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. Last Updated: 07/27/2016

Unfriendly Skies for Aeroflot Successors

Most of the 160 state-owned airline carriers using the Aeroflot trademark will go private next year and will be forced to merge into larger companies as a result of free market competition, spokesmen for the Air Transportation Department said Wednesday.


Sergei Kozlov, an official in the department, said the Transportation Ministry has approved privatization plans for 97 companies.


"Since last year, 22 carriers marked for privatization have been registered as share holding societies", Kozlov said. "Eleven of them are selling their shares already".


Valery Kasyanenko, deputy head of the department, told a press conference that most of the small independent companies, some possessing only two planes, stood little chance of surviving in free market competition.


"Those tiny carriers cannot develop their services; passengers will get nothing from a competition of dwarfs", Kasyanenko said. "They can't afford to buy new planes, and 70 to 80 percent of the equipment they are using is old and worn out".


When all airlines were the property of the Soviet government it used the state agency Aeroflot to run its air transportation operations. After the Russian government decided to break up the monopoly and encourage competition, Aeroflot retained only its international branch and was renamed Aeroflot-Russian International Airlines.


The domestic branch of the agency was split into 160 state-owned carriers which still use the name Aeroflot as their trademark, but are free to set prices and choose routes.


Kasyanenko said the weakness of the new companies has led to air transport problems because they have reduced the number of long-distance flights and raised prices.


On the positive side, however, the number of fatal accidents on Russian airlines has dropped sharply to 10, compared to 24 last year, according to Ivan Mashkivsky.


Gennady Zaitsev, first deputy head of the department, said: "We can't make them come together against their will. They will realize the need to unite when competition begins".


Kasyanenko said the drawing of the privatization plans was a long and difficult process involving the evaluation of companie's property and the choree of the form of privatization.


"It has taken us over a year of battling to develop a privatization program for Aeroflot-Russian International Airlines", Kasyanenko said. "And that is a company that has huge experience in the Western market economy and should have had fewer problems with its privatization project".


In July, unions at the Sheremetyevo international airport, which is part of the Aeroflot-Russian International Airlines, threatened work stoppages because they said the State Property Committee was deliberately delaying the privatization of the company.


The government has decided to keep airports, which are now part of the carriers's property, in state ownership to ensure equal access to them for all companies, according to the officials.