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. Last Updated: 07/27/2016

Air Carrier Sibir Gobbles Rivals to Expand in Siberia

Novosibirsk-based airline Sibir is gunning for a greater share of the Russian air transport market by taking over smaller carriers in the Western Siberian region, company officials said Tuesday.

"Our aim is to create a powerful and efficient regional airline," Vladislav Filyov, Sibir's youthful general director, said at a news conference Tuesday. "The industry is undergoing serious consolidation and we have to act now to benefit."

Over the past year, Sibir has taken over failed airlines in Kemerovo, Barnaul and Tomsk, giving it increased market shares, a greater number of routes and the planes to service them.

Sibir saw a 2.3 percent growth in passenger volumes last year, officials said.

That marks an impressive performance when set against the overall sector performance. Passenger volumes in Russia fell 10 percent last year, according to Federal Aviation Service statistics.

Sibir has not yet released financial results for 1998 but said it flew 623,000 passengers - falling short of its original target of 730,000.

Sibir was created in the early 1990s from the Novosibirsk division of the Soviet-era monolith Aeroflot.

The airline got off to a disastrous start and analysts credited the 35-year-old Filyov - who took the helm of the company about one year ago - with turning the company around by kick-starting Western-style reforms.

"After Mr. Filyov took over last April, he implemented restructuring programs cutting costs by 20 percent," said Dmitry Manakov, an airline analyst at consultancy InfoMost. "Sibir's losses had been mounting for several years before that." With major airlines like Transaero and Vnukovo going downhill, a host of small but dynamic carriers such as Sibir are stepping in to fill the gap, Manakov said.

Sibir's strategy to take bankrupt regional banks under its wing as subsidiaries could consolidate Russia's fractious airline industry without causing too much pain, said Vladimir Tasun, head of the FAS Aviation Authority's West Siberia department.

"This method, under which the bankrupt airline becomes a subsidiary of Sibir, is good for the industry, as it weeds out less competitive companies but lets most employees retain their jobs," Tasun said.

The local administration takes over the fleet of the bankrupt airline in lieu of debts and leases them to Sibir, he said.

"Such a large regional airline can also effectively compete with Moscow-based airlines," Tasun added.

Besides Moscow, the airline operates regular flights to 20 destinations in the Commonwealth of Independent States and Russia, as well as flying to Germany, China, Israel, Turkey and the United Arab Emirates. Aiming to increase hard-currency inflows, Sibir has stepped up those international flights.

The airline operates eight 350-seater Il-86 aircraft and 18 Tu-154 planes, and hopes to add two large planes to its fleet within a few years.