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. Last Updated: 07/27/2016

Transaero Growth Defies Sector Trends

The Russian airline Transaero, its hopes for an alliance with U.S. Trans World Airlines at a standstill, is pushing ahead with plans for new destinations and will offer ticket discounts to try to keep its passenger volume booming.

Transaero's president, Alexander Pleshakov, said Monday that the airline will stick to its policy of expansion, notwithstanding "serious problems" in the domestic aviation sector.

"Our principal aim this year is to make Transaero the most affordable airline, at the same time preserving our record of safety and excellence," Pleshakov said, noting that the carrier's 29 percent growth in 1996 is remarkable against a backdrop of falling air traffic levels in Russia.

"But Transaero's biggest achievement is that there has not been a single accident to blemish its five-year record," Pleshakov said, adding the airline spent more than $25 million on maintenance and safety checks in 1996. It flies mostly Western-made aircraft.

Russia's air industry has been hit hard by declining passenger levels -- 24 percent on domestic routes last year -- and safety concerns, raised most recently by the crash of a charter Antonov plane in the Caucasus, reportedly when its rusted fuselage fell off.

The industry is also facing increased competition from Western airlines.

Pleshakov said there has been no progress on a reported Transaero deal with beleaguered U.S. carrier TWA. The Russian airline had been approached by U.S. investors wanting to pair the two companies in a global network, he said, adding that the deal had been wrongly reported as a merger bid.

"The arrangement would probably have been advantageous, but unfortunately nothing has moved on that front," Pleshakov.

Transaero also saw a planned code-sharing agreement with American Airlines fall apart, Pleshakov said, but it is now examining proposals from "three major Western airlines." Code-sharing allows companies to coordinate flight schedules and ticketing systems.

State-owned Aeroflot, Russia's biggest carrier, has signed a potentially lucrative code-sharing deal with U.S. carrier Continental Airlines.

Transaero appears less a competitor than a collaborator with Aeroflot, with Pleshakov saying Monday that an agreement last year to divvy up destinations among them had been "productive." Transaero will expand cooperation with Aeroflot and smaller domestic carriers to share out internal routes and coordinate ticket prices, Pleshakov said.Transaero hopes to boost its passenger volume from 1.5 million in 1996 to 2 million in 1997, Pleshakov said, in part by offering discounts for families, youths, multi-leg trips and for more than 15 other fare categories. It also aims to increase the number of ticketing outlets and expand credit-card acceptance.

New international destinations for 1997, beginning in June, include Hong Kong, twice a week; Taiwan, weekly; and Manchester, England, twice weekly. The airline also will expand service to Frankfurt and Tel Aviv, and is considering flights to popular tourist destinations such as Orlando, Florida, and several Mediterranean resorts.

Domestically, Transaero will add flights to Krasnoyarsk and Karaganda, and increase flights to St. Petersburg and Omsk.

Pleshakov also disclosed plans for a $15 million program to upgrade Sheremetyevo I airport, to be completed within a year. The program follows a $10 million renovation of the terminal in 1995.

Transaero also is considering building a hotel near the airport for the benefit of transit passengers.

Formed in 1990 with start-up capital of just $5,000, Transaero quickly became Russia's largest private airline. Its 1996 revenues were $250 million, nearly $70 million more than the previous year.

Since its success, several other domestic airlines have followed Transaero's lead in introducing frequent-flier programs and upgrading on-board service.