Irkutsk region makes moves to consolidate air transport under state control

Published: 2/16/2000

According to reports in Irkutsk, the regional administration has approved a programme to restructure Irkutsk regional aviation during 2000-2001. The primary objective is the merger of all the local airlines in which the state has interests into one state unitary enterprise, built around Irkutsk Airport. All the airlines in the region are currently in administration and under temporary management, such as joint stock companies Baikal and Bratsk, and the state-owned GUP Ust-Ilimsk Air Enterprise. The government and the regional airlines consider that the present situation can only deteriorate, given the fall in traffic combined with an aging fleet, reaching the end of its life limits and mostly not flying, given lack of funds. Merging the airlines is designed to halt the slide. The restructuring proposes that, of the 20 airports operated by local carriers, at least half are unprofitable and need to be closed or restricted to summer use. In addition, assets need to be checked and resources generally optimised. Volumes in the region fell by 1% in the first nine months of 1999, with the airlines combined carrying only 51,164 passengers. Passengers · Baikal Airlines 24,369 · Bodaibo Airlines 1,727 · Kirensk Airlines 2,063 · Ust-Ilim Airlines 7,381 · Bratsk Airlines 13,381 · Sayany Airlines 2,276 The losses for the same period (in rubles): · Baikal Airlines - 3,884,000 · Bodaibo Airlines- 2,416,000 · Kirensk Airlines- 1,525,000 · Ust-Ilim Airlines - 559,000 · Bratsk Airlines - 5,716,000 · Sayany Airlines - 195,000 The first stage of the restructuring comprises the merger of airlines from Irkutsk, Bodaibo, Ust-Kut, Mama and Kirensk. When they are ‘stable", a new regional company, called Regional Corporation of Air Carriers of Irkutsk Oblast, will be established. According to the region, this will focus all the budget support in one organisation, rather than being spread across a number of separate entities. The issue of returning to state control is a perplexing one for those observing the dire state of much of Russia"s regional air transport. Consolidation is certainly is the only route open to the many airlines that were either spun out of Aeroflot or which emerged when it was broken up in the early nineties, but never looked like meeting anywhere close to critical mass. The argument however, that a return to closer control within the state sector under the same people who failed to exploit the benefits of merger before, appears to be a return to the philosophy of management by the state for the benefit of the state. The finances in Russian regional government, with a few exceptions, remain very perilous. Its ability to provide funding is limited and its ability to provide even a modicum of commercial management is almost non-existent. In fact, in many cases, it is precisely the non-payment of subsidies or the fares of regional and federal officials that have given the airlines their acute financial problems. The model of Sibir has shown that it is possible for a commercial operator, to achieve success in a depressed market like Siberia, even with managers who previously had little airline experience. Its success has ruffled the feathers of local politicians, unhappy to lose control of their local air companies, but it has, at least, through its acquisitions, given air services to communities that would have lost them. The commitment of the Chairman of the Administration"s committee dealing with the restructuring, Valentin Mezhevich, is admirable. It was he who suggested that the decree enabling the stabilisation programme should be signed in blood, in order to prevent the participants changing their minds at a later date.

Article ID: 1432