Taxes Weigh Down Air Carrier

Russian cargo airline Volga-Dnepr said Friday that last year's steep climb in business would continue past 1997 but that taxation was keeping the company's profits grounded.


Volga-Dnepr brought in total revenues of $111 million last year, a 27 percent increase over 1995, the company's general director, Alexei Isaikin, told a press conference Friday.


"Experts predict the market for cargo transport in these planes will double in the next few years, but we think it will more than double," Isaikin said.


Isaikin said, however, that taxation had turned a profit into a loss for the company in 1996.


"Our pre-tax profits were 5 to 6 percent, which are comparable to profits of Western air companies," he said. "But we're a loss-maker after taxes."


Volga-Dnepr's business has been carried -- literally -- by a fleet of seven massive Antonov 124-100 "Ruslan" aircraft, the world's largest cargo plane with a capacity of 120 tons each. Isaikin said these planes accounted for 91 percent of the company's revenue in 1996.


Also in 1996, the company expanded into passenger flights, with a route between Moscow and the company's home base in the Volga River city of Ulyanovsk, 500 kilometers east of the capital.


But the company's main business remains cargo, for which the Ruslan is the workhorse. Isaikin ticked off a number of prestige loads these planes carried in 1996. In September, 40 jeeps weighing 2.5 tons apiece were ferried from Paris to Ulyanovsk as backup vehicles for the Paris-Ulan Bator road rally. The company also shipped drilling equipment to mountainous areas of Colombia for British Petroleum, and moved 90-ton shafts for diamond mining in northern Siberia.


The Antonov 124-100 Ruslan was designed by the Soviet military to ferry missiles around the Soviet Union, and only 25 planes were ever built. Since 1991, the Ruslan has created its own market for civilian cargoes that could not previously be shipped by air.


"There will never be anything to compete with the Antonov 124-100," said Peter Smith, an aviation specialist with Kasparov consultancy in Moscow. "They can take satellites, helicopters, trains, even other planes."


It is doubtful that Aviastar, the production facility in Ulyanovsk that builds the Ruslan, will be producing any more of the giant planes. They can only be flown by Russian airlines, Isaikin said, due to lack of international certification, and Russian airlines cannot generally afford to order them. There are also serious questions regarding safety. According to one aviation expert, four of the 25 Ruslans built have crashed, the most recent in Turin, Italy, three months ago.


Volga-Dnepr has a joint venture with the U.K. company HeavyLift cargo airlines. Isaikin said Volga-Dnepr last year extended the joint venture for another five years.