The agreement will increase the airline's market presence and competition between it and Encor-owned Buryatsky Airlines could prove interesting (489 words)

Published: 11/8/2001

Krasnoyarsk Airlines (KrasAir) is to increase its market presence in the Buryatia Republic in Siberia's Southern Mountains, under the terms of a protocol signed between Andrey Egorov, Head of KrasAir's marketing department and Vladimir Perelyaev, Deputy Chairman of Buryatia Republic Government. The airline will provide concessions for certain classes of passengers, such as pensioners and war veterans, who currently make up 50% of the traffic between Ulan Ude and Krasnoyarsk, according to KrasAir. For its part, the Buryatia Government will encourage entities within the republic to join the airline's corporate travel programme and benefit from the associated pricing, with a special programme due to be announce by the end of November. KrasAir has operated in Buryatia since April 2001 and now offers Buryatia's 353,000 population connections from the region's principle city Ulan Ude to over 20 destinations (recently increased from 10) via Krasnoyarsk, including Almaty, Baku, Barnaul, Ekaterinburg, Kaliningrad, Kemerovo, Kiev, Krasnodar, Krasnoyarsk, Mineral Waters, Moscow, Novosibirsk, Norilsk, Rostov-on-Don, Samara, St. Petersburg, Sochi, Tashkent, Tomsk and Ufa, with all flights going via Krasnoyarsk. KrasAir's increased presence in Buryatia could pose a competitive threat to the regions' small airlines. A KrasAir spokesperson remarked: “We don't care about it, as business is business”, but the airline does not currently plan to acquire any of the local airlines. It may face a more potent rival itself in the form of Buryatsky Airlines, which in August 2001 was acquired by the operational part of Chelyabinsk Airlines Holdings (CAH), Encor Airlines, now based in Moscow. Under the terms of the original purchase of the bankrupt airline from the region's government by Moscow-based Media Group, now a 50% shareholder in Encor, Sergey Yashin, General Director of Encor, said that it was obliged to open a local affiliate in Buryatia, employing personnel from the acquired airline. Currently about 50 people are employed and operate a scheduled flight from Moscow-Ulan-Ude. Yashin added that the Buryatia government has also signed a decree giving Encor full access to Ulan-Ude Airport, spun off from Buryatsky Airlines earlier this year and is operating the airport and a small fleet of regional aircraft, with the right to sell its full services, including direct flights from Ulan Ude, while KrasAir is restricted to providing services, for the meantime at least, via Krasnoyarsk. Given the historically close relationship between Encor (CAH) and the region's government, combined with the restoration to some degree of regional air transport capability, the agreement with KrasAir hints at some discord, or at least frustration, prompting the regional administration to encourage some competition in the region. Encor's emergence from Chelyabinsk Airlines (CA) was billed as the birth of new national carrier with the transfer of the former CA fleet from Chelyabinsk to Moscow, but to date little has been heard of developments.

Article ID: 2898