Hard currency revenue for carrier (550 words)

Published: 10/9/2000

Samara based Samara Airlines (SA) has signed an agreement with Hungarian company Atlant Hungary for the provision of Tu-154s to Hungary under a one year wet lease. The agreement, signed on the 9th of September, will start at the end of October 2000, offering the carrier guaranteed hard currency revenue according to the company spokesperson Natalia Kamalova. Adding that the aircraft are currently operating on low load factors and the possibility of getting revenue regardless of passenger numbers, not surprisingly, is an attractive option for the airline. Kamalova said the carrier has other wet leasing agreements with foreign carriers including Iran's Kish Air. Kish currently leases 3 of Samara's Tu-154 and 2 of its Il-76 and has recently extended the agreement. This was achieved says the airline, despite competition from Krasair, which has been competing hard for wet lease business in the Iranian market. Samara, according to Kamalova, is currently developing its interregional network of 17 destinations including Ekaterinburg, Tyumen, Nizhnevartovsk, Chelyabinsk, Makhachkala, Nizhny Novgorod, Astrakhan, Kazan, Balakovo (Saratov region), Kiev and Minsk. It is also developing the route network with fewer direct flights in an effort to increase load factors. According to Kamalova, the airline's proposed introduction of a stop on their Samara- Minsk route, in Nizhni Novgorod, will increase the load factors on the Yak-40 used from 54% to almost 100% given the level of anticipated demand for travel from the respective cities. The programme according to the airline will be launched in the near future. On the 29th October 2000 Samara will open a Samara - Frankfurt route and will provide a bus feeder service to carry passengers to the hub from Ulyanovsk and Saratov for passengers wishing to travel to Frankfurt and other international destinations serviced by the airline such as Tel Aviv and Larnaca. Historically the airline has flown to Vienna, but according to the airline, the airport did not offer the connections its passengers required. The airline has found that reductions in their flights have also increased their load factors with a commensurate undisclosed impact on the airline's revenues. Kamalova believes that their experience is similar to a number of Russian airlines that have finally managed to understand how to operate reasonably efficiently in the current Russian market conditions, through being driven by profit rather then the need to sustain unsustainable schedules on badly structured route networks. Any euphoria on the part of the airline however, is being somewhat mitigated by the continuing problems of rising costs. Fuel being, as for all other operators, the primary driver, but according to Kamalova, increasingly matched by the cost of keeping their aircraft in the air. The particular problem for Samara is the availability of parts. Forcing them not necessarily to buy from the highest quality or the cheapest source, but simply from the only source. As in many cases, plants have either closed down or stopped producing components, eliminating any competition with an associated impact on prices. An illustration of this problem for Samara according to Kamalova was shown in the recent merger with Aero-Volga, which while providing a cheap method of acquiring aircraft over purchasing them. Provided an old fleet on which considerable amounts have had to be spent to keep the two Tu-154Ms taken from the airline's fleet of five in operation.

Article ID: 2116