Domestic routes carry the heaviest losses (339 words)

Published: 3/22/2001

State-owned airline, Dalavia, has decided to increase ticket prices by 10%, despite low seat load factors on its domestic routes, in an effort to pull some routes out of loss. The company is currently incurring its heaviest losses on intra-regional routes in the Sakhalin, Khabarovsk and Primorsky regions, particularly to cities and towns such as Zonalnoe, Okhotsk, Okha, Sovgavan and Shakhtersk, serviced by the An-24. The expectation is that the higher prices will at least allow the routes to breakeven during the summer months and avoid cross-subsidisation from international routes to Japan, China and Korea. The company believes it will be able to breakeven losses on domestic routes only in the summer season, when traffic increases. According to Victor Nekrasov, flight director of Dalavia, the company was in profit in 2000, with revenues of Rb1,600m and additional revenues gained from leasing aircraft. The company has however, leased two Tu-154Ms in 2001 from a Moscow-based company, as the Tu-154M is substantially more economical than the airline's Tu-154B. This reflects the proportion of cost that fuel obviously represents for the operator, as according to Nekrasov, despite poor market conditions, the operation of the Tu-154M is profitable for the airline. The company operates the Tu-154M on routes from Khabarovsk to Yuzhno-Sakhalinsk, Irkutsk, Novosibirsk, Omsk, St. Petersburg and Vladivostok. The company expects to take delivery of its first leased Tu-214 in April 2001 and the second in October 2001. The company plans to use the Tu-214 on the Khabarovsk-Moscow route. It now offers 164 seats instead of the normal 250 seats, to increase passenger comfort. In addition to the airline's Tu-154s and An-24s, the airline operates 6 Il-62s, although rather ominously an additional 4 Il-62s are kept in reserve it. Dalavia flies to Ekaterinburg via Irkutsk, Zonalnoe, Irkutsk, Kranodar via Irkutsk, Moscow, Novosibirsk, Omsk via Irkutsk, Okhotsk, Okha, Petropavlovsk-Kamchatsky, Samara via Novosibirsk, St. Petersburg via Irkutsk, Sovgavan, Shakhtersk, Yuzhno-Sakhalinsk, Yakutsk, Vladivostok. On international routes it flies to Uzbekistan, Japan, Korea, and China.

Article ID: 2439