Pricing disputes dog international discussions about Russian overflight

Published: 5/26/1999

Although international debate continues over the pricing of Russia"s airspace, its potential profitability is without question, given that Russia makes up one-sixth of the earth"s land surface. So far, Russian authorities and foreign airlines have only drafted plans for an agreement, with no resolution of outstanding difficulties. Foreign airlines are also reluctant to share their future profits with Russia, and the Russian Federation Aviation Service (FAS) is in no hurry to encourage their co-operation by updating ground service infrastructure, which is far below international safety requirements. This general antagonism manifested itself recently when Russia tried to raise a number of tariffs for the use of its air space, resulting in protests from western airlines. Consequently, a Russian-European meeting on air transit through Russia airspace took place in Moscow in April 1999. Routes crossing Russian airspace have an aggregate length of 600,000 km, 90,000 of which serve international flights. Foreign airlines flying to and through Russia pay an aero-navigation fee of $39 to $72 for every 100 km flown, depending upon the maximum take-off weight of each aircraft, in all contributing about $100-120 million annually to Russia. Foreign airlines must also pay a fee for course corrections and a compensatory fee to Russian airlines for taking business away from them, but only for non-stop flights. The latter is a major source of revenue for Aeroflot. The FAS supervises the payments to Russian airlines and sets the relevant rates. During the Russian-European negotiations, the Russians insisted that their compensation rate be increased. According to the FAS, European airlines save about $30,000 on every non-stop flight through Russia. European officials cited the Chicago Convention of 1944, also known as the International Transit Agreement, which establishes an aero navigation fee among its signatories for foreign airlines. Although Russian ever signed the agreement, its western counterparts refer to it as a suitable precedent. Early this year, Mr Evgenii Primakov, former Prime Minister, ordered the FAS to draw up terms of operation for routes connecting North America to the Asian countries via Russia"s Krasnoyarsk Territory and the Arctic Ocean. Russia"s Transaero, SIBIR and Krasnoyarsk airlines have been selected to service the new trans-Siberian and polar route. According to the CIS International Aviation Committee (IAC), some 450,000 aircraft fly from the Western hemisphere to Asian states each year. Should the Trans-Siberian route come into operation, its traffic volume would reach 1,000 flights per week, amounting to 52,500 flights annually. Airlines based in the USA prefer the new non-stop route to traditional flights that must land in Russia for refuelling. A flight from the USA to Southeast Asia via the Arctic Ocean saves an airline up to two hours of flight time and several tons of jet fuel. The advantage for Russia is that each of these flights would bring another $3,000 to the Russian treasury. Transaero and Krasnoyarsk Airlines, along with American Northwest Airlines and Hong Kong-based Cathay Pacific, were the pioneers of two new routes. One, named “Polar" by the USA, flies to Asian countries from the USA across the Krasnoyarsk Territory and Kazakhstan. The other, “Polar 2," links the USA to Southeast Asia via the Krasnoyarsk Territory, Mongolia and China. Practical trial flights have confirmed the theoretical calculations. A Boeing 747-400 flying from Beijing to Detroit will save 45 minutes of flying time and cover the 6,600 miles in 14hours. Boeing 747s were used for the trial flights instead of Russian aircraft, as the 747 is equipped with navigational aids for transpolar and Trans-Arctic flights. Before they can actually become operational, it will be necessary to define the potential volume of the new routes and to evaluate the capacity of Russian transpolar traffic management systems. So far, there is no uniform radar-pilot system in Russia"s northern and eastern territories. FAS officials believe that, if the Russian government can charge $5 for every 100 km of flight over Russia, therefore money should be made available for modernisation. Various estimates show that Russia could receive between $16.5 million and $75 million for aero navigation services alone. However, not everyone would benefit from the new routes. Russian Far Eastern territories would lose the non-budget funds theycurrently receive from the transit and refuelling of foreign airlines. The Khabarovsk Territory, for instance, sold $20 million worth of jet fuel to foreign airlines in 1997.

Article ID: 542