Airline says the fuel was simply too expensive (440 words)

Published: 9/13/2000

Vnukovo Airlines have refuted the claims that they had stopped using Aviazapravka-Norilsk Fuel Service due to debts to the company , but claimed the reason for stopping the purchase of fuel was the very high prices offered by the provider. According to VAL, Aviazapravka charges Rb12,000 ($430) per tonne while New Urengoi charges only Rb5800 ($210). Therefore VAL decided to add New Urengoi to its Moscow-Norilsk route so its aircraft can refuel there claiming that even Norilsk Airlines fuel its aircraft in Novy Urengoi and not at Norilsk. Passengers on the Moscow-New Urengoi-Norilsk route, according to VAL, are quite happy with the arrangement despite the additional hour on the flight. It appears that VAL is currently on something of a charm offensive and is eager to refute every suggestion that the airline has severe cash flow problems. These rumours that the airline is staggering under debt are coming thick and fast and any attempt to clarify reports from airports and suppliers that they are owed large amounts are being refuted by the airline. The airline argues that airports such as Domodedovo and Tolmachevo have stopped being used for either technical or commercial reasons or in the case of Norilsk, expensive fuel. Vnukovo's problems have been going on for some time and the appointment of Alexander Krasnenker, ex-Aeroflot Director, in September 1999 was seen as a last ditch effort by the airlines owners the Russian Aviation Consortium (RAC) to rescue the situation after a succession of General Directors failed to achieve a turn around and left quickly one after another including the President of RAC. To Krasnenker's credit the airline has begun to show signs of improvement, punctuality is reported to have improved to 80% of flights according to the company, an increase from the very poor 20% at the beginning of the year. However, anecdotal stories in the Russian media suggest that it still has some way to go. The airline also says that it experienced a good upturn in passenger volume in July compared with the very depressed figures of July 1999, with passenger volumes up by 50% and the airline believes that in August its RPK was in second or third place behind Aeroflot and Pulkovo. According to the airline, it turned a profit soon after Krasnenker arrived and financially the airline's condition is steadily improving with its debts falling. The various report from numerous unrelated sources suggest however, that this not enough and that Krasnenker, an able manager, still has his work cut out for him.

Article ID: 2072