Kazakhstan’s competition watchdog has initiated court proceedings that could enforce fines totalling KZT6.7 billion tenge (USD15 million) on Air Astana (KC, Astana Nursultan Nazarbayev), accusing it of abusing its dominant position in the market to charge unreasonably high prices for air tickets.

The proceedings are a result of a joint audit of the airline’s activities by the Prosecutor General’s Office and the Agency for the Protection and Development of Competition conducted last year. The outcomes were presented by the head of the competition watchdog's transport and communications department, Nurgul Zhamanova, during a Senate hearing.

"On December 12, 2022, an administrative protocol was drawn up in relation to Air Astana. The amount of the fine for 2021 is KZT4.8 billion [USD10.7 million], for 2022 KZT1.9 billion [USD4.3 million]. Court proceedings are now underway," Zhamanova said.

Zhamanova stressed that on top of the proposed fine, the audit's results also included two proposed legislative changes.

“First we need to ensure the development of legal acts regulating the use of dynamic pricing in the field of air transportation. Second is to amend the law on the use of airspace in terms of the application of the fuel surcharge,” Zhamanova explained.

Work is also underway, she added, together with the ministry’s Civil Aviation Committee, to develop rules enforcing more dynamic pricing in the market in terms of restrictions on the use of software that exploits periods of high demand.

A week ago, Rustam Akhmetov, the competition agency’s chairman, said during a news conference that the main problem facing Kazakhstan’s aviation sector is that three state-owned carriers have a market share of 76% - Air Astana and its low-cost subsidiary FlyArystan (FS, Astana Nursultan Nazarbayev) with about 70% and Qazaq Air (IQ, Astana Nursultan Nazarbayev) with 6%. Privately-owned SCAT Airlines (DV, Shymkent) has a share of 24%. To remedy the situation, the country is planning to sell blocks of state-held shares in both Qazaq Air and Air Astana and to separate FlyArystan ahead of its own privatisation.