Azerbaijan is consistently strengthening its position as a key Eurasian transport and logistics hub connecting European and Asian markets. Amid the large-scale transformation of global supply chains, rising passenger traffic, and the rapid development of the Middle Corridor, the country is demonstrating impressive progress in modernizing its aviation sector. Key drivers of this process include the implementation of advanced airspace management strategies, expansion of route networks, development of new airport infrastructure, and the region"s active participation in the global green transition agenda.
In an exclusive interview with Report, Rafael Schvartzman, Regional Vice President for Europe at the International Air Transport Association (IATA), discussed how the organization assesses Azerbaijan's transit potential, what operational and regulatory barriers must be overcome to unlock the opportunities of the Middle Corridor, as well as the prospects for low-cost carriers and the production of sustainable aviation fuel (SAF).
We present the interview to our readers:
– How do you assess Azerbaijan's long-term prospects as a leading transcontinental transit corridor over the next 10–20 years, considering IATA forecasts that passenger traffic in the region will increase by 80%?
– Azerbaijan has all the necessary prerequisites to strengthen its role as a transcontinental transit corridor over the next 10–20 years, driven by its strategic location at the crossroads of Europe and Asia. One of the key development areas is the expansion of transit passenger flows.
Currently, the share of connecting passengers in CIS markets remains relatively low, indicating significant untapped potential. Azerbaijan Airlines (AZAL) has already established itself as a promising regional leader: around 20% of its passengers currently connect through Baku, creating a strong foundation for further development of the hub model.
At the same time, other regional airlines, including Air Astana and Uzbekistan Airways, are also expanding their operations, confirming the broader potential for air traffic growth across the region. To fully capitalize on this opportunity, airlines and airports need to coordinate schedules and develop effective connecting waves, creating a fully integrated hub ecosystem. This is particularly important in markets with relatively limited local demand, where transit traffic becomes the main driver of growth.
Several structural factors will also play a decisive role. These include economically justified infrastructure development based on real demand, aligned with the international aviation community and supported by a comprehensive master plan; maintaining dialogue with airlines to ensure that expansion supports growth without imposing excessive charges, while fully implementing ICAO pricing policies; modernizing airspace and improving its efficiency, especially amid growing traffic caused by changes in global flight routes; liberalizing air transport, including the implementation of an "open skies" policy to attract new carriers and improve connectivity; as well as digitalization and simplification of passenger procedures to provide seamless transfers and a competitive transit experience.
With proper alignment of infrastructure, airline strategies, and regulatory frameworks, Azerbaijan has significant potential to strengthen its position as a competitive aviation bridge between Europe and Asia.
– Given the ongoing transformation of global logistics chains, European markets are increasingly viewing the Middle Corridor as a strategically important alternative in trade relations. How does IATA assess Azerbaijan's role in developing the aviation segment of this corridor, and what operational or regulatory barriers still need to be overcome to fully unlock its potential for Europe–Asia trade?
– Azerbaijan is playing an increasingly important role in the development of the Middle Corridor, particularly as global supply chains seek more reliable and diversified routes connecting Europe and Asia. The country's advantageous geographic location, combined with major investments in infrastructure and logistics capacity, makes it a natural connecting hub for both cargo and passenger air services.
The development of logistics facilities, including the Alat Free Economic Zone and a new specialized cargo airport, demonstrates the country's strategic ambitions. At the same time, Heydar Aliyev International Airport has significant potential for further expansion through more efficient use of existing capacity and the attraction of new airlines.
However, fully realizing the corridor's potential requires overcoming a number of operational and regulatory challenges. The first priority is ensuring price competitiveness: airport fees and service charges must remain attractive compared with alternative routes and hubs, as excessive costs could discourage airlines and logistics operators from choosing Baku as a transit point. This requires sound economic regulation that supports the development and operation of necessary infrastructure while providing investors with a predictable regulatory environment.
In addition, simplifying the regulatory framework and advancing liberalization remain key priorities. This includes streamlining customs procedures and related documentation to reduce entry barriers and attract new market participants.
Digitalization and data exchange will also play a critical role. The implementation of advanced standards such as IATA's ONE Record initiative could significantly improve cargo transparency, efficiency, and traceability throughout the logistics chain.
Furthermore, comprehensive multimodal integration of air, rail, road, and maritime transport is essential for maximizing the opportunities of the Middle Corridor. Effective coordination between different modes of transportation will help reduce delivery times and improve the predictability of shipments.
Finally, maintaining high levels of operational efficiency and quality standards through industry programs such as the IATA Safety Audit for Ground Operations (ISAGO) will help strengthen overall safety, reliability, and confidence among international logistics partners.
– In recent years, traffic through Azerbaijan's airspace has reached record levels amid the restructuring of global aviation routes. How does IATA assess the interim results of the National Airspace Strategy (NAS), developed in cooperation with IATA Consulting? Is the country's infrastructure successfully managing such high demand in terms of safety and operational efficiency?
– As mentioned earlier, the significant increase in traffic through Azerbaijan's airspace demonstrates its growing importance as a strategic transit corridor connecting Europe, Asia, and the Middle East.
In this context, the implementation of the NAS, developed jointly with IATA Consulting, represents an important step toward increasing capacity, improving efficiency, and strengthening safety. The preliminary results of the NAS implementation are encouraging.
From a safety perspective, Azerbaijan continues to maintain high standards and demonstrate strong performance. At the same time, the NAS strategy has delivered notable efficiency gains: route structures have been optimized, flight times reduced, and traffic flow management mechanisms improved - benefits that airlines are already experiencing in practice.
A decisive factor for future development will be the adoption of advanced air traffic management concepts, including:
Performance-Based Navigation (PBN) to optimize flight paths and reduce fuel consumption;
Flexible Use of Airspace (FUA) to increase capacity and improve adaptability;
Digital air traffic management and modern surveillance systems to enhance predictability and situational awareness.
These measures will help expand airspace capacity and reduce operational complexity, enabling Azerbaijan to effectively handle growing volumes of air traffic.
At the same time, the NAS strategy is designed as a long-term transformation program, with implementation continuing throughout 2026. This forward-looking approach ensures that capacity expansion, infrastructure development - including the construction of new airports such as Alat and Lachin - and airspace design are aligned within a unified strategic framework.
Going forward, the priority will remain the gradual expansion of capacity in line with demand while maintaining the highest safety standards. This includes strengthening cross-border coordination with air navigation service providers in neighboring countries, advancing digitalization and automation of air traffic management processes, as well as training and improving the qualifications of air traffic control specialists.
Overall, Azerbaijan's airspace is successfully managing increased demand, while the NAS strategy provides a reliable foundation for sustainable growth. As with airport infrastructure, independent economic regulation plays a crucial role by ensuring the financial sustainability of the system, alongside early coordination of projects and their financing with the international aviation community.
– Mr. Schvartzman, European aviation is largely shaped by intense competition and the availability of low-cost carrier services. How does IATA assess the current level of market liberalization in Azerbaijan? Do you see further potential for expanding the presence of European low-cost airlines at Azerbaijan's regional airports, such as Ganja, Gabala, or Lankaran?
– Azerbaijan has made progress in opening its aviation market, but significant potential for further liberalization remains. Market openness and fair competition are key drivers of improved connectivity, particularly for low-cost carriers.
Currently, the presence of low-cost airlines in Azerbaijan remains relatively limited compared with Europe and neighboring markets, indicating clear opportunities for expansion. European budget carriers could potentially develop operations not only in Baku but also at regional airports such as Ganja, Gabala, and Lankaran, provided that the right operating conditions are established.
To encourage such growth, several factors are particularly important:
further liberalization of air service agreements through the transition to "open skies" models;
competitive airport and air navigation service provider (ANSP) charges achieved through transparency, consultation with airlines, and efficiency-oriented economic regulation;
appropriate airport infrastructure, particularly at regional airports, designed to support efficient point-to-point routes;
a simplified and predictable regulatory environment that facilitates market entry and airline operations.
These measures would stimulate demand, increase destination awareness, and ensure that expanded capacity translates into sustainable growth.
– According to IATA data, tourism development and aviation connectivity are closely interconnected. In your view, what is the main barrier preventing a more significant increase in direct passenger traffic from Western and Central European capitals to Baku? Is this primarily due to flight frequency, ticket prices, or destination awareness, and how can IATA help stimulate these markets?
– Air connectivity and the tourism sector are closely interdependent, and in the case of Azerbaijan there is no single "bottleneck" that can be identified. Rather, demand from Western and Central European markets is influenced by a combination of interconnected factors.
Overall cost competitiveness plays a significant role, as it influences airlines' decisions regarding route launches and capacity deployment. This includes not only airfares but also operational expenses, such as airport charges and air navigation service fees.
At the same time, flight frequency and the depth of the route network are critically important. Travelers generally prefer destinations with flexible and convenient flight schedules.
Another key factor is strengthening the country's image as a tourism destination and promoting it in target markets. Despite Azerbaijan's strong tourism potential, increasing destination awareness among consumers in major European markets remains an important challenge.
From a demand-generation perspective, it is also essential that fare structures are properly adapted to different passenger segments. A balanced and flexible pricing approach, aimed at stimulating both leisure and business travel while maintaining airline sustainability and profitability, can increase travelers" willingness to fly.
IATA can support market development by facilitating dialogue between governments, airports, and airlines, promoting best practices in connectivity development, and helping create conditions that encourage sustainable growth in air transport and tourism.
– Mr. Schvartzman, Heydar Aliyev International Airport is rapidly becoming a key regional hub. In your view, what priorities should form the foundation of its long-term master plan to enable Baku to successfully compete with other major transport hubs located at the crossroads of Europe and Asia? What best practices from European airport management would be most applicable in this context?
– To effectively compete with leading hubs at the intersection of Europe and Asia, the long-term development strategy of Baku's Heydar Aliyev International Airport should be based on the principles of economic viability, operational efficiency, and the ability to scale development in stages.
Systematic consultations with airlines should be an integral part of this process to ensure a balance between growing demand and available capacity.
One of the key priorities is recognizing that the terminal is the primary capacity constraint. Future infrastructure development should therefore focus first and foremost on improving operational efficiency, including optimizing passenger flows, increasing processing capacity, ensuring scalability, and maintaining competitive charges, rather than pursuing ambitious architectural projects.
The best European practices clearly demonstrate that the most successful aviation hubs focus primarily on operational performance and economic efficiency, which ultimately drive their growth and strengthen their competitive position.
At the same time, it is important to recognize that airport charges directly reflect the cost of the infrastructure created.
During the implementation of future terminal expansion projects, there is a real risk that additional capital investments could lead to higher charges, potentially weakening the airport's ability to attract airlines and expand its route network. Therefore, ensuring economically justified development based on real demand is essential.
Achieving this goal requires the implementation of an appropriate economic regulatory framework. Such a mechanism not only protects governments and airlines from excessive infrastructure costs but also builds investor confidence, as investors consistently favor fair, stable, and predictable operating conditions.
– A new cargo airport is currently under construction in the Alat Free Economic Zone and is expected to be integrated into a digital air traffic management system. What are IATA"s expectations for this project, and could Baku become one of the key cargo hubs on the New Silk Road?
– The creation of a dedicated cargo airport in the Alat Free Economic Zone is a major strategic decision by Azerbaijan aimed at strengthening its position along the Middle Corridor and the New Silk Road. Thanks to the country's advantageous geographic location and investments in multimodal infrastructure, the project creates significant opportunities to transform Azerbaijan into a regional logistics hub connecting Europe and Asia. However, the long-term success of the Alat cargo airport will depend on several key factors.
One of the most important aspects is the project's commercial viability, particularly the ability of a dedicated cargo airport model to generate sufficient and sustainable freight volumes to support profitable operations. This requires a thorough understanding of market demand, competitive positioning, and Alat's role within the broader regional cargo ecosystem.
A decisive competitive advantage for any successful cargo hub is operational efficiency and digitalization, particularly in customs clearance and data exchange. In this context, the implementation of the IATA ONE Record initiative and the alignment of processes among airlines, airports, freight forwarding companies, and customs authorities could significantly improve transparency, reduce cargo processing times, and strengthen operational reliability.
Efficient and digitalized customs procedures are increasingly becoming a critical competitive advantage in global logistics.
– Under the EU's strict environmental standards, particularly the ReFuelEU Aviation initiative, airlines operating flights to European destinations are required to adapt to new compliance requirements and bear additional costs. What regulatory and advisory support does IATA provide to airlines outside the EU, including AZAL, to ensure that the green transition does not undermine the economic viability of routes between Baku and European destinations?
– The aviation industry fully supports the goal of achieving net-zero carbon emissions by 2050, and initiatives such as ReFuelEU Aviation represent important steps toward accelerating the adoption of sustainable aviation fuel (SAF). At the same time, it is essential that this transition is carried out through global coordination, without discrimination, and while preserving the economic sustainability of all airlines, including carriers from countries outside the EU, such as AZAL.
A key point is that airlines from non-EU countries operating flights to Europe are required to comply with ReFuelEU Aviation requirements depending on the volume of their operations to European destinations. In practice, this means they may need to purchase and uplift SAF at European airports, creating additional operational challenges and financial burdens.
Given that SAF remains significantly more expensive than conventional jet fuel, this could directly affect route profitability. In the long term, the key solution lies in scaling up global SAF production, improving operational efficiency, and developing environmental policies that support both decarbonization and the sustainable growth of the aviation sector.
– The IATA Aviation Energy Forum held in Azerbaijan's capital strengthened the country's position as an active participant in the aviation industry's green transformation. From IATA's perspective, what specific steps should the Caspian and Caucasus region take to establish SAF production and ensure its commercial viability?
– Holding the Aviation Energy Forum in Baku was a landmark event demonstrating Azerbaijan's commitment to supporting aviation's goal of achieving net-zero carbon emissions by 2050. The Caspian and Caucasus region has significant potential to contribute to the expansion of sustainable aviation fuel production, particularly due to its extensive energy expertise and advantageous geographic location.
To move from plans to practical implementation, it is necessary to establish a clear policy and regulatory framework. Governments should develop long-term regulatory structures and incentive systems that encourage SAF production and consumption, ensuring regulatory transparency, certification mechanisms, and alignment with international standards to attract investment.
In addition, the region's existing energy potential should be leveraged. The experience accumulated in energy production could contribute to the development of SAF value chains, including power-to-liquid technologies, biological fuels, and synthetic fuels, taking into account available local resources and technological feasibility.
At the same time, demand must be created through coordinated industry action. Close cooperation between airlines, airports, fuel suppliers, and government institutions will be critical to establishing a sustainable demand environment capable of supporting SAF production at industrial scale.
Ensuring the economic viability of projects is equally important, as one of the main challenges remains the significant price gap between SAF and conventional jet fuel. Developing financial mechanisms - including incentives, partnership programs, and long-term purchase agreements - will play a decisive role in narrowing this gap.
Parallel investment in infrastructure and supply chains will also be required, as airports need appropriate facilities for fuel storage, blending, and distribution to support SAF integration. Furthermore, digitalization and transparency will become increasingly important, as the ability to track fuel origin throughout SAF supply chains will be essential. Digital tools can help ensure compliance with certification, monitoring, and reporting requirements.
Ultimately, to meet global demand and enable SAF exports or its use by international carriers, Azerbaijan will need to significantly scale up production volumes of fuel fully compliant with global Jet A-1 standards.
With the right combination of government support, investment activity, and cross-sector cooperation, the Caspian and Caucasus region has all the necessary conditions to become an important participant in the global SAF ecosystem.
