Belarus needs to solve its problems

Published: 6/13/2000

According to Anatoly Gusarov, General Director of Belarus's national carrier Belavia, the airline is beginning to see some signs of improvement after a pickup that started at the end of 1999 with passenger traffic for Q1 of 2000 up by 10% on the same period in 1999. The State Aviation Committee attributes this improvement to the improved stability of the country's economy and the increased purchasing power of the country's citizens. A sustained recovery could however, yet be thwarted by the lack of speed in reorganising the sector and the age and low chances of replacement of the fleet, which could leave the fleet vulnerable to changes in noise and emission regulations in Europe. The market however, demonstrates little of what could be described as commercial zeal in the drive to be more competitive. The main Belarus airlines are the state-owned Belavia and cargo carrier Transaviaexport and, according to the State Aviation Committee (Goskomavia), Belavia has a market share of 67% of the passenger market. Although it has lately been losing share as Russian airlines in particular endeavour to attract passengers to fly through Moscow and with the incentive that prices can be 30% lower than a direct flight on Belavia from Minsk. The impact of this trend is unclear at present, but will be more evident after the holiday season ends in September and the impact on tourist traffic can be seen. Given Belavia's virtual monopoly of the Belarus market with its failure to develop commercially and, although not significantly challenged internally, has failed to answer threats from outside the country. This situation is likely to increase, as the $100m funding for the purchase of three new aircraft essential for the Belavia fleet is unlikely to be forthcoming. Local sources suggest that the solution may simply to eject other carriers from profitable routes and hand the over to Belavia. The authorities have been aggressive in making the market as difficult as possible for domestic competitors for Belavia. Techaviaservice (TAS), 50% owned by Russian oil company Lukoil, was the only private airline operating in Belarus using Tu-134s and Yak-40s when its licence was withdrawn due to unspecified safety violations in September 1999. The national carrier then refused to honour the tickets issued by the suspended airline, creating chaos for tourists that had been carried by TAS. Despite its safety shortcomings, according to Vasily Yermakov, Deputy Chairman of the State Aviation Committee, the carrier failed to maintain adequate load factors and therefore solvency. It is therefore unexplained why low volume routes such as Minsk- Damascus were operated with the long range Tu-134B, removing the necessity for refueling stops at more lucrative destinations such as the Egyptian resort of Hurghada, which is a major destinations for Belarus passengers via Moscow -a practice adopted by Belavia who inherited the route. According to Yermakov, the domestic marketis beginning to show signs of recovery in the general aviation area with a number of operators emerging using An-2s and Mi-2s.The State Aviation Committee has suggested that it might create a structure to fund the purchase of aircraft from both the west and the east for these small carriers, although given the general condition of the country's finances this seems an unlikely scenario. In an effort to liberalise the regime, there are plans to privatise the state carrier Gomelavia and the possibility of introducing an external investor has not been ruled out, although the state has said that it intends to keep a controlling interest. Given the company's indebtedness and the state control, foreign interest is expected to be muted. For Anatoly Gusarov, the major problem facing the Belarus air transport is not the age or condition of the fleet, but the fact that the EU's enforcement of noise and emission controls from 2002 will prevent the fleet flying in the European airspace. According to Anatoly Pashukov, Head of the External Relations Department of the State Aviation Committee, the Belarus airlines and the Committee have undertaken to solve the problem by asking for an extension of the deadline through diplomatic channels, but reserve the right to act if those discussions do not provide an adequate solution. The effectiveness of the canvassing will become clear when the ICAO President visits the country in the near future. Belarus undoubtedly needs time to upgrade its aircraft and bring them up to international standards. The only solution to date has been the establishment of a Belarus-Russian-Ukrainian JV 'Interavia' in February 1999, made up of the Minsk Aircraft Overhaul Plant and Belavia, Kominteravia (Syktyvkar) and ANTK Tupolev, the Progress Design Bureau, OAO Motor Sich, and the Kharkov Aircraft Plant. The primary goal is the upgrade of the Tu-134 into the Tu-134M by fitting the D-436T-134 with the first aircraft meeting noise and emission standards according to Victor Dronov, technical director of the JV, scheduled for delivery to Belavia this year. The final aircraft will however, be considerably cheaper than the original offering, which was felt to be too expensive at $5-6m a unit.

Article ID: 1859