Alexander Borodin, Tolmachevo Airport (Novosibirsk) - Международный аэропорт "Толмачево"
Release Date: 2010-09-23Alexander Borodin, General Director of Tolmachevo Airport, has been interviewed by Russianavia.net to discuss the latest development of Tolmachevo Airport, its achievements and objectives, as well as the outlook for the next 5-10 years.
How do you asses Tolmachevo Airport evolution since the last interview that the former Tolmachevo’s CEO had with Russianavia.net in 2009? How have the ambitions of this strategic Siberian airport changed?
First of all, it is worth noting that Tolmachevo has upgraded its development plans with the support of the Ministry of Transport of Russia that has helped to position Tolmachevo as the Russian hub linking Europe and Asia. Some of the obvious geographical and demographic factors that characterize Tolmachevo’s advantageous hub position are its proximity (15 km) to Novosibirsk, one of the largest cities in the Siberian Federal District, with a population of 1.4 mln people living in the city and 1.7 mln people more living in its conglomeration. Actually, it’s fair to say that Novosibirsk is the largest Russian city because, officially speaking, each of the other two biggest Russian cities – Moscow and Saint-Petersburg – has a federal, and not a municipal status. Furthermore, the density of population around Novosibirsk is combined with its industrial, scientific and agricultural potential. Geographically wise, Novosibirsk is a hub located at the crossroads of river Irtysh, the largest river basin in Russia, the main Trans-Siberian railway, the major motorways linking the West and the East, and very close to Kazakhstan and Central Asia in general.
Historically wise, Tolmachevo aviation detachment used to consist of an airport, an airline and various aeronavigation services. During the followed privatization, it was divided, with all the services remaining within one territory. Our task is to minimize the presence of any intermediaries and operate on the basis of direct contracts with the service providers, such as Gazpromneft and Gazpromneftaero that is in charge of fueling, so that all the facilities and laboratories are located within the controlled territory. For instance, Gazpromneft is operating on the basis of the petroleum, oil and lubricants (POL) service of the former aviation detachment that was modernized, with investments worth hundreds of millions of rubles. As a result, we have ensured better prices and conditions of fueling services for the airlines as compared to those of the intermediaries that, nevertheless, do try to enter the market. In the perspective of integration and maximization of our existent resources, it is also important that we enjoy full support of the local authorities. Due to direct supplies, we have managed to decrease fuel prices, as recently as last week, almost 2%, to maintain one of the lowest tariffs in Russia. It’s the second time that we decrease fuel prices since July 2009.
One of our objectives is to offer better services and facilities that constitute any aviation hub. In particular, we’re amending the budget to provide for a program of setting up a full-fledged technical station in the airport worth 19 mln rubles. I hope that our Board of Directors would support this initiative. In order to achieve that, we have invited a few certified foreign experts who can contribute with their experience, their contacts and clients.
Also, as our business is international, we need to upscale the skills of our work-force in order to up scale our development, this is why we encourage studies of foreign languages with the airport’s employees who would be the ones to apply the new working technologies that derive from the cooperation with our foreign partners. As General Director, I have even provided a special incentive that envisages an additional 25% to the monthly salary for knowledge of English and another foreign language. Moreover, as Tolmachevo is an Asia-oriented airport, we encourage knowledge of Chinese and have developed a Chinese version of our website and adapted some documents for China.
Besides, Tolmachevo airport is a frequent participant of international forums where our representatives, according to our internal procedure, always make speeches at the appropriate occasions. For instance, at the upcoming conference in Vancouver we’ll present Tolmachevo’s second runway that will be certified in 2-3 weeks. The two runways are designed so that they can be operated simultaneously in any weather conditions.
Speaking about the good geographical location in Russia and Eurasia, does Tolmachevo have any competitors or potential competitors in the region that could pretend to be a similar hub linking Asia and the European part of Russia? We understand that probably Emelyanov Airport is playing in the same niche. How does it influence the airport’s strategy of development?
Speaking of the surrounding cities in general, one of the objectives pursued by Tolmachevo as one of the most influential cities in Siberia is generating the development of regional aviation and regional transport. In particular, Tolmachevo has reached a cooperation agreement with Tomsk, Omsk and Gornoaltaisk for the regional flights.
Concerning the regional transport, we have set up a focus group headed by Russian President’s plenipotentiary representative in West Siberia to ensure state support and uplifting the barriers that hinder development of regional aviation in order to attract more passengers and generate more revenues for the additional businesses in the regional airports. One of the achievements among the regional Siberian airports is opening Tomsk airport as an international airport in 2012 however we realize that it might influence Tolmachevo’s passenger flow. Nevertheless, Tolmachevo has achieved serious growth over the first five months of 2010 with an annual increase of 30% of the passenger flow and reaching the pre-crisis level of 2008. Comparing with 2007 and 2010, we see a clear and smooth growth trend.
Summing it up, I would say that our main competitors are Astana, Karaganda, Almaty (Kazakhstan) and Tashkent (Uzbekistan). Generally, today there’s a well-established air transport flow between the South-East Asia and Moscow. According to our evaluations, each landing is worth 5 mln USD/week. We have managed to ensure favorable conditions in Tolmachevo for some Asian carriers like China Cargo, similarly as Lufthansa Cargo flies to Krasnoyarsk (Emelyanov airport). We have also allocated some funds to attract more transit passengers.
Speaking about the strategies to attract new airlines – Tolmachevo has an intensive cargo exchange with China and Kazakhstan. What is the situation regarding Tolmachevo’s possibilities in terms of cargo handling?
The volumes matter less than technology. We have introduced a few changes in the business: formerly, we had a few companies to receive cargo while today the owner of the warehouse is our subsidiary. The warehouse is located so that it reaches directly to the apron. With 30,000 sq. m of available space in total, we’re buying new equipment; we train people and work directly with the customs. The entire necessary infrastructure is available. Like our partners, we have always tried to do as much as possible in order to ensure the optimal comfort for the passengers. We realize that the airport represents its region.
It seems that investment plans were and will be quite capital intense for your corporation. What is the source of funding for the current and future projects?
When stepped in as the General Director of Tolmachevo in July 2009, the credit portfolio was 1.4 bln rubles, with a turnover of 2.5 bln rubles. This year, we have decreased the credit load almost 17% and plan a credit portfolio of 950 mln rubles as of July 1, 2010. We have restructured the previous loans and established partner relations with the banks on the basis of obligatory tenders.
Our task is to prevent the credit load from becoming a burden. We have optimized the payment scheme decreasing the rates and linking the payment schedule to revenue reception peaks which has saved us about 20 mln rubles simply by looking at the calendar. As soon as my arrival as, General Director, I made an anti-crisis plan which included optimization of costs, increasing revenues and optimizing the management system. I have centralized the structure and procedures of the company: for instance, I have the only authority to sign contracts and payment orders, which brings the process of purchasing in a more dynamic and optimal way. As a result of that and simply by negotiating, it was sometimes possible to decrease prices two-fold.
In the same line, we have brought the profitable businesses, such as luggage wrapping and ticket offices, back to the airport which helped to increase the commercial revenues from 7 to 30 million rubles.
In this line, the overall commercial strategy is to control everything except catering and retail. Catering spaces are on lease by our old partners for whose convenience we have replaced the former 12 month contracts with a 5-year contract. It’s a win-win solution because for them it means more investment opportunities.
After having been part of the Board of Directors of Tolmachevo airport for many years, how it does change for you, to be in front-line?
As I have learned from my previous experience in a large private company, a state company represents more responsibility. Personally, I’ve been working in Novosibirsk during 10 years when we finally realized that the situation went out of control and had to choose a candidature that would be equally supported by everyone- the government and our private shareholders. Besides, my family has moved to Novosibirsk: it’s very convenient for life! (laughs)
How can you finally define your development vision of the airport in 5-10 years?
In 4 years, we plan to reach a passenger flow of 3 mln people and hope to double the cargo flow (16,000 t last year). The necessary changes have already been introduced at the federal level, besides, we will make our conditions more flexible for the foreign companies and expand and double the Asia-focused route network.
With an efficiency of 18 new routes per year, we’re working on developing an incentive program for the new routes agreed in the Federal Antimonopoly Service of Russia.
In a few years, I see Tolmachevo as a full-fledged hub linking Asia and Europe. We have a good position abroad, and we hope that Tolmachevo’s transit potential and the region’s potential will allow it get a central position in aviation business in Asia.
Thank you for speaking to Russianavia.net!
|Company:||Tolmachevo Airport (Novosibirsk) - Международный аэропорт "Толмачево"|