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. Last Updated: 07/27/2016

Fettered Airline Cites Unfair Competition

With their one Western jet grounded by local customs officials and competitors circling around them, executives at Air Baikal on Friday lashed out at the Russian aviation market, saying it was rife with unfair competition and uncontrolled regulation.


"There are a lot of ways to strangle an airline and compete unfairly if someone wants to," said Mark Bond, chairman of the board of Air Baikal and president of its parent company, the Anglo-Russian Finance and Investment Corp.


Competition, fair or unfair, was unheard of a mere five years ago, before the breakup of Aeroflot, the state monopoly airline. Since then, Aeroflot's offspring have been struggling to adapt to often chaotic market conditions.


Bond said Transaero Airlines and Sheremetyevo 1 Airport have combined to give Air Baikal inconvenient departure and arrival times for their flights to Irkutsk and that the airport demands prepayment for all ground services.


"We arrive in Irkutsk at 3 a.m., when there are no services available to our passengers," Bond said. "Transaero departs from Moscow at 10 p.m. and arrives in Irkutsk at 10 a.m."


Transaero and airport officials could not be reached for comment Friday.


Air Baikal is also suffering though what officials say is a mix-up in customs regulations. Their only Western aircraft, a leased Boeing 757, was seized last month by Irkutsk customs officials for nonpayment of import tariffs, even though Russia agreed at U.S. insistence last month not to impose duties on foreign aircraft.


"As is often the case in Russia, the left hand doesn't know what the right hand is doing," Bond said. Customs officials in Irkutsk have said they have no documentation proving Air Baikal is exempt from import tariffs.


About 70 percent of Air Baikal's fleet needs replacement, and without a quick injection of new equipment, the company may not be able to fly all its routes in the near future. But the incident with customs has put the airline in a difficult position.


"Nobody wants to lease us a plane that is going to get seized," Bond said. Transaero and Aeroflot, he noted, have exemptions to tariffs on their leased Boeings and Airbuses. Meanwhile, as Air Baikal's 757 sits impounded in Irkutsk, the airline loses up to $40,000 a day, Bond said.


Last year, Air Baikal carried 800,000 passengers on routes between domestic and international routes. The airline was officially created in 1992 from the remains of the Irkutsk division of Soviet Aeroflot.