In the next few years, it should be able to compete with Aeroflot. However, some analysts recall that the former alliance was also faced with this task, but the state, its main shareholder, did not cope well with it. Will it now?
AirUnion's insolvency became public knowledge a month ago when fuel companies refused to fuel its aircraft one after another. The crisis did not break out overnight but had been brewing for some time. The alliance consisted of state and private assets of regional airlines, many of which were far from successful. The alliance was piling debt on debt, the sum of which has now reached $800 million.
Unprecedented doubling of prices on aviation fuel in one year put AirUnion into a spin. The fuel crisis, as well as a rise in airport tariffs and navigation services dealt a heavy blow to all airlines. In the first half of this year, 25 reputable foreign operators either ran into bankruptcy or suspended flights. The International Air Transportation Association predicts that by the end of this year the aggregate losses in the air travel market will reach $5.2 billion. The forecasts for 2009 are even worse. Airlines using old aircraft will be the hardest hit. AirUnion was one of these. Its fleet consisted mostly of Tu-154's, which will be scraped in the near future. They burn much more fuel than newer Western aircraft.
The government's attempt to rescue the alliance was belated. In May, Putin turned over its public shares to the State Corporation Rostekhnologii (Russian Technologies) but Rostekhnologii did not have time to manage them, and could make little progress. The emergency aid rendered to the alliance by the government after massive flight delays, which affected thousands of people, merely protracted its agony. Nothing was gained by the lamenting appeals of the Russian aviation authority, Rosaviatsiya, or the threats of the Russian Prosecutor General's Office, the Federal Anti-Monopoly Service, or the Auditing Chamber, or even by the prime minister's interference. Therefore, the government decided to resort to surgery.
The approach of establishing a new airline alliance comes from the heads of Rostekhnologii, the Moscow city government, and the administration of the Krasnoyarsk Territory. The airline alliance will be even bigger than AirUnion. Apart from the public shares of AirUnion's KrasAir, Samara, and Domodedovo Airlines, it will hold the assets of such major operators as Atlant-Soyuz, Rossiya Airlines, and Kavminvodyavia (KMV Avia), to name but a few. Two airports, Krasnoyarsk's Yemelyanovo and Moscow's Vnukovo, also want to participate. Flights of the bankrupt alliance have already been transferred from Domodedovo to Vnukovo.
Experts in Russia are not unanimous about the future of the new alliance. On the one hand, its formation is in line with the current centripetal trend in world civil aviation. Transport Minister Igor Levitin has been lobbying this idea for years. He believes that the assets of able companies should be consolidated, whereas invalid airlines should be eliminated. He maintains that after this reform, Russia will have just a few major operators. In the least, it will be left with the Magnificent Ten, which now handles 65% of all Russian passenger traffic.
However, experts are justifiably concerned that monopolization may lead to the closure of many regional airlines, and all of Russia's backwater provinces, especially, in the north, which is linked with the rest of the country by air alone, will be cut off from the center.
AirUnion's debts are another problem. Who will pay them, and will the creditors agree to debt restructuring? What is planned for the obsolete fleet? What is the source of investment for its modernization? But the main question is whether the State Corporation Rostekhnologii, the new alliance's biggest shareholder, will manage to integrate such a motley company into an effective operator, especially since air service is not part of its existing portfolio?
Several weeks ago, I flew to Amsterdam. The combined flights to this wonderful Dutch city were operated by Skyteam. Our outbound flight was operated by KLM, and we returned on Aeroflot. There is simply no comparison in the level of service in the air, and in the airports when contrasting Amsterdam's Schiphol and Moscow's Sheremetyevo-2. It seems that we live in different centuries and different civilizations.
So, the new alliance has a chance of success in competing with Russia's number one airline. However, improved service alone will not do the job. It is crucial to acquire more effective, fuel-saving aircraft. This requires huge investment, and much depends on the ability of the new owners to find it, for instance, in the federal budget, and Moscow and Krasnoyarsk's municipal funds.
For the time being, they have to lay any ambitious plans aside. Their priority task is obvious but hard to fulfill. Above all, they should take the bankrupt alliance out of the high turbulence flow.
The opinions expressed in this article are the author's and do not necessarily represent those of RIA Novosti.
