Subjects are in no hurry to support the regional airline Aeroflot

The idea of creating a regional airline in the Far East was again voiced by Aeroflot. It is currently planned to implement the plan with the financial participation of Far Eastern entities. Meanwhile, the regions are not ready to financially support the project. Experts believe that without subjects' preferences, the company will have low profitability.

Last week, representatives of Aeroflot OJSC once again announced their intention to create a Far Eastern regional airline based on the company’s subsidiaries - Vladavia OJSC and Sakhalin Air Routes OJSC. The general director of the air carrier, Vitaly Savelyev, explained that the project involves the participation of interested constituent entities of the Russian Federation, since “it is difficult to develop a regional airline without subsidies from the regions.” According to Mr. Savelyev, the corresponding agreements “already exist with the governors and the government.” The creation process may take a year and a half, given that the aircraft fleet will be completely updated, noted Vitaly Savelyev. According to him, we are talking about 10-15 new aircraft - which ones exactly are not specified. The board of directors of Aeroflot will consider the issue of founding a Far Eastern regional airline before the fall, according to the company’s official statement.

Leaders of the Far Eastern regions have repeatedly and unanimously spoken out in favor of the idea of a regional airline. But not all entities are ready to provide financial support to such a project. The authorities of the Primorsky Territory will one of these days consider the issue of developing a new airline together with Aeroflot, the press service of the regional government reported yesterday. “The need of residents of the Far Eastern regions for a regional company exists. It’s often easier to get there through Moscow,” states Anton Ivlev, head of the press service of the government and the governor of the Amur region. According to him, today there is no communication between Blagoveshchensk (Amur Region) and Petropavlovsk-Kamchatsky (Kamchatka Territory). However, according to Mr. Ivlev, the issue of subsidizing such airlines is very painful for the budgets of the Far East regions. “In particular, the budget of the Amur region is not rich. There are no agreements on subsidizing the new airline between Aeroflot and the Amur Region yet,” said Anton Ivlev.

They do not see the opportunity for “their feasible contribution” to the project in the Khabarovsk Territory either. “Within certain powers, we subsidize local airlines - Vostok and Khabarovsk Airlines,” explained Dmitry Kirsanov, deputy head of the passenger and cargo transportation department of the Ministry of Industry and Transport of the Khabarovsk Territory. He recalled that since 2012, a program for subsidizing regional (inter-subject) air transportation of passengers in the North-Western, Siberian, Ural and Far Eastern federal districts began to operate (the planned level of co-financing from the federal budget is set at up to 50%.— “Kommersant”) . “To receive subsidies, regions must include money in their budgets. As far as I know, no one agreed to this,” Mr. Kirsanov clarified. According to him, Sakhalin Air Routes previously approached the regional authorities with a proposal to organize a regional airline. But soon the conversation turned to increasing subsidies for the company’s transportation from the regional budget, and “the project did not go ahead.” Today, JSC Aviation Company Vostok (51% of shares owned by a subsidiary of UTair) has prospects for the development of long-haul transportation, says Dmitry Kirsanov.

The project of a Far Eastern regional airline became attractive after Prime Minister Medvedev, during a visit to the Far Eastern Federal District, announced the possible introduction of quotas for duty-free import of aircraft with a capacity of up to 72 passengers, believes Investcafe analyst Andrei Shenk. “Perhaps this is exactly what Aeroflot is counting on, and in general, such conditions will significantly reduce the amount of investment in fleet renewal, which will enable the company to take a leading position in the regional market,” explained Mr. Schenk. According to analysts, investments in the project will range from $200 million to $1 billion, taking into account the renewal of the machine fleet and significant investments in infrastructure. At the same time, subsidies from constituent entities can reach 20-30% of the total amount of capital investments, Andrey Shenk noted.

The “depressing state” of domestic air transportation speaks in favor of creating a new regional company, Alexey Rybakov, head of the analytical department of the Trade Portal Investment Company, is convinced. But without preferences from the subjects, the carrier may face unprofitability, because consumers of services use air transportation mainly for flights abroad and to central Russia, the expert suggested. Among the possible tools of support from subjects, the expert names the provision of preferential leasing, exemption from certain types of taxes, and the supply of fuel at non-market prices. For the benefit of the project, it is necessary to reduce the cost of jet fuel, which in the Far Eastern Federal District is 20% higher than in the European part of Russia, agrees Igor Kraevsky, senior analyst at FG BCS.

“It is not a fact that the regions will take part in this process. It is unlikely that in the Budget Code of the Russian Federation there is such a thing as “a subsidy from the region for the creation of an airline.” After all, many of them themselves receive subsidies from the federal budget, and it is unlikely that the federal authorities will allow them to spend money on the airline,” said Dmitry Baranov, leading expert of Finam Management. At the same time, subjects can make a certain property contribution, “for example, in the form of local airports located at them, other aviation infrastructure,” Mr. Bogdanov noted.

Maria Konstantinova

You can't fly without subsidies