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. Last Updated: 07/27/2016

Airport Loans Mulled

Russian airports may soon receive loans for reservation and navigation systems, and for facilities to improve access for international travelers, according to officials at the European Bank for Reconstruction and Development.

But the officials warned that big investments will not come until the government settles the question of who actually owns airport property and creates a profit-oriented airline system.

Clell Harral, the EBRD's deputy director told an international conference on Russia's transport system Tuesday that the bank was considering a $40-million loan for a Siren-3 reservation and operating information system for Russia.

Another EBRD official, Graham Smith, said the bank is also planning to upgrade airports, most likely Moscow's Domodyedovo and St. Petersburg's Pulkovo airports.

But Harral said that big investments would be risky until it became clearer which branch of government, local or Federal, owns Russia's airports. He said the growth of airport traffic was also restricted because Russian airlines and airports were still often the same legal entity.

Until December of last year, all Russia's airports were owned by the national air carrier Aeroflot but since then government policy has been to split up Aeroflot and share out airports between federal and local governments and workers.

More recently, a decree in March by Prime Minister Viktor Chernomyrdin handed over to Aeroflot control of Moscow's Sheremetyevo airport and appeared to swing policy back toward a monopoly national carrier.

Harral said that many Russian cities want to upgrade their airports but few had realistic plans. Vadim Ivanov, director of the Aeroproyect research institute said that Russia has 23 international airports but it would cost hundreds of millions of dollars to upgrade them to international standards.

"The only question for Russia is where to get money from", Ivanov said. He said some cities such as Ufa in the autonomous republic of Bashkortostan had formed private consortiums to reconstruct their airports.

But Robert Brown of consultants Lehman Brothers said it would be difficult for local governments or consortiums to attract investors and lenders as there are no reliable data on aircraft operations. "We have figures of operations decline ranging from 20 to 70 percent, and we definitely need more precise figures to size up demand before investing", said Brown.

Nils Bruzelius, an EBRD consultant, insisted Russian airports do not need huge investment -just upgrades of terminals, cargo facilities and telecommunications. Within the next three years investment will range from $10-50 million per airport, he said.