Flag carrier reports passenger growth and unexploited potential, while Perm Airlines struggles to shake off the threat (390 words)

Published: 10/29/2001

n another manifestation of the growth of Aeroflot's regional network, Boris Shreider, the airline's representative in Perm, has said that the flag carrier plans to increase its traffic on the route from Moscow from its 2000 figure of 30,000 passengers up to 40,000. Aeroflot started the route in June 2000. With a seat load factor of around 80% in 2001, Shreider says the route has sustained last year's levels and continues to match the airline's expectations, although Aeroflot is still unhappy about its slots and the seat quotas on the route, requiring it to operate the Tu-134 as opposed to the larger Tu-154. The situation is further inflamed given that Perm Airlines alone has the right to introduce new seats capacity onto the route. A resolution of the problem between the two airlines does not appear to be on the horizon. On 24th October, Igor Grachev, the General Director of the 100% state-owned Perm Airlines, allegedly offered to resign from his post, after reports of disagreements between him and the Ministry of Transportation. These reports indicate, however, that this was less voluntary than prompted, given Grachev's unpopularity with the regional government. If Grachev does go, it is anticipated that he will be replaced by his deputy Vladimir Wassermann. The company, however, refuses confirm any of the reports. Grachev's possible departure leaves an airline that has been in poor condition and, indeed, loss making since 1997, with debts of between $8-10m and a fleet that is reported to be in a regrettable state of repair, having sold its single Tu-204-100 to Sibir early last year. Controlled by the airline, Perm Airport's runway remains in a perilous condition and the airline is having problems finding funding for repairs. The regional government believes that Grachev has mismanaged the airline and, according to Yury Trutnev, Governor of the Perm Region, speaking in March 2001, the company needed a change of management as it was"on its knees". Despite the airline's problems, Grachev strongly opposed the state's plans to privatize the airline in 1995 and 1996 and succeeded in preventing it. Local opinion has it that the airline is currently surviving on revenues from the airport and, if privatized, would undoubtedly go bankrupt shortly afterwards.

Article ID: 2864