Flights to the state expense: why do you need a new airline from Sberbank and VTB

A new state airline will appear in Russia. For the aviation market, this may be bad news

Sberbank and VTB create its own airline, which according to the plan should be included in the five largest in Russia. Its specialization will be regional transportation - this is necessary in order to fulfill the “May Decree” of Vladimir Putin, which requires a share of air transportation without transplanting in Moscow to 50%. The project will surely require state subsidies - now regional transportation in Russia is by definition are unprofitable.

• The State Bank received an order to create a new airline from the government in early 2018, Vedomosti writes . She can start flying already in 2019. Gosbanks are already writing a business plan, for the creation of which each of them concluded a contract for 55 million rubles with a consulting company Bain. The exact structure of shareholders has not yet been defined.
• According to the preliminary plan, the passenger flow of the regional airline should amount to 6-10 million passengers per year. With such indicators, the new carrier will have to enter the five largest in Russia. The largest regional airline-Yamal-transported 1.8 million people in 2017 (11th place in Russia).
• The project is needed to fulfill one of the requirements of the May Decree Vladimir Putin - to bring the share of regional air transportation (without transplants in Moscow) to 50%. In 2017, it was 23%. In fact, to fulfill the decree, the volume of regional transport will need to be increased three times. The Federal Air Transport Agency estimated the costs of fulfilling this part of the decree at 182.4 billion rubles in six years. In September, Aeroflot had already announced a large -scale program for creating regional hubs, and ordered 100 Superjet aircraft for their service.
• The new airline will be for state banks, as for Aeroflot, its regional program, not a business project, but social stress. In Russia, for many years, by definition, not only flights between the regions, but also domestic transportation as a whole have been unprofitable.

The average operating profitability of air carriers on internal air lines. Source: Gosniyiga

• Large air carriers subsidize intra -Russian routes at the expense of profitable international destinations, and small airlines survive at the expense of state support . Last year, The Bell studied the business plan of one of the most progressive regional airlines-all profitability in it was formed due to the subsidy of the basic region for the transportation of its passengers and the federal subsidy for the use of Russian aircraft. Since 2019, it is also planned to reset VAT on flights not through Moscow.

What am I to me?

The launch of a new airline that is not related to more than 50% of the Aeroflot market will increase competition. On the one hand, this is good, but the appearance of a new player who will easily receive state preferences will complicate the life of private airlines, and so balancing on the verge of losses. But in general, the Russian air transportation market is gradually moving towards the model of the time of the USSR, where a large -scale network of unjustifiably cheap regional routes was completely subsidized by the state. The collapse of this model has led to the fact that for 30 years from one region of Russia to another it is impossible to fly, bypassing Moscow.

Peter Mironenko