Mixed messages emerge in terms of the real motivation behind the case (404 words)

Published: 5/4/2001

Continuing its allegations against Aeroflot, Transaero has stated that it intends to pursue its plans to sue its rival for what it considers to be price dumping on routes the two carriers shared over a number of years. Transaero claims that, as a result of the cuts, it was forced to reduce prices and so sustained losses, particularly on the major Moscow-London and Moscow-Frankfurt routes. At the end of April, the airline's board was expected to approve the action, but this has been delayed, apparently pending the completion of the move to Domodedovo. Somewhat curiously, Transaero contends that, by cutting prices, the airline deprived the tax authorities of income and also left companies unable to pay air traffic charges. It adds that Aeroflot was significantly less affected by the decline in revenues given that it had other sources of income, specifically overflight fees, paid almost in entirety to the state-owned carrier. This has contributed to Transaero's irritation and the company has recently extracted some concessions regarding such fees on those routes it solely services. In the same breath, however, the carrier concedes that Aeroflot can forget the action if it pays off Transaero's debts at Sheremetyevo Airport, following its recent departure to Domodedovo Airport. The debts owed to the airport's jet fuelling facility, the catering company, Aeromar, the airport itself and air traffic control, are believed to account for 65% of the losses that Transaero believes it has incurred on the Moscow - Frankfurt and Moscow - London routes. Aeroflot has stakes both in the Sheremetyevo fuelling facility and in Aeromar. According to Alexander Pleshakov, Chairman of Transaero, the carrier has made its case in a letter to Sergey Frank, Minister of Transport, but it has so far received no response. Transaero insists that it is not orchestrating a campaign against Aeroflot simply to rid itself of its debt but, rather, to highlight the abuse of its virtual monopoly. Transaero's relationship with the airport, however, has been publicly rocky, since the announcement of its move to Domodedovo, when the fuelling facility at Sheremetyevo threatened to halt supplies to the airline, owing to non-payment of debts. Transaero claimed that its debts were no larger than could be expected for an airline not making advanced payments, but did clear its immediate debts, in order to prevent the cessation of fuel supplies.

Article ID: 2514