Northern Russian airline fights to find profitable income

Published: 10/8/1999

Polyarnyy Airlines was established in 1997, from the merger of Batagaisky and Nizhnekolymsky airlines, together with Tiksi, Deputatsky, Chokurdah and Belyaya Gora airports in northern Siberia. With Batagay selected as the airport base, owing to its facilities, location and ability to stay open virtually all year round, even in extreme weather conditions. Following the merger, one An-24, two helicopters, three An-2s, a Tu-154 and an An-12 have been overhauled and according to reports three Mi-8s are currently being repaired in Omsk and Magadan. The company also plans to restore another An-26, sharing the costs with the repair factory, currently undisclosed. Despite this effort, in early summer this year, only 17 out of a total 80 aircraft and helicopters were in a serviceable condition. Servicing passengers from the northern regions , a leased Tu-154M has been operating for over a year on the route Tiksi-Moscow-Tiksi. A weekly An-24 flight picks up passengers for the Moscow flight in Batagay, Deputatsky, Chokurdah and Chersky, to bring them to Tiksi. There are two weekly flights in the summer to Moscow. Although in the winter the typical cargo is two tons of cheap fish. Given these market conditions fierce competition forces the company to undercut on tariffs. Losses are substantial: all flights in Yakutiya are currently unprofitable,even before fuel prices started to escalate, with losses on An-2 and An-24 flights amounting to Rb17m according to reports. Against this unpromising backdrop, Polyarnyy Airlines is managing to improve its operations and financial position. Air traffic in H1 1999 increased by 106% compared to 1998, and revenues grew by 21%. Losses have been reduced from Rb1.82 to Rb1.66. Wage arrears have decreased, but are still significant, at Rb20m. While the company has managed to keep its divisions in aviation fuel, insufficient reserves have forced management to make economies in power and heating by using smaller buildings as passenger terminals in Verhoyansk and Kular. In the short term, Gennady Gorbunov, General Director of Polyarnyy Airlines, plans to lease another Tu-154, complete runway repairs in Chokurdah and prepare the runway in Sakkyryr to enable An-2s to land all year round. In In the longer term, the management hopes that the with the help of the Sakha government, it will be able to replace An-2 and An-24 by Technoavia Finist SM-92, a low cost Beaver selling for $200,00, and An-140 respectively.

Article ID: 959