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6 Aug, 2010 08:25

Low cost isn’t easy for Russian airlines

Russia’s first low-cost airline Sky Express is facing the prospect of license withdrawal or merger due to financial problems and multiple flight delays, possibly leaving just one air discounter.

A model airplane costs $10 dollars but that is about as close as most Russians get to a budget airline in this country. Regular air carriers sell even domestic flights at the price of many people’s monthly salary and Russians are craving for the discounters so popular abroad offering flights like 8 pounds from Liverpool to Krakow or 20 euros from Oslo to Frankfurt

Russia’s first low-cost airline Sky Express was meant to be like that – however it ended up raising prices to match the network airlines – but without the reliability or in-flight service.

Konstantin Teterin, the head of charter airline Red Wings, says – flying low-cost is very expensive in Russia, and the experience of Sky Express proves it’s impossible to repeat the business model of Ryan Air or Easyjet.

“It’s only possible to make a quasi-low-cost airline, just a budget carrier. We will have one or two but they wont be able to have such extremely cheap tariffs as in Europe or in the States."

Konstantin says Russia offers few opportunities for a carrier to strip out expenses. A 40% import duty on planes and monopolized air services contribute equally to all Russian carriers, and the cost is high.

Then most cities just don’t have second airports which are widely used by discounters in other countries. He adds that it's equally difficult for foreign low cost carriers to operate here, mainly because of legislation.

“It’s very strict agreements between Russia and all other countries which limits the number of carriers, destinations, frequencies of flights and number of seats in the plane. To overcome this bureaucracy any airline should spend a lot of time and money and low-cost airlines are actually doing their best to avoid spending time and money.”

Russia's aviation rules were created in Soviet times when some airports served just a couple of planes a day. Analysts say, the government should reform the airspace code if it wants to develop cost effective air travel for the general public. This could pave the way for greater competition in the industry and make flying in Russia less of a luxury for the few.