Russian government seeks greater control of Russia's airports

Published: 6/8/1999

Reuters has reported that Russia plans to strengthen state control over the country"s airports. Mr Viktor Gorlov, Deputy General Director of the Federal Aviation Service (FAS), told a conference on airport development in Russia that the government lacked a controlling stake in only 12 of 63 major airports. Mr Gorlov confirmed that officials already worked closely with those 12, and that the state intended to increase its stake in each, whenever the opportunity arose. He added that, in 1998, more than 1.5 billion roubles ($61.22 million) had been invested in Russia"s airports. This is equivalent to some $250 million, at an exchange rate of six roubles per dollar: its general level for most of last year, until August 1998, when it was devalued. Officials claim that there is a critical need for investment in airports, with a minimum of one billion roubles required for modernisation programmes in 1999 and at least two billion roubles in 2000. The FAS is calling for about 34 billion roubles in investment in airports over the next ten years, with the majority of funding used to overhaul and strengthen around 48 runways. In 1998, Russian airports handled a total of 22.4m passengers, compared to 27m in 1997. The role of the state in the investment process for Russian airports would appear to be largely a symbolic in the case of the major entry points, but there is no doubt that without state intervention many airports would find themselves unable to operate. Whether the state in the long term however, is an appropriate owner of the system is another matter, given the poor performance of the state in controlling the abuse of regional airport"s monopolies to make Russian landing costs as a proportion of costs some of the highest in the world. The state"s lack of funds may also mean the state will take control in exchange for tax debts and be unable to make much in the way of financial or commercial investment.

Article ID: 566