Change from the original plan? (700 words)

Published: 10/24/2000

It appears from reports that the control of some of the assets of Moscow's Vnukovo Airport may have been transferred to GTK Rossiya, the state transport company responsible for transporting government ministers, based at the airport and the Presidential Administration. The FSVT and the Ministry of State Property proposed the loss of these assets, from the control of the joint venture company managing the airport, in the fourth quarter of last year. With the plan that certain state assets at Vnukovo not held by the joint stock company after the privatisation, namely the runways, aprons and taxiways, should be transferred along with other state airport assets in Moscow into a new state enterprise, Administration of Moscow Airports. From the management of the Vnukovo Airport joint stock company, which is 63% controlled by the state through holdings of the Federal Property Fund and the Ministry of State Property, there were strident objections to the move. The General Director of the airport, Victor Baikov, even went to the Moscow Arbitrage Court in an effort to block the transfer. A move initially supported by the FSVT, who later withdrew their support after the Deputy Director was overruled by the General Director Andreyev. The state holdings also refused to support Baikov's objections, despite the fact that management holdings represented a substantial share of the outstanding shares. The transfer of the assets therefore is not entirely unexpected, but it is surprising that the transfer is being made to Rossiya, as it was speculated that East Line Group had been manoeuvring for control of the potential Moscow airport authority, through its control of the administration at Domodedovo Airport. Recent developments however, have led to the reappraisal of that view. The last few weeks have seen the powerful cargo carrier East Line grounded and operating under close supervision at Domodedovo for an extended period. The result of action taken by the Russian security service, the FSB, relating to contraband imports and possible weapons smuggling. The fact that the action was undertaken by the FSB rather than the customs service, has led to speculation that East Line, historically close to the presidency, had lost its leverage with the new administration. This view may be further supported by the fact that Rossiya is involved in the transfer. Its new General Director, Nicholai Shipil, appointed in May, is considered to be close to Putin, who reportedly recommended him for the job and is seen as part of the President's efforts to surround himself with fellow St Petersburgers. Shipil was formerly employed at Pulkovo Airlines. The hand of Moscow Mayor Luzhkov can also not be discounted given his strident objection to the Administration plan at its inception, which he saw as a potential barrier to his possible control of state owned Shermetyevo Airport and the Moscow airport infrastructure.. What the future of the FSVT inspired Administration of Moscow Airports is in the light of these events is unclear. The recent demotion of the FSVT from ministry to department of the Ministry of Transport has diluted its role considerably. It is also not clear whether this transfer may be an interim measure pending the creation of such an entity. As was suggested by the original proposal; with an initial transfer of the assets at Vnukovo to the Domodedovo Administration prior to the creation of the city's airport's administration. It seems unlikely that the reason for the move has anything to do with the President's safety as suggested by some sources, but we will have to wait and see what benefit a state transport organisation that has its own financing problems, gains by owning the tarmac at one of Russia's largest airports. Particularly when other branches of the state control the operating company. The airport itself is also not in good condition having seen falling revenues as carriers have sought better services and cheaper rates at other Moscow airports such as Domodedovo , with suggestions in the middle of last year that it should be closed to reduce Moscow's airport capacity and free up air space for more aggressive players.

Article ID: 2150