Crisis hits airline in Armenia
By Laman Sadigova
Armenia's only airline company Air Armenia has been announced bankrupt after only two years of operation.
No business lasts long in this poor and corrupted post-Soviet country with a scaring number of migration and growing inflation.
The Yerevan court of administrative districts admitted Air Armenia joint stock company a bankrupt on the basis of the claim by HSBC Bank Armenia.
Air Armenia has become second bankrupt airline after Armavia, former national carrier of post Soviet country, which ceased its activities in 2013 because of low profitability.
The current tragic situation in the Armenian aviation sector is a well known reality. The country drove itself in a situation when it is blocked from every side due to its aggressive policy towards its neighboring country. In fact, it isolated itself from regional projects, economic growth and foreign investments. It can be said that it almost does not need an airport as nobody comes there.
Also, due to the ill-conceived economic course of the government, the country is sinking in debts and lacks any opportunity to get rehabilitated.
The member of the Subcommittee on Aviation of the Armenian Public Council Levon Kazaryan believes that the company’s debts amounting to $16 million will not allow it to carry out flights.
The company does not have enough money or property to “survive”. As for the investor (Ukrainian Fund for East Prospect Fund owns a 49 percent stake of the airline), Ukraine faces crisis by itself and will hardly allow funding organizations in other countries when it is in such a difficult situation.
This is not a single case in this poor post-Soviet country, where crisis touches almost every sphere. Several thousands of small and mid-scale business companies have been closed in Armenia over one year, but the government does nothing to change the desperate situation.
High unemployment rates seems never ending problem for Armenia, pushing mass migration from the country. People seek for a better life abroad, and those who cannot leave, try to "survive" in the harsh Armenian realities but not all manage to do it.
The official statistics say that there are about 70,000 SMEs in Armenia, including 58,000 micro and small businesses. Although they account for 43 percent of Armenia's GDP, and their contribution to overall tax revenues is about 5-6 percent.
Also, foreign companies and investments estimate Armenia as unreliable partner and stop investing money in it. In the first half of this year, foreign investment in the Armenian economy decreased three-fold compared to the same period last year – from $180 million to $65 million.
Even Russia, Armenia’s biggest ally, decreases its “donations.” While the volume of direct investment from Russia amounted to $88 million last year, it could hardly overcome a bar of $7 million this year.
Much leaves to be desired in Armenia. The country needs first to get rid of the criminal oligarchy and to draft a normal economic model of state to improve the current deplorable situation the nation is in.
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