Uzbek government intends to hand over state airline to foreign company

The President of Uzbekistan held a meeting on sustainable functioning and consistent development of the transport industry. Due to the coronavirus, the transportation system around the world has almost come to standstill. Logistic companies are suffering huge losses. It is expected that civil aviation will lose $113 billion by the end of this year, alone. The local transport companies have been already assessing the damage of 340 billion soums resulting from the quarantine restrictions. And this figure will increase further before the epidemiological situation stabilizes.

So far, the government has taken a number of measures to mitigate the impact of a pandemic, and support the enterprises. For example, joint-stock companies -  ‘Uzbekistan Airways’ and ‘Uzbekistan Airports’,  are the most affected by the quarantine. They were granted deferments on bank loans of  $122 million and tax credits of more than 60 billion soums. Additionally, Interest-free loans worth $50 million were provided from the Anti-Crisis Fund as working capital.

The board also discussed the new ways of stable operation of the transport industry in current circumstances.

The Ministry of Transport was tasked to put forward a business model, aimed at overcoming the aftermath of the coronavirus pandemic for Uzbekistan Airways and Uzbekistan Airports.

Instructions were given to enter the freight market on the Europe-China route and to optimize current and investment costs.

The meeting raised the questions of attracting new air carriers to the civil aviation market and handing over “National carrier” to a well-reputed foreign company to intensify the competition.

The plans to announce the tender for modernization of airports and to transfer the activities of international airports of Andijan, Bukhara, Urgench and Karshi into a public-private partnership were heard.

In contrast, the pandemic has started to have a positive impact on demand for rail transport. The percentage of railways in international freight traffic soared from 75 to 87, which is a good opportunity to increase the number of customers by improving the quality of services and reducing costs.

However, the excess of non-core assets in the structure of the entity complicates the further development of ‘Uzbekistan Railways’.

The instructions have been given to optimize ‘Uzbekistan Railways’ non-core enterprises as part of improving tariff setting mechanisms, renewing the railway carriages and locomotive fleet.

The officials discussed the present state and support of the truck services engaged in international transportation. The recent reforms done over the past three years have stirred up the business in international freight transportation and numbers tripled in our country, the share of domestic enterprises in the foreign market has risen - from 37 to 48 percent.

And the target has been set to increase the number of domestic carriers and increase their share in foreign trade up to 60 percent. It’s worth noting to mention that one freight transport can provide more workplaces, and create 30 000 additional new jobs in the market.

Instructions were given to further modernize the intercity bus services in the Republic of Karakalpakstan and the regions, to provide any financial aid where necessary.

The head of state also touched upon the issue of domestic roads, noting their poor condition and people's discontent with their quality; the need for reconstruction of 80 thousand kilometers of internal roads, the introduction of “toll roads”, which is very common worldwide.

For that, It was assigned to announce a tender for the Tashkent-Andijan “tollway project”, which includes the construction of an alternative tunnel at the Kamchik pass.