Effective safety management is critical to minimise the potential for incidents or accidents. The resulting effects of such an event could have an adverse impact on the Company.

For the purpose of mitigating risks related to flight safety, the Company has established a safety management and compliance monitoring system, through which it conducts compliance and performance monitoring audits and sets and monitors safety performance indicators. The Company has an effective human factors training programme in place. There is a specific emphasis on procedural compliance. Specifically in the area of flight operations training, the Company has made significant investments in training instructors with a strong emphasis on standardisation.

There are regular independent assessments by regulatory authorities, EASA, DCA Aruba, and CAC Kazakhstan as well as industry assessments (IOSA).

Air Astana’s operational performance and flight planning depends on many factors, one being its ability to retain a sufficient number of qualified pilots.

To mitigate this risk, Air Astana has commenced an Ab-initio pilot training programme which has been operating since 2009, having already contributed over 210 pilots. In 2016 the first of these were promoted to Captain. This is a critical source of local pilots and is a cornerstone of our long-term strategic objective to deliver a steady flow of crew. Air Astana also recruits direct-entry pilots from the domestic market. The Ab-initio and local direct entry programmes are the primary sources of pilots for Air Astana and are augmented by the engagement of international contract pilots. The Company continually reviews terms and conditions to ensure we are competitive. In addition, the Company launched its Pilot Referral Programme in 2018, a recruitment tool whereby current employees are encouraged to refer their friends and/or relatives for open pilot positions.

Maintaining high levels of customer satisfaction is essential to the Company. Failure to provide high-quality services could lead to damage to the Company’s reputation along with the loss of customers and a reduction in the airline’s Skytrax rating, as well as an inability to retain its TripAdvisor award achieved in 2018.

Air Astana offers extensive training programmes to ensure that cabin crew maintain their skills at a high level. The In-Flight Services Department has a structure that infuses more control mechanisms into cabin crews’ working routines. The Quality and Standards Division uses a variety of means to regularly monitor customer satisfaction (for example feedback from passengers to in-flight crew and issues standards for cabin crew in terms of maintaining high-quality service. The Performance Division is constantly working with cabin crew in order to sustain the required motivation and ensure that their performance meets established standards. The Operations and Crew Service Centre Divisions provide support in all administrative work flow and in handling day-to-day issues, allowing cabin crew to concentrate on their main duties, in other words, providing a high level of on-board services. The Product and Catering Division ensures the supply of on-board provisions that contribute to excellent service and the utmost comfort of passengers. To provide a more comfortable flying experience, In-flight Supervisors are equipped with CrewPads that contain all the essential information necessary for a flight, for example, detailed passenger information, food preferences, et cetera, all to personalise the service for both Business Class passengers and Nomad Club members, thereby increasing passenger loyalty.

The recruitment process has been established in a way that helps Air Astana to hire customer services orientated personnel for ground services. Employees undergo extensive training in accordance with the Company’s standards. During the probation period newly hired employees are monitored by an experienced trainer who helps to assist and correct their work. Everyday work assessments are made by supervisors on duty, which help to monitor the level of staff qualifications (including the quality of services provided) and to address the weaknesses.

The Company’s IT infrastructure and systems are vital to its day-to-day operations. In growing the role of technology, companies are now more exposed to cyber-attacks and IT failures that could lead to significant reputational and financial losses.

In order to manage this risk Air Astana has robust cyber-security measures in place. The Company has developed processes to comply with the best industry practices and standards in information security. Training for employees on information security and familiarisation with the Information Security Policy is conducted on a constant basis to enhance employees’ awareness of information security. IT infrastructure is fully geared to support business continuity within the best possible limits with redundancy and backup systems in place.

In 2018, the crude oil price increased significantly, by more than 30% in comparison with the previous year. The airline industry was hit hard by this increase as fuel expense is the major cost item of any airline. Hence, as with the whole industry, Air Astana is exposed to risks related to the high volatility of fuel prices and related costs.

For locally sourced fuel, the Company negotiates prices on a competitive basis with Kazakhstani suppliers by concluding stable contracts. Moreover, Air Astana maintains ongoing negotiations with suppliers regarding price reductions. One important aspect is the constant monitoring of alternative suppliers in the market for domestic and international stations. Air Astana also applies a fuel surcharge on domestic and international routes where the Company does not face restrictions as an additional tool for reducing the risk. The amount of the surcharge depends on fuel prices and market conditions.

To reduce its overall consumption of fuel, the Company has added new, more fuel-efficient aircraft to its fleet in recent years, including the Airbus A320neo and Airbus A321neo (with a new engine option). Additionally, several of Air Astana’s pilot training programmes include skills for efficient fuel management.

In 2018, the Company entered fuel hedging deals with a reputable ‘A’ rated international bank by purchase of call options to hedge its international consumption for 2019.

Air Astana’s goal is to develop an international and domestic route network to provide a convenient schedule for passengers who travel directly and who connect frequently between international-to-international and domestic-to-international services. If the Company’s network is not properly built, this will restrict the efficient expansion of its route network and make it impossible to achieve target revenues. Additionally, the Company is exposed to losses of, or reductions in, its current routes and the inability to implement new routes in accordance with its Route Network Plan.

In order to manage these risks, the Company submits slot applications in a timely manner, it negotiates with slot coordinators to get new slots, it works closely with the Kazakhstan Aviation Authority to ensure that traffic rights are granted, it regularly conducts analyses of route effectiveness, it generates route forecast analyses and it uses information from databases. If necessary, appropriate changes are made to the Route Network Plan from time to time.

The retention of key management staff is essential for the Company’s continued successful operation and provides a solid backdrop for making important managerial decisions.

Air Astana has developed succession planning for key management positions to ensure the development of the best candidates. Moreover, the Company implemented the KC Talent Programme in 2010 to identify talent at junior levels.