Dispute over charter flights appears to be over

Published: 5/25/2000

Russia's problems with Spain regarding charter flights, which resulted in a banning of Russian charter fights in early April, appear to be over for the meantime. The FSVT however, is keen to prevent a recurrence and has informed operators of its intention to police the coverage of routes by handing out slots to fly non-scheduled flights to foreign resorts. This appears to be with the aim of preventing the growth in capacity on routes ahead of the new Spain/Russia bilateral agreement, due to be signed in October, and to pre-empt any similar disputes. The Spanish dispute, which stranded 300 tourists, was primarily caused by the Spanish objections that they were not being allowed to compete for traffic on the route and being placed at a disadvantage by Russia's reluctance to accept foreign carriers in the market for Russian tourists. The view stated by some Russian commentators was that the Spanish were unrealistically expecting to take half of the traffic, a view that they are reported to have held since the early 1980s when the first bilateral agreement covering air relations was signed. The Spanish authorities however, say that parity is not an issue as such, they simply want to have the right to compete under the principles of open sky and on that basis 50% is unrealistic. To date, Russian charter carriers flying to foreign destinations have only had to coordinate the frequency of flights with the designated carrier and in some cases in the absence of the designated carrier, even this was not necessary. The FSVT now plans to designate several airlines on a route and then hand out the rights to weekly flights. The deadline for the new system was reported to be mid-May, but the airlines have been advised that the slots to the eight most popular destinations (Antalia, Istanbul, Larnaka, Paphos, Dubai, Barcelona, Burgas, and Varna) will be made at the next meeting of the FSVT license committee and that no further carriers will be accepted on the routes. The response of the industry to the new FSVT system has been mixed. Leonid Itskov, advisor to the General Director of Vnukovo Airlines, said that the changes will have no effect on airlines or the travel operators and airlines will get all the routes they want, by simply negotiating with other carriers with rights for flight slots. This view is shared by the major regional airlines with Boris Abramovich, General Director of Krasair, saying that even if they do not get the routes out of Moscow, they will operate under the codes of other airlines with available slots. The charter airlines in contrast, believe that the decision is at odds with the law and amendments have to be made in the air code, according to Serguey Gusak, General Director of AJT International. He argues that the timing of the decision in the spring puts at risk the existing contracts with travel agencies to carry passengers during the summer season. This is a view shared by Serguey Koltunov of Atlant-Soyuz saying that the discussions of the quota had already made negotiation between operators and agents uncertain and that uncertainty could only damage the existing market. The intention of the FSVT's decision appears to be to limit capacity and therefore allow some leeway for Spanish carriers to access the market and to come to a successful conclusion of an agreement with the Spanish in October. It does however, highlight the increasing problems for some of Russia's carriers, such as higher fuel costs and other regulations relating to noise, that have reduced the Russian charter airlines price advantage and may make the Moscow market an attractive proposition for foreign charter carriers if there is a relaxation in regulations.

Article ID: 1809