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Russian aviation industry gets government lifeline to stay afloat during pandemic-related flight restrictions

Russian aviation industry gets government lifeline to stay afloat during pandemic-related flight restrictions
The Russian government has allocated 23.4 billion rubles ($316 million) to support domestic airlines, which are suffering tremendous losses as a result of coronavirus-related restrictions.

The subsidies were unveiled on the government website early Thursday following Russian President Vladimir Putin’s call to support the troubled sector.

According to the document, air carriers will have to use at least 60 percent of the funds on wages for their employees. The rest can be spent on leasing payments (30 percent at most), payments for aircraft parking, as well as other operating activities. The companies will have to wait 20 work days after applying for a subsidy with the Federal Air Transport Agency.

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The rapid spread of the coronavirus has forced countries across the globe to halt most air travel. As Russia suspended regular and charter international flights since the end of March, international air traffic dropped over 90 percent, while domestic flights also slumped by 88 percent. Russian air carriers continue only limited operations, including cargo and mail delivery, as well as special flights to repatriate Russian citizens. In March, the government allocated over $20 million to help airline companies fly people back to Russia.

As the coronavirus crisis has swept across the airline industry, plane makers are also facing problems with new orders. To support domestic producers, Putin ordered the government to launch a support program for the leasing and operation of Russian aircraft. The initiative could allow Russian producers to manufacture around 60 new civilian aircraft in the next 18 months.

“I propose offering leasing companies state guarantees in 2020–2021, as well as subsidies in order to reduce the per-hour flying cost for Russian aircraft,” Putin said during a meeting on Wednesday.

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