Penza privatisation reflects more widespread problems for the Volga region (570 words)

Published: 12/5/2000

The state owned Penza Airport all that is left of the liquidated Penza Air Enterprise, is in bankruptcy proceedings and has been under the control of temporary manager Gennady Balshov ,since February of 2000; is to be offered for sale. The sale of the airport is proceeding despite its debts of $1.4m and the residue of the liquidated Penza Airlines in the form of 3 non-operational An-24. According to local reports Vasily Bochkarev, the governor of Penza region, decided to make the move after coming under pressure from the Volga region's Presidential representative and former Prime Minister Sergey Kirienko who suggested that the region development would be severely curtailed by the lack of viable air transport links. Kirienko has recently been very vocal in stating that carriers within the Volga region should seek to merge, preferably voluntarily, and create more viable unified regional carriers out of the present 30 airlines. A view is supported by Pavel Rozhkov Deputy Minister of Transport responsible for the department for civil aviation, the GSGA. Rozhkov appears keen to revive the agency's role in its former guise as the FSVT, as marriage broker between struggling regional carriers and has been actively seeking the support of the president's regional representatives in his efforts. Kirienko's concerns reflect similar worries expressed at the Greater Volga Association's (made up of the regional governments of the area and also known as Big Volga) conference regarding Volga air transport in February 2000. The conference suggested that of the 140 aircraft and 204 helicopters based in the association's area only 50% were operational at the beginning of 2000. The conference suggested various measures such as splitting airline and airports into separate entities, regional airline funding, development programmes, aircraft leasing and the attraction of foreign investors in the region's air transport. The primary conclusion of the discussion was that privatisation was the only route to the survival of the network and it appears that Penza have decided to follow this route despite the dilapidated state of the asset to be sold. Efforts have been made to save the struggling airport; Bochkarev had initially undertaken to provide Rb 3-4 m ($0.10-0.14 m) to repair 3 unflyable An-24. It appears however, that the aircraft were beyond repair and Bochkarev invited regional carrier Saransk Air Enterprise to provide cover over the summer period. A business that has been developed by the carrier given the weakness of the air transport market within its own region. Saransk then opened routes Saransk-Penza-Sochi, Saransk-Penza-St. Petersburg and Saransk-Penza-Mineralny Vody. In addition Bochkarev discussed with a LUKoil subsidiary the provision of a Tu-134 to open a route Penza-Moscow. By the autumn however, due to low traffic over the key summer period attributed to high-ticket prices relative to the railways, all flights were cancelled leaving the airport currently unused, although there have been plans to start a general aviation service by Moscow base Avialine. The Tu-134 from LUKoil also failed to materialise. The temporary manager Balashov when interviewed at the time of the cessation of flights said that their market research showed that the region's traveller simply did not want to travel by air. Against this background the region has decided to sell the airport through an open auction and has hired an advisor for the purpose. According to local reports it would seen the most likely bidders would be Gazpromavia, owned by gas producer Gazprom or Moscow-based airline Avial. The positioning of the airport has been seen as being attractive given it is placed at the centre of European Russian, however Balashov's comments suggest that unless an incoming carrier can tackle the issue of competitiveness against the railways volumes will not be there to sustain a business.

Article ID: 2230