US embassy cable - 03ISTANBUL1847

C O N F I D E N T I A L ISTANBUL 001847 
 
SIPDIS 
 
 
E.O. 12958: DECL: 12/17/2013 
TAGS: PREL, ECON, PGOV, AM, TU, Istanbul 
SUBJECT: ISTANBUL-YEREVAN FLIGHTS: TURKISH FIRM ENTERS THE 
FRAY 
 
 
Classified By: Consul-General David Arnett for Reasons 1.5 (b&d) 
 
 
1. (C) Summary: Absent an open border between Turkey and 
Armenia, twice-weekly flights between Istanbul and Yerevan 
since 1995 have provided some of the only direct contact 
between Turks and Armenians.  Initially operated by the 
state-owned (and now bankrupt) Armenian Airlines, the rights 
were taken over last year by a private Russian company, 
Armavia.  Following an agreement between the Turkish and 
Armenian Foreign Ministers, however, on October 16, a Turkish 
firm, Tower Aviation, initiated twice-weekly flights of its 
own.  End Summary. 
 
 
2. (SBU) Twice-weekly flights between Istanbul and Yerevan 
since 1995 represent the only direct links between Turkey and 
Armenia.  According to Dikran Altun, a Turkish-Armenian who 
acted as Armenian Airlines' Istanbul representative for 
several years, 90 percent of the passengers are Armenian 
"suitcase traders" traveling to Istanbul to purchase goods 
for resale in Armenia.  Only 10 to 15 tickets are sold on 
each flight to Turks (generally Turkish-Armenians, but 
occasionally Turkish businessmen).  Although the Turkish 
government requires the airline to submit seasonal and 
monthly applications for the charter flights, Altun claims 
that there were never any real problems with securing the 
necessary approvals.  It was always clear, however, that 
Turkish Civil Aviation authorities passed along applications 
to the Turkish Foreign Ministry for "political" approval. 
(Note: Altun neglected to mention the brief period when the 
flights were disrupted by the Turkish government's decision 
to stop issuing visas for Armenians at the Istanbul airport 
following the passage of an Armenian "genocide law" by the 
French parliament.  End Note.) 
 
 
3. (C) After two years of trying, Altun himself recently 
secured permission and initiated additional flights on 
October 16 along the same route under the auspices of his own 
firm, Tower Aviation.  Altun told poloff that while a 
personal appeal to then-Foreign Minister Ismail Cem failed to 
secure the necessary political approval, an agreement reached 
between FMs Abdullah Gul and Vartan Oskanian earlier this 
year did the trick.  Arsen Avegyan, the Armenian 
representative to the Black Sea Economic Cooperation forum, 
confirmed to poloff that the Foreign Ministers had 
specifically discussed this issue.  Avegyan added that in the 
framework of seeking a gradual improvement in bilateral ties, 
the Armenian side is now interested in exploring the idea of 
allowing cargo flights between the two countries. 
 
 
4. (SBU) Tower Aviation rents both its equipment and crews 
from another private Turkish firm, Fly Air (which also 
recently initiated the first domestic Turkish flights to 
compete with state-owned Turkish Airlines).  Altun told 
poloff that he has minimal expectations regarding potential 
profits from this venture.  His costs are about USD 19,000 
per round-trip flight (USD 18,000 for the equipment and crew 
and approximately USD 1,000 for ticketing, sales, and 
marketing expenses).  The capacity for each flight is 148 
passengers and tickets are currently available for TL 270 
million (USD 190).  According to his calculations, Altun said 
that he needs to sell about 100 seats on each flight to break 
even.  Since October (admittedly not the high season), Altun 
said that he has had only 60-70 passengers on each flight. 
 
 
5. (SBU) Altun's biggest concern, however, stems from what he 
labeled "unfair competition" from Armavia.  Altun claimed 
that Armavia is "trying to crowd him out" by pressuring 
travel agencies in Armenia not to sell his tickets.  Because 
Armavia now controls most of the flights in and out of 
Armenia, Altun claims that travel agents are susceptible to 
such pressure.  Armavia has also threatened to add a third 
weekly flight in order to undercut demand for Tower/Fly Air. 
If he continues to have problems, Altun said that he plans to 
petition the Turkish Civil Aviation authorities to cancel one 
of Armavia's twice-weekly flights.  This would force Armenian 
passengers who do not want to spend a full week in Istanbul 
to use Altun's airline.  Altun was confident that such 
pressure would immediately resolve his problems with Armavia. 
 
 
6. (C) Embassy Comment: The Turkish MFA views the approval of 
these flights, NGO exchanges, and the proposed joint 
restoration of historic monuments as modest examples of 
improved Turkish-Armenian relations.  They continue, however, 
to link the opening of the border and the restoration of full 
diplomatic relations to a Nagorno-Karabakh settlement (or at 
least to Armenian concessions towards such a settlement). 
ARNETT