FSVT General Director talks about promoting mergers in the airline sector

Published: 7/28/1999

The Federal Service of Air Transport (FSVT) has taken up the position of its predecessor the FAS in favouring the merging airlines, according to statements made by Vladimir Andreyev, newly appointed Director General of the FSVT. The FSVT will however according to Andreyev, not become actively involved in forcing such mergers, although they are rumoured as the FAS to have taken active roles behind the scenes in the consolidation of the industry in Siberia and played a role in the potential merger between Sibir and Vnukovo. The number of the airlines operating today in Russia is around 300: 197 state companies, 80 joint-stock companies, and the rest are limited liability companies. The merger of the companies and the reduction of their number should, Andreyev said, decrease the costs of services provided, and improve the reliability of services. He also emphasised that larger companies will also be more able to respond to changes in the direction of demand. Accordingly the FSVT it is to review some of the current regulations relating to airline operation. Currently a new airline is not allowed to join a route, if the airlines' operate at a load factors below 65%. It is planned to lower the minimum load factor level, and promote greater competition by allowing more efficient operators the opportunity to enter new markets. Although it was not mentioned what would be the exact load factor. The latter move could have a considerable impact for the expanding carriers who require time to build load factor in soft markets. Also identified as an area for action was the creation of the national aircraft leasing company that the Director General emphasised would require both government support and potentially foreign capital if Russian airlines were to replace aging fleets with aircraft produced by Russia's troubled aviation industry. He did say that the Government was currently planning such a body.

Article ID: 716