Gov’t looks to subsidize airlines to boost tourist numbers

The Government will give carriers $10 USD for every empty airline seat. Photo by, 22 May 2014 - 13:56, Tbilisi,Georgia

The Government of Georgia is embarking on a unique project to make it cheaper for airlines to come to Georgia in a bid to boost tourist numbers.

The Government will give carriers $10 USD for every empty airline seat as a way to subsidize flights, and to encourage more carriers to enter the Georgian market and boost incoming tourist numbers.

Georgia’s National Tourism Administration (GNTA), a governmental body responsible for developing tourism in the country, said an initial sum of 20,000 GEL would be allocated from the state budget for the marketing campaign. This money will predominantly come from the tourism budget.

"GNTA has begun negotiations with international airline companies operating in Georgia to see if new flights from the summer tourism season can promote the local tourism market,” said GNTA’s director Giorgi Sigua at a meeting with representatives of airline companies operating in Georgia.

At the meeting, held on May 5 at the Sheraton Metechi Palace, Sigua said Ukraine International Airlines, the national and largest airline of Ukraine, would be the first company to receive a subsidy.

Ukraine International Airlines representative Lali Beshkenadze confirmed the company had begun negotiations with GNTA about the unique project.

"Due the service costs of the airport service and the high cost of fuel, they offered to subsidize us in terms of empty seats. This will be profitable for the government and airlines as it will make tickets cheaper and encourage more tourists to enter the market,” Beshkenadze said.

He believed the money would be spent on planned flight between Tbilisi and Lvov and Tbilisi and Kharkov but could not confirm this as negotiations had not finished.

General Director of Lufthansa in Georgia, Azerbaijan and Turkmenistan Stefan Versemann believed ticket prices would be reflected by supply and demand. He said there "a middle demand” from German passengers to travel to Georgia.

"If there is high demand, prices will go down and I believe the tourism administration has to do a lot of promotional work in Germany to attract more German tourists. Georgia has a good image in Germany,” Versemann said.

The general director of Airzena, a Tbilisi-based airline company, believed subsidizing airlines from the state budget was "not reasonable” as it would not help develop the tourism market.

"I am against any kind of state subsidy as it will not have an effect on the air market development, in particular to give money to international companies which have high margin profits from operating in Georgia,” Iase Zautashvili said.

He believed the Government had a lot of work to do to create free market competition and not to put one or two companies in a privileged situation.

There are 24 foreign airline companies and one national carrier who offer regular flights to and from Georgia.