AirUnion woes lead to new airline as governments act

This week saw the proposed merger of Russia's troubled AirUnion with Alant-Soyuz, after flights were cancelled repeatedly due to the non payment of fuel charges. The sight of passengers left stranded by troubled airlines is being repeated around the worl

The rising cost of oil is hitting airlines hard. The International Air Transport Association estimates companies will post losses of $6 billion dollars in 2008 – and that's rising. Evgeny Bachurin, Chief of the Federal Air Transportation Agency says that local factors are contributing to the problem in Russia.

“Around the world many air companies are faced with difficult situations – and our airlines are no exception. Moreover other countries don't have duties on aviation equipment. But Russian companies are in a more difficult situation than foreign. We can't give exact figures for our losses this year.”

Across the country this summer, customers of the AirUnion alliance suffered delays as carriers struggled to pay for airport services.  The government's move to help with fuel supplies, couldn't solve the company's financial problems.

Now the Moscow City government and the Krasnoyarsk Territory are joining forces with the Russian Technology Corporation to bring calm to troubled skies. Aleksey Misharin, Deputy Transport Minister says it means the creation of a new nationwide transport competitor.

“The government has long-term plans to solve problems faced by civil aviation. This includes the creation of a new national-scale transportation company.”

The new nationwide transportation company would take over AirUnion's routes, along with its assets. But, according to executives, that could take another nine months.