Expected improvements have not materialised for some airlines(870 words)

Published: 2/14/2001

Protests over the situation of air transport in Russia's Sakha region in 2000, have resulted in little improvement as 2001 sees the continued deterioration in air transport, with the possibility of at least one large state-owned airline having its operating licence suspended The most vocal of the protesters in the region, the Sakha Aviation Staff Trade Union, demanded at the end of 2000, that the Sakha Government should pay the budgeted 50m rubles and the outstanding debts to the airlines. It also demanded that the 2001 budget include 22.5m rubles for the overhauled Mi-8s and An-2s and subsidies to cover unprofitable routes. One particular action undertaken by the authorities in April 2000, aimed at incorporating Chersky (an affiliate of Polyarny Airlines) into a single state unitary enterprise, including Chersky airport, appears to have had an adverse effect on the situation. Few of the carrier's underlying problems appear to have changed. The State entity has continued to be burdened by debts and falling income, due to non-payment. By June 2000 the trouble was such that the airline staff union appealed to the Aviation Department of Sakha for an independent audit of the company; the allocation of funds to the pilots' pension fund and the disposal of two An-26 to assist with the carrier's finances. The situation was further exacerbated by the acquisition of two An-74 from the Sakha Aviation Training Centre, which, reportedly had costs of 900,000 rubles per month and only 300,000 in revenues. Another airline in the region Vilyui, also remains in dire straits. It has wage arrears in excess of one year and debts of 11m rubles spanning the last 10 months. The causes of its poor performance, as with the entire region's carriers, lies in a combination of: falling sales; State failure to fund subsidized local routes; and support missions such as ambulance flights, forest patrols and government employees' flights. Payment for some of these flights can be delayed by years and even then, do not take account of inflation. For the head of the regional office of the Federal Civil Aviation Service (GSGA), Panteleimon Syromyatnikov, the way out of the financial crisis is a reduction in flight numbers, to boost load factors. At least this would allow the major regional carrier, Sakhaavia, to reduce its losses. He also believes that regional subsidy is a continuing requirement to keep the network going, adding that the cost of the subsidies is approximately 20m ruble for 2001. This is if the same schedule is to be maintained as for 1999-2000 and to be promptly paid. He points out that Tatarstan have been able to keep their schedules operational with subsidy and by the State paying outstanding debts to airlines. A typical example of these debts is services supplied to government agencies, as in the case of ambulance flights. They have to be made, but the airline uses up working capital to cover them and the Ministry of Health (with debts of 49m rubles at the beginning of November 2000), simply does not pay them. The suggestion has been made that ambulance flights could be made using fuel provided by the government, thereby avoiding any increase in related direct costs to the airlines. Given the sector's current condition, it is doubtful whether the plan for restructuring into two airlines in 2001-2002 will go ahead. The Ministry of Economics has approved the concept, but it still awaits complete government support and that of the regional Duma. This plan calls for the creation of a quasi-commercial airline in the form of Sakhavia, and another operating under subsidy - to service local routes within the region The situation does seem to require some urgent action since the Sakha Regional Aviation Department indicates that both Polyarny and Vilyui's operator licenses expire on the 18th and 22nd of February respectively. The Department adds that neither has sufficient funding to keep its aircraft airworthy and maintain safety levels. Polyarny had its license for scheduled passenger traffic suspended in early January. Since then it has only been able to undertake charter service. The state unitary enterprise Polyarny Airlines say they have stopped flying their Tu-154, but continue to operate the An-2 and An-24; the latter being used on the route from Yakutsk to Batagai. The airline attributes its poor finances to the outstanding 174m rubles, as yet, unpaid by the Ministries of Defence, Health, Internal Affairs and other State agencies. It is sceptical of Aviation Department claims that it will be closed down, given that the head of the region only recently appointed Semen Terekhov, to be the new Polyarny General Director in early January (at which time he also appointed Oleg Rogalev as the new General Director for loss-making Sakhaavia) and because there is no other airline available to undertake local flights. On this basis, the airline expects an extension on 18th February. Terekhov is in Moscow attempting to obtain funding for fuel. Lack of fuel, due to shortages and debts, was the reason for the cessation of flights from 16th October until the end of 2000, which resulted in delays of up to forty days for flights into remote locations such as Nizhneyamsk. .

Article ID: 2354