In 2005, Tbilisi – the main destination for visitors to Georgia – turned its attention towards improving tourists’ first impressions upon their arrival. The government signed an agreement with TAV Georgia, which has taken over management duties at Tbilisi International Airport. Less than two years after the signing of the agreement, the old Soviet-era airport terminal was replaced with a new building, which has been gradually expanding since then.
TAV Georgia began its operations by serving 500,000 passengers per year. This number has now risen to more than 4 million. In 2006, there were 30 routes operated from Tbilisi International Airport by 19 airlines. Today, there are direct flights to more than 60 destinations operated by 50 different airlines. The airport gradually became busier, and by 2016, the infrastructure needed an upgrade. The terminal building was expanded from 25,000 metres to 37,000 metres, the landing strip was renovated, and new ramps were built for aircrafts.
All of this has been happening in Tbilisi. However, TAV’s activities are not limited to the capital city. In 2007, investors revealed ambitious plans for Batumi, and Georgia’s famous seaside resort soon began welcoming guests at its new airport. Today there are more than 30 flight routes operated by 30 airlines at Batumi International Airport.
TAV has built an arch over the air space between eastern and western Georgia. To date, the company has invested a total of $200 million in the two airports. TAV Georgia has received international acclaim for the structural, environmental and other innovative projects carried out at the airports of Tbilisi and Batumi. In 2018, the international air transport rating organisation, Skytrax, named Tbilisi among the best airports in Eastern Europe for the fifth year in a row.
TAV Holdings and their services are currently represented at 79 airports in 23 countries across the world. TAV Airports also operates in other fields, such as duty-free shopping, catering, ground handling services, information technology and security services. In 2012, the French state-owned company Aéroports de Paris Group purchased a 38% stake in TAV Airports, and later increased this to 46.12%. Consequently, TAV and the ADP Group collectively served 281 million passengers last year.
We spoke to TAV Georgia’s General Manager, Mete Erkal, about the results of the company’s fourteen-year spell in Georgia and its future plans.
TAV Georgia has been operating in Georgia for almost 14 years, taking over the management of Tbilisi and Batumi International Airports. What kind of challenges did you have to overcome in our country?
From the day our team began operating in Georgia in 2005, we set ourselves ambitious goals of devising innovative airport management policies and implementing high service standards in local aviation, as well as becoming a trusted partner for your country. One of our main tasks was to play our part in enhancing Tbilisi’s and Batumi’s tourism potential. To this end, we had to implement significant infrastructural projects, attract new airlines and offer them high-quality services.
Realising these plans was a big challenge for us, as we were starting everything from scratch. We implemented new international standards in passenger and aircraft services, modern equipment and an innovative passenger registration system at Tbilisi International Airport. With these changes, we increased the efficiency of our human resources department.
Your investment activities in Georgia come with a social responsibility. What does this mean for TAV Georgia?
The TAV brand stands for success and development in Georgia. As a leading company on the local market, we have a responsibility to care for the socially vulnerable section of society, implement environmental and educational projects and support students in their quest to start a career and find employment.
Every day the company receives various letters asking for our help. We constantly try to lend support to families that do not have the means to purchase everyday goods, pay their utility bills, or whatever it may be.
Aside from helping families financially, we also devote considerable attention to supplying families and schools with books. Last year, we went to a Georgian village near the occupied zone and presented the local school library with numerous books by both Georgian and international authors. We are also involved in various social and cultural activities, supporting numerous shelters and support centres. Since 2005, TAV Georgia has donated more than 32 million GEL to charity.
Based on our management policies, we do not include charitable activities in our PR campaigns. Therefore, we try not to use media coverage of sensitive subjects to enhance the company’s image. Aside from planting thousands of trees, our most important undertaking from an environmental point of view was to install solar panels at the airport. Since 2016, the Tbilisi International Airport has been partially operating on solar energy. This project was carried out jointly with the government of Japan. Its objective was to implement the use of clean energy in Georgia. Tbilisi International Airport was the first in this region to be named a ‘green airport’ back in 2008, which shows that TAV Georgia has been conducting its business in accordance with environmental standards for many years.
How easy is it for you to source personnel in Georgia? How does your company contribute to creating jobs for the local population and staff training?
Unfortunately, there is currently a shortage of qualified personnel in the aviation industry. We faced this problem when we began operating in 2005, and it can be said that the situation has not changed significantly since then. This is probably because the standard of professional education in Georgia is quite low. We, therefore, decided to establish a training centre in 2012; providing people with the opportunity to acquire knowledge and subsequent experience in aviation. Our training centre and its educational programmes have been certified by the Georgian Civil Aviation Agency. Most of our trainers have themselves undergone training at various IATA and ICAO centres across the world. Our training centre currently operates 36 educational programmes, providing people with knowledge and training in fields such as aviation security, passenger transfers, quality management systems, transportation of dangerous goods, aircraft centring and loading. We conduct emergency assistance courses both in Tbilisi and Batumi on a frequent basis. Our training centre trains up to 2,500 people in the private and public aviation sectors each year.
With regards to jobs, together with our subsidiaries we currently employ 1,400 people across both Tbilisi and Batumi International Airports. All our staff undergo training and acquire professional skills at our training centre. I am also proud to say that our airports have some of the most desirable jobs for graduates of the Georgian Aviation University. Helping these graduates with their careers is one of our priorities.
When we talk about large-scale investment, we are particularly keen to know about the methods and content of your communication with the Georgian government. What are some of the issues discussed?
We have a healthy relationship with the Georgian government, as is necessary between a contractor and a supplier. All our projects are agreed with the government in advance, and we can feel their support. In this case, we both have the same objective – namely, for Georgia to become a regional aviation hub. This requires proper communication with the government, and we feel that we have achieved this aim throughout these years. We believed in Georgia in 2005, when we decided to take a risk and implement our first project abroad. We now feel the same level of trust from the state towards us.
In 2015, TAV Georgia renewed the Build-Operate-Transfer agreement which we signed with United Airports of Georgia in 2005. By signing this agreement, we have once again confirmed that Georgia represents a trusted investment partner for us. Notably, TAV Georgia was named among the largest investors in Georgia in 2017.
Your management contract at the Tbilisi and Batumi International Airports runs until 2027. What are your plans for these two locations for the next 8 years?
We have presented several infrastructural projects to the government’s economic team, and we are actively working in this direction. We are willing to further invest in developing the Tbilisi and Batumi International Airports.
We would also be interested to know what concessions that Georgian Airways benefit from, compared to foreign airlines. Are there any planned changes in this regard?
From the day when we entered the Georgian aviation market, our priority has been to establish Georgia as a regional aviation hub. To this end, we immediately implemented special terms and concessions for Georgian airlines at both our international airports. Georgian Airways are leading the way in terms of the number of passengers flown to Tbilisi. As we all know, this country cannot become a regional aviation hub without a strong national airline. Therefore, we are doing everything within the scope of the competition laws to support the development of the local carriers.
To support the Georgian flagship carrier, TAV Georgia and the Georgian government signed an agreement that affords Georgian Airways a discount of 50% to 80% on the most vital services. The contract also allows Georgian Airways to provide ground handling services to its own aircraft and passengers, which significantly reduces their expenses. Since 2017, the company has also been benefiting from a 20% discount on take-off and landing fees. Furthermore, in order to support the development of local flight routes, in 2010; TAV Georgia devised a special tariff for companies that carry out domestic flights. This also considerably reduces the expenses for Georgian Airways. It is currently the only Tbilisi-based domestic carrier benefiting from the reduced passenger fee of $19 (instead of $24). This discount will apply to any Tbilisi-based airline that transports more than 100,000 passengers per year.
The number of passengers using Georgian airports is growing, and Batumi is no exception. What are the prospects for this particular facility? Does it require expansion, and are you conducting any negotiations on this subject?
The new Batumi International Airport was built from scratch in 2007. It was designed to serve up to 500,000 passengers per year. However, the seaside resort is attracting a growing number of visitors, and in 2018; we already served approximately 600,000 passengers (compared to only 40,000 in 2007). Based on the current trends, the numbers are set to increase even higher this year. Consequently, to ensure the airport’s smooth operation and avoid operating problems for the airlines, the terminal urgently needs to be expanded.
In April 2018, we presented a new project to the Ministry of the Economy, which includes expansion of the departures and arrivals halls. If implemented, it will increase the Batumi International Airport’s capacity to 1.2 million passengers per year. We are currently in talks with the Georgian government, and we believe that this project will be implemented in 2020.
Furthermore, we installed additional check-in desks at the Batumi International Airport in time for the 2018 summer season. Passport control booths were added both in the departures and arrivals halls. The aircraft parking positions were expanded, allowing the airport to serve seven different types of aircraft.
Can you also tell us about any future plans for the Tbilisi International Airport?
We are currently building six new aircraft ramps at Tbilisi International Airport, which will then mean it has 63 ramps in total. The works are due to be completed in June 2019. We also carried out fundamental upgrades to the equipment inside the airport, which will increase the speed and quality of service. TAV Georgia is investing 25 million GEL in infrastructural projects and renovation work this year.
As in Tbilisi and Batumi, new flight routes are also being introduced at the international airport in Kutaisi. How would you assess the latter’s role in the development of local tourism? To what extent does Kutaisi compete with the airports in Tbilisi and Batumi?
We are delighted to see the growth of tourism in Georgia, and all three international airports are playing their part in this process. Due to the sharp increase in the number of passengers in recent years, there was a need for another airport that would focus on low-cost carriers. Most countries across the world operate a similar model: the largest airports in the main cities are dominated by national flag carriers and large international airlines, while smaller airports that are located far away from the capital cities tend to serve budget airlines. It is good that Georgia has created a new market for low-cost airlines through Kutaisi International Airport.
Finally, I would like to ask you about your longer-term plans in Georgia. What do you intend to do when the existing contract expires?
By investing in Georgia in 2005, we put a lot of faith into the country’s possibilities. I can confidently say that both TAV Georgia and the country have fulfilled our expectations. We are always prepared to support the development of the country’s economy and tourism through further investment. TAV Georgia is one this country’s most trusted partners, which can be clearly seen from the level of confidence and support expressed by the airlines and the general public over the years.
