Monday, October 29, 2012

Russia goes for low cost air travel

Russia opens its airports for European low cost air carriersScandinavian transport hubs fear they may lose Russian travellers.

The second biggest budget carrier in Europe - Easyjet - has shouldered its way to the Russian market promising a competitive ticket fee of around $200.  The company is opening a regular twice-a-week route to connect Moscow (DME) and London (GTW) starting in spring 2013.

The existing competitors of Easyjet on the Moscow-London route are British Airways, Transaero and Aeroflot.

Ryanair - the biggest budget carrier in Europe - has also approached Russia's Transport Ministry with a letter of intent to become an air link between Ireland and Moscow.  Negotiations are yet to be scheduled.

Ryanair is presently gaining a foothod in the Baltics and neighbouring areas 'stealing' some passenger traffic from Russia. A vivid example is Finland's Laapenranta - where the air carrier had settled down and doubled number of passengers (up to 120.000), 70% of which are the Russians. Laaperanta and Riga are the two geographically closest to Russia hubs of Ryanair.

Finnish YLE reports there are certain concerns related to the expected low cost boom in Russia. There is a chance that Russian tourist flows via Finland may eventually shrink.

In the meantime, after years of considerations, Russian air giant Aeroflot has brought forward an idea of establishing a low cost daughter company.  At the meeting with Vladimir Putin last week, the Aeroflot's director general Vitaly Saveliev said Russia should amend its legislative acts  on aviation and allocate relevant infrastructure for a new national no-frills carrier to come. Previous experiments on establishing a low cost carrier in Russia did not prove any success: Avianova and Sky Express turned down their activities in 2011.

With another  revolutionary step, Aeroflot is giving up its monopoly on 34 routes - both domestic aand overseas - triggering stronger competition on the air market.

To make the domestic air travel more affordable, the government is about to take radical measures and invite foreign low cost carriers on the domestic market of Russia [this is prohibited at the moment]. First vice premier Igor Shuvalov has tasked Ministries of Transport and Economic Development to elaborate on the issue and let foreigners engage in air operations within Russia. As a matter of an experiment first, a foreign low cost carrier may take on a certain route or a region of Russia to test the initiative.

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