Russia's Aeroflot To Become Monopoly. Putin Seems Concerned

Russia's Aeroflot intends to take the lead on the Russian market of airlines. The head of the company, Vitaly Saveliev, had a meeting with Prime Minister Vladimir Putin on Saturday. Putin advised Aeroflot should use domestic aircraft in spite of the fact that Aeroflot has concluded a number of contracts with Boeing and Airbus.

Photo: Russia's Aeroflot To Become Monopoly. Putin Seems Concerned

Russia's Aeroflot To Become Monopoly. Putin Seems Concerned

"Last year was indeed a year of serious challenges for Aeroflot, because the world crisis seriously affected the aviation industry on the whole and Aeroflot in particular. The market of civil aviation in the Russian Federation dropped by 9.4 percent. Aeroflot has managed to stay on the level of 5.6 percent," Saveliev said.

"We have managed to report profit. The profit of Aeroflot has gained 3.5 times on the international financial accounting system. We will pay dividend for 2009 in the volumes twice as much as in 2008," the head of Aeroflot said.

Russia Today: Aeroflot posts FY 2009 net profit of $86 million

"Today, Aeroflot takes about 25 percent of Russia's aviation market. If we take our real competitors - BA, Air France and Lufthansa, then Lufthansa, for example, takes 60 percent of its home market. Alitalia - about 60 percent of the home market, Air France - 50 percent," Saveliev said.

Aeroflot controls over 42 percent of the Russian market of regular international transportation. Aeroflot's entire route network counts 856 points in 169 countries.

Aeroflot will also acquire a number of regional assets. The situation with Rosavia - the company which did not materialize - was finally settled in April of this year. There was an agreement signed for Aeroflot to supervise aviation assets of Rostechnologii (Russian Technologies State Corporation). The assets will be transferred to Aeroflot, whereas Russian Technologies will receive a seat in the board of directors of the largest national aviation carrier, as well as the right to purchase aviation technology for the needs of aviation companies, spare parts and to conduct technical servicing for aircraft.

There will be no competition between the two state-run companies: Aeroflot will become a monopoly.

"There are about 160 airlines working in the Russian aviation industry. This is too much for the Russian Federation. Many airlines have one or two planes, which creates a mess on the market and problems for normal air carriers. In Europe we can see Lufthansa and Austrian Airlines working together, Air France and KLM, British Airways and Iberia. Therefore, our decision to consolidate assets is a timely one," Saveliev said.

Putin stated that the airline should take an orientation at domestic aircraft, first and foremost.

"This is what we do. We will have Sukhoi Superjet and Il-96 planes for four or five years. We will also have An-148 - six aircraft have already been purchased," Saveliev said.

"I want to understand to which extent exactly Aeroflot is interested in domestic airplanes. It looks like you want to dominate the Russian market, but you do not want to purchase domestic aircraft. This won't do," Putin said.

"Is it not enough, what I said?" Saveliev wondered.

"No, it is not," Putin confirmed.

Aeroflot's fleet mostly consists of European Airbus liners. Moreover, the company has contracted Boeing and Airbus: 22 Dreamliner and 22 A350 will be delivered from 2016.

Vitaly Salnik
Pravda.Ru

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