State officials propose to keep only 50 major airlines
Of course, it might seem that there are a lot of airlines in Russia now. The “service” notion is symbolic for the majority of them. To a certain extent, it is possible to assume that the miserable service that Russian airlines had during the Soviet era was gorgeous in comparison with what airlines offer today. This way or other, Russian airlines took all vacancies on the market, offering the service, which passengers can afford to pay for. It goes without saying that a lot of airlines might not stand the competition. They might simply vanish from the market. However, if it happens, then it is supposed to happen in a natural way, as the market economy essence stipulates. This would be a way to avoid a shock, when these or those Russian regions might be left with no airlines at all. However, certain state structures cherish tough artificial selection plans for air transportation companies on the threshold of elections.
One may understand that, when it is Sergey Shoygu, the head of the Russian EMERCOM, asks to conduct the selection. Mr. Shoygu has a professional approach to the whole issue, as well as certain claims to several private airlines, which have problems with the security of their flights. But this is a problem for professional services and inspections. It is up to them to decide, who is going to fly and who is not. However, when it is the administration of the Russian aviation and space concern Rosaviakosmos suggesting the same idea of selection, this seems to be a rather surprising fact to deal with. Rosaviakosmos explains its suggestion with the fact that such a “cleansing” would be very good for the air transportation market.
The head of the mentioned concern, Yury Koptev, stated during the weekend that having over 300 airlines in the country was not normal. The official was especially indignant about the fact that only 50 companies provided more than 90% of passenger and cargo transportation. According to Yury Koptev, those companies are supposed to remain on the market, while the rest of them will have to go. Mr. Koptev is definitely right. However, no one stopped those 50 giants from forcing other airlines out from the market and taking ten percent of their market space away from them. This did not happen. Big airlines do not need that ten percent, it is not profitable for them. Otherwise, large companies would have obtained all those routes long ago. Yet, they will not deal with that, even if that part of the market becomes vacant. Their prices are too high for a consumer, so they will never carry anything, if it’s not good for them.
If it is so, remaining 250 airlines found their place to work on the market and they do not bother each other. It is not ruled out that some of those small companies will takeover smaller ones and become a big airline. However, if the government decides to get rid of them all, like Mr. Koptev suggested, there is an opportunity that some regions of Russia might be deprived of their air means of communication. Yury Koptev keeps on talking about the security of flights, following EMERCOM’s example. As Koptev says, local authorities are supposed to set up obstacles that would not allow to use the planes, which do not have a right to fly, so to speak. As the official believes, the state will provide new planes for the industry, which will eventually result in the development of the Russian aviation field (Rosaviakosmos is in charge of it, by the way).
On the other hand, it is not like that. There are certain obstacles anyway. They are created with laws, norms, acts, and other legal and technical documents. Yet, none of those legal documents is fully executed. The reason why is very simple – there is a strong lack of money for that. Small airlines do not have it, they are unable to raise a long-term loan for either leasing or buying planes. Russian banks do not provide such long-term loans. Local authorities experience the lack of money as well. That is why, they turn a blind eye on the fact that airlines use the planes, which do not correspond to technical and security norms. However, if those planes are demolished, there will be no flights at all, for there will be nothing to fly on. Mr. Koptev hopes that it is possible to make regional authorities find money for new domestic planes. One shall assume that the money will be obtained at the expense of teachers, pensioners, orphans, outstanding electric power and gas accounts. Mr. Koptev probably thinks that passengers will agree to pay more to airlines for their services, when flights stop. This is the logic way of the prospering Russian monopoly tendency – leave no choice and just raise prices. Most likely, nothing like that is going to happen. Regional governors might initiate actions of protest in their territories, while people will prefer railway transportation instead of travelling by air, paying less to railway tickets. The mentioned ten percent of the market risks to vanish from the structure of the air transportation market completely.
Russian media outlets cited several representatives of those 50 aviation giants. They talk about the improvement of the situation on the whole, about the competition in the industry, about the state and administrative selection. It is known, which way the wind blows. The competitive selection happens alone by itself. An official’s interference is needed for establishing a monopoly. No one feels embarrassed about it. Everyone in Russia is used to cynical proclamations of reforms, while something completely different happens in reality. Media outlets can not do anything about it, but sigh with helplessness. People are left to believe what they write and broadcast.
Yury Koptev, the head of the Russian Rosaviakosmos concern, says that the air transportation reform will touch upon the State Civil Aviation Service – the major regulator in the industry. It is the Civil Aviation Service that deals with the distribution of air transportation routes. Furthermore, regional divisions of the department cooperate with local governments, lobbying their interests (those small airlines). They have a certain financial interest there. This is probably why Yury Koptev believes that Russian airlines will soon be deprived of the State Civil Aviation Service’s support. The funniest thing of all that is the fact that all airlines (including 50 big ones) will have to face the state monopoly Aeroflot – the real ruthless owner of the Russian airspace. Aeroflot’s managers possess the resource, which no one ever dreamed of in Russia. What will happen after that? Most likely, the real market selection will occur. There will be bankruptcies, crimes, assassinations, and funeral ceremonies. If it all happens, one shall assume that someone needs that.
Kira Poznakhirko PRAVDA.Ru
Translated by Dmitry Sudakov