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Vahe Sarukhanyan

Georgians Invest in Armenia’s Aviation Market: New Company Waits For Certificate

Rumors started circulating as far back as last year that Georgian Airways (formerly Airzena) was preparing to enter the aviation market in Armenia.

There were two possible ways to do this: Either the company’s owners were to create a new company in Armenia or Georgian Airways needed permission to fly overseas from Armenia.

The latter is known as the 5th freedom of the air; one of nine in a set of commercial aviation rights granting a country's airlines the privilege to enter and land in another country's airspace

The fifth freedom allows an airline to carry revenue traffic between foreign countries as a part of services connecting the airline's own country. It is the right to carry passengers from one's own country to a second country and from that country to a third country (and so on).

Today, Armenia does not have such a two-way right with Georgia. What exists between the two countries in terms of aviation is a 2008 agreement stipulating that “Implementing the 5th air freedom is subject to the special agreement of the aviation authorities of the parties.”

Georgian Airways went the other route. As reported by the Georgian Commersant.ge website, Tamaz Gaiashvili and Robert Oganesian founded a new aviation company in Armenia. Gaiashvili founded Georgian Airways and serves as its board director. Hetq has written about the close connection between Gaiashvili and Mikhail Baghdasarov, former owner of the now defunct Armavia Airlines. 

It’s likely that recent news that Baghdasarov was offered a job at Georgian Airways had something to do with the new company. Through our colleagues in Georgia, Hetq has obtained public registry data regarding Georgia Airways as of January 15. Tamaz Gaiashvili is the company’s CEO and his first deputy. 80% of the company’s shares are owned by Davit Gaiashvili, and the remaining 20% by Georgian Air Service Ltd.

The aviation company formed in Armenia is called AviaCompany Armenia Ltd. It was founded on December 18, 2015 by RA citizen Ashot Torosyan and Georgia citizen Robert Oganesian. The company’s registered at an address in the Malatia-Sebastia neighborhood of Yerevan with charter capital of 200,000 drams. Torosyan’s official residence is in Gyumri while Oganesian is registered in Tbilisi. On January 5 of this year the name of Tamaz Gaiashvili was added as a founder. This proves that Georgian money is involved.

Readers might ask why then are 51% of the shares belong to Ashot Torosyan from Armenia. It’s simple. Armenian law requires that the shares of an aviation company seeking an air operator’s certificate (AOC) must be 51% owned by a citizen(s) of Armenia or a legal entity/entities registered in Armenia.

The name AviaCompany Armenia doesn’t show as an airline operator in the website of Armenia’s General Civil Aviation Department. Thus, we can conclude the company hasn’t yet received an operator’s license.

Commersant.ge reports that the company will be using Georgia Airways’ planes. The news site sputnikarmenia, citing Robert Oganesian, says the company will employ 350. A few will be employees of Georgia Airways. Commersant.ge reports that most of the new company’s employees will come from Georgian Airways.

So why are the Georgians interested in Armenia’s aviation market? As we wrote previously, Georgian Airways has faced a number of problems since 2014. That year, the Georgian government allowed thirteen Russian companies to fly to Tbilisi. Georgia Airways was the first to suffer as a result. (Direct Tbilisi-Moscow-Tbilisi flights were cut after Russia and Georgia clashed in the August 2008 war. Between 2011 and 2014, Georgian Airways and Russia’s Sibir Airlines   carried out direct charter flights linking the two countries that went to war in 2008. When the powerful Russian companies started taking over some routes, especially Tbilisi to Moscow, Tamaz Gaiashvili threatened to halt all Georgia Airways flights. While Georgian Airways was able to regain some parity in flight numbers, Russian aviation authorities later requested that the frequency of daily flights be increased. This too angered Gaiashvili who said that the Russian desire to operate sis daily flights to Tbilisi was incomprehensible.

Commersant.ge reports that Georgian Airways has halted flights to Vienna, Paris, and Amsterdam. Instead, it flies to Moscow and Tel Aviv. Nevertheless, according to the company’s website, one can still book a ticket to Vienna or Amsterdam.

Iase Zaudashvili, the Georgian operator’s former CEO, told Commersant.ge that it can’t be ruled out that the company will leave the Georgian market all together since there is the threat that Russian carriers will completely gobble it up. Thus, the logic behind making moves towards Armenia. On the other hand, Zaudashvili mentioned the corruption that exists in Armenian aviation and the existence of the same Russian companies (Aeroflot and its subsidiaries) with which Air Armenia and Armavia failed to compete with.

Robert Oganesian told sputnikarmenia that the company’s first flight would be a Boeing 737-700 NG. Where it will fly isn’t yet known. According to aerotransport.org, Georgian Airways has two such aircraft, in addition to one Boeing 737-500, and one each of a Bombadier CRJ 100LR and a CRJ 200LR, plus one Challenger 850. The company plans to obtain an Embraer ERJ-170.

The registration of AviaCompany Armenia at this time isn’t accidental. The summer aviation season starts at the end of March, and according to Armenian government regulations petitions to operate regular flights must be filed with the ministry of the economy no less than twenty and no more than thirty days in advance.

In the meantime, the new company, with Georgian financial backing must first receive an Armenian AOC.

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