Towards the creation of an aviation monopoly

Rosimushchestvo calls for Aeroflot to be enlarged at the expense of state assets in the industry

As it became known last Friday, Rosimushchestvo proposed to the Russian Ministry of Transport to consider the possibility of consolidating all state assets in the field of civil aviation by including them in the authorized capital of Aeroflot OJSC. Previously, the management of Aeroflot came up with such an idea; now, for the first time, its initiative has received support from one of the influential departments. However, the Ministry of Transport refused to immediately join the supporters of restoring the air transport monopoly in our country, saying that it was considering other options for consolidating domestic airlines. The heads of private airlines with a minority state share in the capital also opposed it.

At the end of last week, the Ministry of Transport held the first meeting of the council to improve the functioning of civil aviation. As Transport Minister Igor Levitin said when opening this event, the new body should coordinate the work of numerous departments that, as a result of the administrative reform of 2004, received the right to manage various aspects of air transport activities. Moreover, executives of private airlines were asked to play an active role in the work of the council. The heads of public and private airlines immediately diverged on the future of the industry.

At the meeting, the director of the department of state policy in the field of aviation, geodesy and cartography of the Ministry of Transport, Karl Ruppel, said that the ministry had received a letter from Rosimushchestvo dated April 4, in which it “requests an opinion on the issue of consolidating all state assets by including them in the authorized capital of the OJSC Aeroflot, ensuring the formation of a federally owned block of shares in Aeroflot OJSC, constituting at least 75% of the capital of this company.” Now the state controls slightly more than 51% of Aeroflot shares. At the same time, the federal center owns 57 federal state unitary enterprises engaged in air transportation, and in another 61 similar enterprises the state owns stakes (including 100% shares in 29 airlines).

Previously, Aeroflot management came up with a similar idea. A week earlier, Aeroflot CEO Valery Okulov told Vremya Novostei that the addition of domestic Russian carriers, while strengthening Aeroflot’s position in the Russian domestic market, simultaneously strengthens its position in the international sphere.

Mr. Ruppel mentioned the proposal of Rosimushchestvo as one of the possible approaches to solving the problem of consolidating Russian airlines. As an alternative, he named the proposal of Vladivostok-Avia OJSC to unite Far Eastern air carriers under the auspices of a specially organized state management company. Transport Minister Igor Levitin also told reporters that the ministry is considering various options for consolidation, including not only Aeroflot as the “core”. However, he made a reservation that the circle of such potential “nuclei” is limited. Large state-controlled airlines can aspire to its role. And in Russia, besides Aeroflot, there are only two of them - KrasAir and the Pulkovo association - STC Rossiya.

Right at the council meeting, active opponents of Aeroflot as the unifying center of Russian civil aviation were revealed. Their position was most emotionally expressed by Natalya Fileva, deputy general director of Siberia Airlines, 25% of the shares of which belong to the state, and if the proposal of Rosimushchestvo comes true, these shares will go to Aeroflot. Ms. Fileva reminded the audience that Aeroflot is operationally unprofitable, and stated that “when this company itself becomes profitable, then it will be possible to talk about joining other air carriers, but for now, no.”

Nevertheless, after the announcement of Rosimushchestvo’s intentions to enlarge Aeroflot, the airline’s shares on the RTS rose by 8%.

Mikhail KUKUSHKIN