Big potential impact on the industry(263 words)

Published: 3/29/2001

According to reports, Sibir and Aeroflot have signed a memorandum of understanding regarding development of their domestic airline activities. It is not entirely clear as yet what may be the outcome of the MOU, but it appears to cover cooperation in three areas: - Discussions relating to the joint operation of the a domestic network - The formation of a joint leasing company for the Tu-204 - The development of Shermetyevo (Aeroflot) and Tolmachevo (Sibir) as joint hubs in the proposed network. There are few details on how the understanding may develop and both sides have been careful to avoid the term merger and in fact even alliance is not mentioned. There can be little doubt however, that any agreement between these two players could have a dramatic impact on the industry. Both carriers have a great deal to gain from cooperation, as Aeroflot, while keen to take a dominant role in the domestic market through a group of associated companies such as Aeroflot-Don, is reported to be finding progress slow and falling short of providing it with the feeds of passengers for its international flights. Sibir on the other hand having acquired the route structure of Vnukovo is now a formidable domestic presence, but with little capacity outside of Russia. The agreement over hub development also suggests that Sibir may be eager to share in the considerable upgrade offered by Aeroflot's new terminal at Shermetyevo. For Aeroflot the Novosibirsk access with its connecting Sibir network could also offer interesting opportunities At present discussions appear to be a preliminary stage, but very interesting!

Article ID: 2451