Russian Far-East to get $270 million in airfare subsidies

[Pieter C. 5]

Russian far east to get $270 million in airfare subsidies

 

Wednesday December 17, 2008

Russia's Ministry of Transport is working out a mechanism for distributing over the next two years RUB7.5 billion ($270.1 million) in subsidies to airlines serving the country's far east.

 

"Our goal is to introduce a uniform system of subsidizing economy-class fares on long-haul routes to and from these regions," Transport Minister Igor Levitin explained. At present, the state provides subsidies only to particular categories of passengers, such as those in the military, pensioners or students.

 

"We'll reimburse the difference between actual costs borne by carriers and the basic tariff to be paid by economy-class travelers regardless of their status," said Levitin, who expected subsidies on domestic flights from the far east to European Russia to average RUB5,000 per passenger.

 

The ministry is planning to select qualifying airlines following competitive tenders and presentations by regional authorities in support of their bids. As an alternative, it will offer financial backing for airports in the far east through state-funded airport maintenance enterprises. Such enterprises already operate in the Sakha Republic, where the government tends to reimburse carriers out of its own budget.

 

The enhanced system should come into force by next year's summer travel season, Levitin said.

 

 

[Pieter C. 5]

Russian government to extend $1.1 billion aid to selected airlines

 

Monday December 15, 2008

Russia's treasury is set to provide RUB30 billion ($1.08 billion) in soft loans to the air transport industry to help it through the current credit squeeze.

 

Last month the government established a state-backed dedicated relief facility to finance the working capital needs of a few major airlines. According to sources, the five carriers that transport more than 1 million passengers per year, with at least half on scheduled flights, are eligible to receive funds.

 

The recipients identified to date by First Deputy Prime Minister Igor Shuvalov are Aeroflot, newly formed Rosavia and Transaero, a private operator of Russia's largest long-haul fleet. KD avia Director-Business Development Mikhail Baskov told that his airline also is on the list given its role in serving the Kaliningrad exclave. "We firmly count on receiving up to RUB4 billion at an affordable interest rate," he said.

 

Rosavia, the successor to the defunct KrasAir-led AiRUnion alliance, has applied for RUB5 billion to carry it through its formation and allow it to maintain operability and meet growth rate targets in 2009.

 

Separately, the government made a decision in principle to subsidize carriers that provide domestic air services to remote regions, with particular recipients still to be selected.

 

At the same time, civil aviation agency Rosaviatsiya plans to tighten supervision over airlines' financial and operational performance. "We'll request them to report results before each summer and winter season," Deputy Chief Vladimir Chertok said. "If results worsen grossly, we'll consider suspending or annulling air licenses."