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 Post subject: No More Cheap Fares (or Service)
Post Number:#1  PostPosted: 04 Jul 2012 09:05 
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Anyone who flew Aeroflot during the Soviet period remembers the routine: After foreigners were escorted to their seats and Soviet travelers packed themselves and uncountable bags and packages in every bit of remaining space, the stewardesses passed around trays of hard candy and gave a lackluster demonstration of safety procedures.

Once aloft, in-flight service on short flights consisted of a plastic glass of water or carbonated lemonade. Waves of smoke from the back of the aircraft drifted through the plane, punctuated by a seatmate's paper-wrapped garlicky sausage or boiled eggs. Upon arrival, ritually celebrated with a hearty round of applause, there was a long wait for a bus to the terminal, or a long walk across the airstrip, and then a longer wait for the baggage.


It was not a comfortable experience.

On the other hand, the prices were rock bottom, you could fly to 3,500 locations in the Soviet Union and 102 countries, and safety standards — especially on flights with foreign tourists — were generally very high.

Aeroflot, founded in 1923, was one of the world's oldest airlines and the absolute largest, with a fleet of more than 11,000 aircraft and over half a million employees.


Almost immediately after the Soviet collapse, the national fleet was divided up among the former republics.

A new private Russian airline, Transaero, appeared in 1990.

Later, the Aeroflot domestic fleet was split into hundreds of "babyflots," small local or regional airlines.

The Soviet Civil Aviation Ministry, a regulatory body that ran air traffic control and the country's one airline, was reinvented several times as the country struggled to adapt to the changing reality of commercial civil aviation.

In the past 20 years, and particularly in the past decade, airports in major Russian cities have been expanded and brought up to date. In Moscow, express trains ferry passengers into the city past traffic jams. The leading Russian airlines — Aeroflot, Transaero, S7 and UTAir — fly new Western aircraft (Aeroflot has just 90 planes left in its passenger fleet), offer frequent-flyer programs, allow online ticketing, and win awards for service and safety.

But that is only part of the picture. Regional aviation, covering distances of less than 500 kilometers, has been cut back drastically, while the number of functioning airports has dropped from more than 1,300 in 1991 to just over 300 today.

"In the U.S.S.R., this was the most developed segment of civil aviation, but now it's barely surviving," said Roman Gusarov, editor of avia.ru, a leading aviation news agency. "With Russia's geography, size and climate, regional air transport is crucial. In some places, you simply can't build roads. Without aviation, it's very difficult for the people living there."

From the point of view of the consumer, the biggest problem today is the high price of tickets. This is largely linked to fuel prices, but costs are also kept high by local monopolies such as a single airport servicing a city or a single fuel supplier at that airport. Other problems include an aging fleet, a lack of qualified pilots, and the tax system, which takes resources that could otherwise be used for modernization. And then there is a specific feature of Russian air travel that creates additional problems for everyone, from passengers to airlines and air traffic controllers.

"Russia is more affected by seasonal travel than other countries," Gusarov said. "People don't fly as much for business or to see relatives, but on vacation. That means packed flights during the summer and empty planes during the winter."

Gusarov is cautiously optimistic that these problems will be resolved in the next decade, but not entirely by the airlines. "These issues can only be resolved at the level of the federal government," he said.

The government has taken some steps. At a recent meeting at Vnukovo Airport, Prime Minister Dmitry Medvedev said that when 56 percent of the country's flights are through Moscow, "that means that regional aviation is in crisis." Subsidies are being provided for leasing some small aircraft used in short flights, and the state has now allocated 40 billion rubles ($1.28 billion) for airport repair and updating.

But it may be another decade before it's possible to fly from one Russian region to another without a stopover in Moscow.


The Moscow Times 27 June 2012 By Michele A. Berdy

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 Post subject: Aeroflot Sell-Off Could Split Giant Airline
Post Number:#2  PostPosted: 04 Jul 2012 09:33 
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From the Archive:
Aeroflot Sell-Off Could Split Giant Airline

Aeroflot, the largest airline in the world, may split into 150 to 200 separate joint-stock companies when it privatizes next year, according to a top aviation official.

The airline lost part of its former fleet and regional airports to newly independent republics after the Soviet empire broke up a year ago.

But Russia inherited the bulk of the huge airline, which is still owned by the state and runs a fleet of approximately 3,000 planes. Now this, too, may be broken down into smaller regional airlines.

That process could spark regional air companies to compete on the same routes, Vitaly Solomatin, head of airline economic affairs at the Transport Ministry, said in an interview.

"Each air company will operate flights on certain routes, and every aviation enterprise will need a license to operate on these routes," said Solomatin, who regulates and oversees Aeroflot's activities. "There will also be competition in getting these licenses."

The traveler between Moscow and St. Petersburg, for example, might be able to choose between a Moscow-based airline and a competitor in St. Petersburg.

Since prices will be set by the free market in 1993 for the first time in local aviation history, travelers will, at least in theory, be able to compare both the airfares and service standards in choosing carriers.

Domestic business-class service is also expected to liven up the choice for the first time, Solomatin said.

The reduction of government subsidies in 1993 will result in domestic ruble fares as much as 10 times higher than current prices, according to Vadim Zamotin, head of the Transport Ministry's air transport department. Dollar-based fares will remain the same.

Even though Aeroflot's successor companies will be able to charge up to 25 percent above their operating costs under the 1993 free-pricing rules, they will be starting out during an economically disastrous period for the local airline industry.

Passenger traffic on Aeroflot's Russian flights is down 25 percent so far this year over the same period in 1991, even though fares are still heavily subsidized by the government, said Yevgeny Pavlov, an Aeroflot spokesman.

The fall in demand has helped keep alive Aeroflot's tradition of unprofitability, which will translate into a loss of 40 billion rubles ($89 million) on domestic services for 1992, Solomatin said.

The situation for the new airlines in the ex-Soviet republics is also grim, with cash shortages creating serious safety problems, according to a report in Komsomolskaya Pravda.

Republics short of hard currency cannot pay for the spare parts needed to operate the aircraft safely, and frequently they cannot afford the cost of landing rights for emergency landings.

In Russia, 23 Aeroflot flights including charters and special flights crashed in 1992, killing 160 passengers, according to Aeroflot officials.

Solomatin believes the government will intervene if things become too grim for Aeroflot's successors.

"Even in the worst of times, no matter what the reason, the state will always give us a helping hand," he said.



The Moscow Times-29 November 1992 - By Adam Tanner

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