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. Last Updated: 07/27/2016

Domodedovo Planes Stay On Ground in Tax Feud




One of Russia's largest airlines has spent the past week on the ground after being shut down over a dispute with local tax authorities in Moscow.


Domodedovo airlines canceled most flights last Thursday after the local office of the Tax Ministry blocked its bank accounts over a 16 million ruble ($560,000) debt to the federal government, according to news reports.


Meanwhile, the airline - which is 100 percent state owned - claims the government owes it 200 million rubles ($7.1 million) for debts accrued by the Defens e Ministry and other government "power agencies" over the past three years.


"It is a very strange anomaly, which, unfortunately, is normal here," said Paul Duffy, an independent aviation analyst.


He estimated that the debts the government owes Domodedovo amount to about 10 percent of its yearly revenues.


Domodedovo claimed profits of 15 million rubles for 1999 - roughly the same amount it owes in taxes.


Meanwhile, Moscow's Domodedovo airport, which is part of the same holding that owns the airline, reported strong earnings growth of 8 percent to $180 million, and is expected to complete a $250 million reconstruction project this year.


The shutdown of most of Domodedovo airlines' operations has left passengers stranded in airports across Russia, according to news reports.


On some routes to the Russian Far East, such as Yuzhno-Sakhalinsk and Anadyr, Domodedovo is the sole carrier. Perhaps for that reason, it has begun operating those flights again despite its inability to pay for essential support services such as fuel and navigation fees.


Press reports say the airline has convinced suppliers to provide the services with the understanding that they will be paid when Domodedovo's accounts are unfrozen.


On other routes, the airline tried to shift some passengers to competitors' flights, though this was not done for military passengers who had discounted fares, Komsomolskaya Pravda reported.


The Federal Service for Air Transport, or FSVT, has ordered Domodedovo to turn over routes for canceled flights, Kommersant reported. This prompted speculation in the Russian press that the authorities are somehow involved in a behind-the-scenes battle for market share with one or more of Domodedovo's competitors.


Domodedovo and FSVT staff were unavailable for comment Wednesday.