Overall decline hides new domestic growth

Published: 2/29/2000

On 29th February, Vladimir Andreyev, Director of the FSVT, reported that Russian airlines carried 21.4m passengers in 1999: 4% less than in 1998. Although for the first time in a decade, a 4.4% growth was recorded in domestic passenger volumes. Total passengers carried on international flights decreased by 17% over the period. Andreyev ascribed the general decrease to the August 1998 financial crisis, significant increase in jet fuel prices (200%-280% in ruble terms), and a 50% increase in tariffs, compared to 4% in 1998. According to the FSVT, 50 out of 96 scheduled airlines in Russia account for 98% of all transportation among the 307 airlines licensed by the FSVT in 1999.A figure, which will fall by around 70 during 2000 if the FSVT enforces its ban on single aircraft operators scheduled to have begun in January 2000. He added that Russian civilian transport revenues increased by 72.5 % to Rb 62.127 billion. However, in dollar terms, revenues fell by 32.2%. In December 1999, the FSVT predicted that passenger volume would decrease by 6% overall, with a 15% decline in international passengers and an 8% increase in domestic traffic. These actual results do support the beginnings of a post-crisis recovery in the domestic sector, even if they fall somewhat short of earlier expectations. Cargo traffic during the year was unexpectedly strong, rising by 4.2% in contrast to the feedback received from the civil operators during the period. Suggesting that government cargo aircraft, identified by East Line recently as a major competitor, may be undermining the industry more than was thought. According to East Line, the military sector was one of the primary reasons behind a decline on its main cargo routes, down 6% between Russia and China and 9% between Russia and India. Operating under a Presidential decree from July 1999 allowing federal departments, such as the VTA, the air transport wing of the air force, the Ministry of Internal Affairs and the Ministry of Emergency Situations to use their aircraft for unscheduled passenger and cargo traffic. Personnel employed in the sector fell by 5.9% reflecting the retrenchment at the major players and the abject disaster further down the league. The decline of people ‘employed ‘ in the sector does not however, reflect the level of those who are actually paid on time and in full for their employment. According to the FSVT, Russia currently has nearly 7400 aircraft, including 1700 aircraft for interregional and international flights, 700 cargo aircraft, 2600 aircraft for intra-regional routes, and 2400 helicopters. The operational condition of those aircraft was however, not stated, but it is unlikely that even 20% of that number are currently in flying condition, and the FSVT should know because they have grounded a great many of them because of expired frame or engine lives.

Article ID: 1491