The “open skies” policy pursued by the government in the field of civil aviation in Armenia continues to be criticized within the professional community.

In order to fully reveal the problem, lawyer Hamlet Avetisyan studied the policy pursued in the field since the country’s independence, addressed a number of issues and made suggestions. Avetisyan, in particular, explained what the “open skies” policy is and what challenges there are in terms of its localization in the Republic of Armenia.

Let’s start with the consequence

Armenians are always interested why a significant portion of flights at Zvartnots Airport are operated at night. According to experts, Armenians are forced to use night flights because foreign airlines set their flight times based on the convenience of those using their base airport.

Therefore, the problem would be solved if the Republic of Armenia had local carriers that would take into account the needs of Zvartnots users when designing their flight routes.

Although local airlines exist, they operate flights to very limited destinations.

We will address the reasons for the lack of powerful local carriers later. First, let’s go back to the beginning.

What is the “open skies” policy and why is it important?

It should be noted that I was unable to find a definition of the concept of “open skies” policy in any official RA document.

For the first time, it was used in official US documentation on air transport liberalization.

The literature on the topic states that the “open skies” policy implies:

• removal of restrictions on transportation capacity [author: that is, airlines designated by countries can carry as many passengers as they want.],
• removal of restrictions on operated routes,
• reciprocal provision of 3rd and 4th degree freedoms of the air [in some cases also providing 5th degree freedom of the air, if there is a third country’s consent],
• granting an unlimited number of airlines the right to operate flights,
• fair and equal competition between airlines.

To understand the essence of the problem, let us note that the “open skies” policy and its tool, the “open skies” agreements, are, in essence, a means of liberalizing international air transportation.

The liberalization of air transport is based on the approach that air transport is exclusively a business, and the policy pursued in this regard should be conditioned by the interests of consumers. This approach seems logical and does not require justification, but this is only part of the truth, and the full picture is much more complex, which we will try to present here.

Localization of the “Open Skies” policy in Armenia

The legal basis for the implementation of the “open skies” policy in the Republic of Armenia was laid by the decision of the Government of the Republic of Armenia adopted on October 23, 2013.

Although this decision, in turn, is based on a joint study by the consulting firm McKinsey and Company and the National Competitiveness Foundation of Armenia, I will focus exclusively on the government’s decision, since the Government is responsible for the soundness of sectoral policy.

The program was intended to ensure an increase in the number of tourists, a reduction in airport tariffs as a result of the increase in passenger traffic, and the activation of business ties due to more convenient departure and arrival times and affordable prices (see clause 7 of the decision).

The implementation of the above-mentioned goals is problematic, since the necessary prerequisites for this are outside the sphere of aviation. Back in 2013, the former head of the RA Civil Aviation Yuri Mnatsakanov addressed this issue in detail in his articles. In particular, according to Mnatsakanov, the liberalization of air transport yields results when the state implementing the liberalization is:

1. a transport hub [i.e., sea, land or air routes intersect or pass through a given area],
2. An economically developed country,
3. An attractive country from a tourism perspective.

According to Mnatsakanov, Armenia does not meet any of the mentioned criteria. For example, in terms of tourist attractiveness, it has been recorded that a significant part of the inbound tourist flow to Armenia is provided, on the one hand, by diaspora armenians, and on the other hand, it is of a regional nature.

The stated view is largely confirmed, for example, by the data published by the Statistical Committee of the Republic of Armenia for the period of January-September 2024. During the stated period, approximately 69% of tourists who arrived in Armenia stayed in “a friend’s or relative’s house, rented apartments, etc.”.

At the same time, in terms of geographical distribution, 50.4% of tourists arriving in Armenia for the same period arrived from the CIS and countries in our region (Islamic Republic of Iran, Georgia).

In parallel with this, the program makes a number of dubious judgments: for example, in point 8 of the program it is stated that: “The positive impact on GDP and employment will be mainly due to the additional spending by additional tourists. This way, greater added value is created than from the income received by local airlines from ticket sales. Most of the value created as a result of the activities of airlines arises outside Armenia. Even in the case of local air carriers, the costs associated with fuel and (or) aircraft rental are mainly incurred outside Armenia.”

The aforementioned claims are problematic because it turns out that “additional spending by tourists” and “revenues from ticket sales by local airlines” exclude each other.

In practice, the existence of local airlines will provide both additional tourist flow and additional revenues generated from tickets sold by local airlines.

Although the program is based on the assumption that the number of flights will increase as a result of lifting all restrictions, the program does not contain adequate justifications that would justify such judgments.

Also, taking into account the fact that within the framework of the “open skies” policy, countries mutually grant each other the right to use the 3rd and 4th degrees of freedom of the air, we can state that the Republic of Armenia has long been implementing an “open skies” policy.

For example, under the Air Services Agreement between the Republic of Armenia and the Arab Republic of Egypt, signed in 2001 and enacted in 2002, the parties provided each other’s air carriers with 3rd and 4th degree freedoms.

The same applies to the Air Services Agreement signed between the Republic of Armenia and the State of Israel in 1997 or the Air Services Agreement signed between the Governments of the Republic of Armenia and the Republic of Kazakhstan in 1999 and entered into force in 2001.

Taking the said into account, we can state that in practice the program adopted in 2013 is more about concealing the lack of a strategic vision for the sector than creating real added value.

Another problematic point presented in the program is the point according to which “the presence of a local carrier does not yet guarantee the solution of national security problems” [see point 38].

The aforementioned statement is puzzling, since no national security problem is solved with a single tool, but through their combination. The presence of one’s own carrier alone cannot overcome all threats, but it is obvious that, for example, during military operations, one’s own civil aviation can make an invaluable contribution to neutralizing threats, which we will address a little later.

The program’s solutions to address security issues are no less problematic. The proposals are based on the assumption that a local carrier may not be established. Based on this assumption, two options are proposed:

1. Aircraft can be held at the disposal, for example by purchasing them and then leasing them back with the right of recall.
2. During a crisis, aircraft may be operated by local carrier pilots, Air Force-trained pilots, or chartered Armenian as well as foreign pilots.

The problem here is that on the one hand, the program makes recommendations for situations where there is no local carrier, and on the other hand, it assumes that the purchased and leased aircraft will be operated by the pilots of the local carrier. It is not clear what the need is for purchasing aircraft and leasing them (it is not clear to whom they are supposed to lease them) if there is a local carrier.

The next proposal concerns the involvement of air force pilots, but there is no clarification on what will happen, for example, in the event of war, in particular: is it reasonable for military pilots to be distracted from their original function and involved in the operation of civilian aircraft?

The idea of hiring foreign or Armenian pilots is also problematic. The problem is that in the absence of a local carrier the Armenian pilot will be forced to leave the country to find work, which will result in him being equated with foreign pilot, as the legislative regulations of the host country/company will apply to him, meaning he will not be able to return to Armenia at any time.

The superficiality of the proposals is especially evident if we examine the role of civil aviation during the years of the First Artsakh War.

Thus, according to the memoirs of the former head of the Civil Aviation Department, Dmitry Atbashyan [see https://nahichevan.ru/wp-content/uploads/2021/11/moja-aviacija.pdf], during the first Artsakh war, the Republic of Armenia actively used civilian aircraft to transport weapons, ammunition, and other necessary supplies to the conflict zone and to evacuate civilians. For example, fuel for military equipment and combat aviation was supplied to Artsakh by Yak-40 aircraft.

Taking into account the above, we must ask ourselves whether foreign pilots or, as proposed in the program, foreign airlines would agree to supply weapons and fuel to Armenia.

The above analysis clearly shows that the Armenian localization of the “open skies” policy was, on the one hand, devoid of content, since the Republic of Armenia had previously pursued a rather liberal policy, and on the other hand, a number of formulations in the program are controversial, and the connection between the defined goals and the proposed policy is unfounded.

Solutions

Considering the above circumstances, we can offer the following solutions for the development of civil aviation:

• The return of aviation personnel who have left Armenia since independence. It is clear that these personnel is employed in foreign airlines, which means that in order to return them, it will be necessary to somehow motivate them. The property transferred to the state in accordance with the procedure established by the RA Law “On Confiscation of Property of Illegal Origin” can be used as such an incentive, the income from the sale of which can be used to organize a decent life for specialists in the Republic of Armenia.
• Establishment of an airline with state participation or state investment in an existing airline. Such an entity can be reorganized into an open joint-stock company, the shares of which can be sold on the Stock Exchange. This step, on one hand, will allow to attract additional capital, and on the other hand, will motivate the Armenian citizen shareholders to use that airline, since they will ultimately participate in increasing their own revenues as shareholders. Such a step will also contribute to the development of the capital market, since the company will also have the opportunity to attract debt financing through it.
• An important step would be the renegotiation of the Concession Agreement and/or the exercise of control over the Concessionaire’s economic activities. Control over the Concessionaire’s activities will allow, on one hand, to ensure favorable conditions for the airline to be established, and on the other hand, to ensure that the cost of air tickets to destinations of interest to Armenian citizens but not served by a local company is affordable.
• Creation of educational programs related to the aviation sector. For example, implementation of master’s programs in the field of aviation law. Such a step would increase the number of jobs created as a result of the development of aviation (multiplicative effect), while at the same time creating conditions for the largest possible part of the value generated in connection with aviation activities to remain in Armenia. As a result, exceptional capabilities will also be accumulated in Armenia. The mentioned issue is also related to the training of aviation personnel itself, the restoration of infrastructure, for example, the aircraft training complex that operated in the territory of “Zvartnots” airport, but was later demolished.

Authored by Hamlet Avetisyan

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