Samarkand and the operator of?Samarkand Airport have a?common private beneficiary. Unlike many startups, Air Samarkand focuses on?a?full-service business model. The airline received an?operator’s certificate on?December 27, 2023. The airline received its first aircraft, an?Airbus A330?300 (registration number UK33001), leased from the Chinese company Minsheng Financial Leasing, on?November 2, 2023. The 13-year-old aircraft has a?layout of?36 seats in?business class and 277 seats in?economy class. It?has become the most spacious passenger aircraft in?Uzbekistan. The second aircraft was a?9-year-old narrow-body Airbus A321, which entered service with the airline on?November 11, 2023. Its layout is?designed to?carry 12 passengers in?business class and 182 passengers in?economy class. The third aircraft was a?7-year-old narrow-body Airbus A321neo (registration number UK32121) with a?capacity of?212 passengers, which was leased from the American Air Lease Corporation and arrived in?Samarkand on?February 16, 2024. As?of?February 2024, Air Samarkand operated only its first wide-body Airbus A330?300. Since entering commercial operation on?December 29, 2023, it?has performed about a?dozen and a?half charter flights to?Istanbul, and since mid-February it?has been involved in?the charter program from Samarkand to?Delhi. Since March 21, 2024, Air Samarkand started regular flights from Samarkand to?Istanbul (Turkey) with a?frequency of?twice a?week. Since the summer of?2024, Air Samarkand plans to?begin flights on?narrow-body aircraft to?European cities such as?Barcelona, Munich, Paris and possibly Rome. In?total, Air Samarkand (IATA code: 9S) has flight permits for 21 destinations. Air Samarkand does not yet plan to?operate flights to?Russia, which remains an?important market for many Uzbek air carriers. The airline believes that Samarkand is?now very well connected with Russ

a.

A?private airline Panorama Airways started operations in?December 2022 with a?single narrow-body Airbus A320. Panorama Airways made its first commercial flight on?December 22, 2022 on?the Tashkent?— Urgench route. In?addition to?transporting pilgrims to?Medina and Jeddah, the carrier then planned to?fly to?the UAE (Dubai), Russia (Moscow and St. Petersburg), Latvia (Riga), Israel (Tel Aviv) and South Korea (Seoul). In?2023, the airline operated two wide-body A330?300s wet-leased from the Maltese division of?the Latvian company SmartLynx Malta. In?August 2023, Panorama Airways launched for the first time a?direct scheduled flight from Samarkand to?Medina (Saudi Arabia), which was operated once a?week on?an?Airbus A320. During the first year of?operation, Panorama Airways performed about 1,200 flights, having carried almost 200 thousand passengers. However, in?the period from January 28 to?February 2, 2024, the airline temporarily suspended flights "due to?a?number of?unforeseen situations." As?a?result, several thousand Uzbek pilgrims were unable to?return home from Saudi Arabia on?time, which led to?dissatisfaction with the Uzbek authorities, the Transport Prosecutor’s Office opened a?criminal case against Panorama Airways, and the airline announced changes in?operational management. On?February 16, Panorama Airways announced that it?had fulfilled all obligations for the return of?pilgrims from Saudi Arabia and continued to?provide passenger air transportation services. However, the aircraft wet-leased from SmartLynx Malta were returned, and the carrier’s only own aircraft, the A320 (registration number UK32050), has not flown since October 1, 2023 and is?parked at?Tashkent airport. Further plans for the airline’s development, if?not its survival, remain unclear. Panorama Airways' competitors have already taken advantage of?the airline’s reduction in?carrying capacity. On?February 19, another private Uzbek airline, Qanot Sharq, started flights to?Medina on?the A330. In?the same month, it?also added charter flights to?Jeddah from Tashkent, Namangan, Ferghana and Samarkand to?the existing routes to?Jeddah from Bukhara. In?addition, flights to?Jeddah are operated by?the state-owned Uzbekistan Airways and the private Centrum Air.

Centrum Air received permission to?operate passenger flights in?January 2023. To?date, there are three A320s in?the air carrier’s fleet (UK32070, UK32072 and UK32071?— parked) with the arrangement for 180 seats in?economy class. In?fact, Centrum Air is?the passenger division of?the My?Freighter cargo airline (IATA code: C6). In?2022, My?Freighter changed its business model, evolving from the general agent for air cargo transportation of?the republican flagship Uzbekistan Airways into an?operator, starting operation of?its first aircraft, the Boeing 747-200?°F. In?November 2023, My?Freighter received its second aircraft, a?converted Boeing 767?300BCF freighter (registration number UK67009). Another Boeing 767?300ER BSF (registration number UK67015) was commissioned by?My?Freighter in?January 2024. In?mid-February 2024, the air carrier began operating six scheduled flights per week to?Belgian Liege, which is?the fifth largest cargo airport in?Europe, and in?March it?opened regular weekly routes in?the eastern direction to?Shanghai and Seoul. Also, in?March, My?Freighter became the first private airline in?Uzbekistan to?receive permission from the?UK aviation authorities for commercial flights to?this country and its controlled territories. According to?Mamur Mamadaliyev, Commercial Director of?My?Freighter, the carrier previously flew through Uzbekistan between China and Europe, but made a?strategic decision to?expand its activities to?Southeast Asia, India and Africa. The airline plans to?continue to?replenish its fleet with cargo planes. The growing demand for the transportation of?perishable goods and goods for electronic commerce serves as?an?incentive for the airline’s development. Thus, the development of?My?Freighter is?a?real step towards the formation of?a?transit cargo hub in?Uzbekistan. Of?course, there are considerable difficulties along the way, first of?all, the expansion of?cargo ground handling capacity.

In?January 2024, a?new Uzbek airline Fly Khiva began forming a?fleet, having received the first aircraft, a?Boeing 767-300?°F cargo plane. The airline plans to?receive several more aircraft of?the same type. It?is?planned that the airline will begin operating cargo flights to?Dubai (UAE), Istanbul (Turkey), Delhi (India) and Hong Kong (China). Fly Khiva was established in?2021 and intends to?work not only in?cargo, but also in?business aviation, as?well as?to?carry out passenger air transportations. The airline is?part of?the Urgench-based Fly Khiva Travel Group, which began its activities as?an?air ticket office in?Uzbekistan and Russia. In?2010, it?was one of?the first to?launch charter flights between Russia and Uzbekistan, and from 2022?— between Azerbaijan and Uzbekistan. It?can be?noted that Fly Khiva is?moving along approximately the same business strategy as?My?Freighter. Both businesses started as?commercial agents, after which they move on?to?developing their own cargo and passenger air transportation. This diversified business model has both obvious advantages and complexities.

Humo Air has undertaken to develop the classic business model of a low-cost carrier in Uzbekistan. In mid-December 2023, Humo Air started operating low-cost flights from Tashkent to Nukus, Karshi, Samarkand and Urgench.

The transition of?Humo Air to?a?low-cost air transportation model became possible after in?December 2022, the Swiss investment company ValleyRoad Capital acquired the previously state-owned airline, which carried out local domestic transportation on?An-2 piston aircraft. The investor bought out a?100% state share in?the authorized capital of?Humo Air for 27.2 billion soums (about $?2.4 million), with a?commitment to?develop the company’s fleet and increase air transportation in?2023?2026. According to?Rene Gsponer, CEO of?Humo Air, who previously headed Air Namibia, the acquisition of?an?airline with a?ready-made operator’s certificate facilitated the launch of?a?low-cost project. Humo Air has so?far become the only Uzbek aviation startup with a?European investor and a?clear low-cost business model. Before that, several other new airlines in?this country?— Silk Avia, Centrum Air?— declared themselves low-cost airlines at?launch, but quickly stopped positioning themselves in?this capacity. To?start transportation on?the new model, Humo Air has wet-leased two Airbus A320s from the Bulgarian ACMI provider Fly2Sky until March 2024. Since April 2024, the carrier plans to?expand its aircraft fleet through long-term operational leasing and have 18 A320s by?2025. All aircraft will have only economy class cabin arrangement. At?the same time, the number of?flight destinations will increase to?60 points. On?two A320s, the airline was able to?launch domestic scheduled flights from Tashkent to?seven destinations: Bukhara, Karshi, Nukus, Samarkand, Termez, Urgench and Ferghana, as?well as?open flights from Samarkand to?Urgench. During the first full month of?operation as?a?low-cost airline, Humo Air performed more than 300 scheduled flights, which transported more than 41 thousand passengers, and over 100 thousand passengers were transported in?two months. However, in?early March, Humo Air unexpectedly announced a "temporary suspension" of?flights from March 10 to?April. The airline presented what is?happening as?a?new stage in?its development?— the launch of?international flights, but the need for a?complete stop does not seem obvious. Humo Air claims that it?is "beginning the process of?preparing for rescheduling and restructuring" in?order to "operate international flights." From the very beginning, Humo Air outlined plans to?open flights abroad and did not hide that it?intended to?receive its main revenues from flights to?foreign cities. Humo Air expects to?fly to?the countries such as?Kazakhstan, the United Arab Emirates, Turkey, China, Qatar and Azerbaijan. While the restructuring is?underway, both aircraft from its fleet (registration numbers LZMDI and LZ-FSD) have returned to?the lessor. We?do?hope that this interesting project will still get its development. Uzbekistan’s potential to?become a?major aviation hub in?the region is?huge. With double-digit growth in?passenger traffic, Uzbekistan can become the leading country in?Central Asia in?the aviation sector. This growth has already attracted the interest of?international airlines, which are eager to?start flights to?Uzbekistan and enter this rapidly growing market. The country’s strategic location, combined with a?fast-growing aviation sector and modern airport infrastructure, makes it?an?attractive destination for both airlines and passengers. As?Uzbekistan continues to?liberalize its aviation market and invest in?airport infrastructure, we?can expect even more growth and development in?this dynamic sector. We?definitely expect strong demand for new aircraft of?various types. As?the aviation industry in?Uzbekistan is?rapidly adopting digital technologies and transforming its operations to?become more competitive and meet the growing needs of?travelers, we?are also seeing an?ever-growing demand for modern?IT solutions from airlines, airports, MRO and other service providers.