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. Last Updated: 07/27/2016

Airport Fees, Ticket Prices Set to Leap

In a move expected to force airlines to raise ticket prices, Moscow's three main airports said Tuesday they will hike service fees as of Sunday.

"We are increasing airport duties by 40 percent," Igor Yuganson, Sheremetyevo's economics director, told reporters Tuesday.

Sheremetyevo, Domodedovo and Vnukovo all said that a combination of inflation, rising energy tariffs and increasing maintenance and safety costs forced the decision to boost service fees, which is expected to push domestic airline ticket prices up as much as 5 percent.

The Anti-Monopoly Ministry approved the hike late last year on the recommendation of the State Civil Aviation Service. It does not apply to international carriers.

Airport duties consist of individual charges for landings and take-offs, air traffic control, air safety, terminal use, passenger services and cargo handling.

Such charges account for as much as half of the airports' annual revenues and make up roughly 12 percent of airlines' operating costs. Of Sheremetyevo's projected revenues of 3.2 billion rubles ($105 million) for 2001, some 1.5 billion rubles will come from airport charges, Yuganson said.

He said the hike should not have much effect on airlines and will probably translate into a rise in ticket prices of no more than 4 percent to 5 percent.

He also said the matter was discussed with most airlines and none objected.

However, No. 2 domestic carrier Sibir, which uses Vnukovo for regular passenger flights and Sheremetyevo for charters, said it had not heard a thing about the rate hike.

"We would normally have been warned two weeks in advance," said Sibir's spokesman Mikhail Koshman.

Likewise, KrasAir, which flies in and out of Domodedovo said it was not told of the new developments either.

And contrary to Yuganson's statement, Sheremetyevo's main tenant, flagship Russian carrier Aeroflot, said it was firmly against the rise.

Furthermore, Aeroflot CEO Valery Okulov has officially protested the move in a letter to the Transportation Ministry in which he urges a delay.

Aeroflot estimates that a 40 percent increase in duties will cost it an additional $6 million this year, on top of the $8 million it already plans to spend itself on beefing up air safety in the wake of the Sept. 11 attacks in America.

In his letter, Okulov cited a December recommendation by the International Air Transport Association to freeze or even reduce airport charges. This was supported by airports in Britain, the Netherlands, Greece, Denmark, Germany, Hong Kong, the United States and many other countries.

Viktor Gorbachyov, head of the Russian Association of Airports, said that while he understands the concerns of airlines, increases in service fees are a regular practice without which airports could not survive.

"Energy tariffs are growing, expenditures are growing with them, does that mean airports have to be loss-making? What IATA recommends is wonderful but where are we to find resources to increase air safety? A single passenger scanner costs up to $100,000," Gorbachyov said.

"Airports are now in an irreparable situation," said Tatyana Teplinskaya, chief economist at Vnukovo airport. "Fees should be hiked even more," she said, adding that charges in Moscow are just 50 percent of what they are in the rest of the country.

"The purpose is not to increase our revenue, but to sustain normal financial and maintenance conditions in the airport," said Yuganson.

He said Sheremetyevo invests 80 percent of its profits in improving and maintaining its infrastructure.

Sheremetyevo's projected revenues of 3.2 billion rubles for 2001 is an 18 percent increase over 2000, but its net profit is expected to be down to 730 million rubles from 882 million rubles.

The airport has had the busiest year in its history, servicing 11.57 million passengers, up 6.8 percent on the year. Nearly two-thirds of all passengers were on international flights.