Russia might get more budget airlines soon

Two of Russia’s richest men plan to start new national low-cost airlines by the end of this year but analysts are warning the country’s air infrastructure may not be able to support them.

You wait sixteen years, then three come along at once. After Sky Express started flights from $20 across Russia in January, two new low-cost airlines are following in their path.

Redwings is backed by billionaire and MP Aleksandr Lebedev. He wants to produce and buy new Russian Tupolev planes to get the country flying.

Russia’s biggest financial-industrial group Alfa Group is behind Line1. After announcing plans for a budget airline last year, it was revealed they had found a CEO capable of kick-starting the project only on Friday.

But the pioneer admits they have found it tougher going than expected.

“There have been delays in delivery of 2 Boeing 737s we are leasing, Service and maintenance of our existing 12-year-old fleet has taken longer than expected, It has been hard to agree with regional airports about landing slots. So we have served less than the 400,000 passengers we had planned to date,” Vitaly Tereshchenko of Sky Express said.

The most severe problem is government attitudes. Because what they are trying to do is protecting the old airlines flying old Russian aircraft, or old western aircraft, with a monopoly on prices

Aleksandr Lebedev, Redwings founder

Redwings founder Aleksandr Lebedev claims the government is deliberately blocking the growth of independent airlines.

“The most severe problem is government attitudes. Because what they are trying to do is protecting the old airlines flying old Russian aircraft, or old western aircraft, with a monopoly on prices,” Aleksandr Lebedev remarked.

“We will probably sue the government if there is another attempt to block us from flying. And very hypocritically saying you have to ask permission from a competitor. This is nonsense,” he added.

Analysts say Russia’s low-cost flights revolution is being hindered by the chronic lack of regional infrastructure.

“An airline’s main running cost is the charges it pays to airports. In Europe the low-cost carriers pay regional airports far less or even nothing. We just don’t have such airports”, Evgeny Shago, analyst at Trust-Bank is Moscow said.

However the situation is looking up. In a landmark decision on Monday, Vladimir Putin signed Law 26/3 allowing regional administrations to buy ownership of airports from the government.

This will allow the regions to offer incentives to the new budget liners, and start the process of opening up the largest airspace in the world to serious competition.