Air Transport World

A steppe-up in costs. (Russian airlines)

Soaring airport charges pinch Russia's airlines, even as open-skies policy doesn't translate into market access

MOSCOW--Things don't always work out as expected. The difficulties of the four years that preceded 1995, during which passenger numbers fell from 137.5 million in the U.S.S.R. in 1990--including 90.7 million for Russia--down to just 33 million for Russia in 1994, appeared ready to end.

The hyperinflation that saw prices rise some 10,000 times between 1991 and late 1994 had slowed and was rising at about 20% per month.

The fall in ruble values had almost stopped and most carriers were reporting steady traffic volumes or slight increases for the first time in this decade.

Aeroflot Russian International Airlines' management had begun the work needed to restore confidence in the airline and build up its cabin service standards. But it was fighting on several fronts: It had made major changes in its banking arrangements that caused bankers to complain to the government, still the airline's major shareholder. And that seems to have been a factor in the government's decision to replace the board with a new one that reportedly has instructions to sort out the banking problem as a priority.

Several other state-owned Aeroflot units are in difficulty. With government assets being privatized, some are finding outsiders with "connections" seeking parts of their fleets or bases.

And the recent completion of the privatization of Vnukovo Airlines saw the remaining 41% of its shares--controlling interest, as 20% of those already issued are nonvoting--sold off for half of the expected $300 million (ATW, 3/95). …

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