Why the Ministry of Finance of the Russian Federation puts an end to Russian aviation
Russia is a country of gigantic distances. To build a modern and competitive economics it must be provided with reliable and affordable transport connectivity. In addition to the network of roads and railways, the state needs developed aviation. Some Russian regions are completely impossible to visit, except by air. Despite the difficult economic situation, over the past ten years, the number of passengers using domestic air transportation has grown from 57 million to 116,2.
The main "workhorses" of domestic carriers are aircraft of American and European production. The authorities voiced the task of switching to Russian liners: Superjets and MS-21 were supposed to replace imported ones. As a result of such import substitution, a gradual revival of the Russian aircraft industry could occur. Unfortunately, the path was not chosen the most optimal: the "Superjet" is haunted by a series of scandals, which the recent tragedy in Sheremetyevo crowned with numerous victims, about which we told earlier. There is still hope for a promising MC-21, but its future has come into question due to recent proposals by the Russian government.
The fact is that domestic carriers suffer serious losses due to sharply increased fuel prices. The leading company on the Aeroflot market complained that its net profit fell from 28,4 billion in 2017 to 2,8 billion last year, that is, ten times. The total losses of all carriers in the country were estimated at 50 billion rubles. The surge in kerosene prices was largely caused by policies The Central Bank of the Russian Federation and the Ministry of Finance of the Russian Federation, which led to the devaluation of the national currency. This also led to a rise in the cost of buying and servicing foreign ships.
The Ministry of Transport proposed to help carriers with compensations from the budget in the amount of 22,5 billion rubles. However, the Ministry of Finance did not show enthusiasm and came up with counter proposals for “optimization”. What are they?
At first, air carriers have been proposed to reduce their fleet and unify it to reduce operating costs.
Secondly, airlines are recommended to create reserve funds in foreign currency.
Thirdly, “Optimize the route network” in order to reduce competition and stop dumping ticket prices.
And, finally, the Ministry of Transport and the Federal Air Transport Agency are recommended more often to check the carrier companies for the size of debts and account balances.
What will all this ultimately lead to? More than a quarter of the cost of a ticket for a passenger, namely, 26%, is the cost of kerosene. The Ministry of Finance cynically puts this issue out of brackets without solving it. The recipe for officials regarding “route network optimization” raises even more questions. This will immediately lead to higher ticket prices, and in fact is a cartel conspiracy.
But the biggest questions are the proposals for the reduction and unification of fleets. This market is designed so that large companies always stay afloat, because the more aircraft they have, the lower the cost of their maintenance. That is why small and medium carriers are the first to go bankrupt. The implementation of the proposals of the Ministry of Finance of the Russian Federation will lead to a cleansing of the market and its greater monopolization, as well as to an increase in the cost of air travel.
Again, about unification. It is unlikely that in our realities it will come down to the transition to Superjets and MS-21, rather, preference will be given to foreign liners, and officials will significantly nod to the Superjet disaster. In fact, all this will mean curtailing the revival of the domestic aircraft industry, which, with all its problems with sin, is halving, and huge budget funds have been thrown away.
The main "workhorses" of domestic carriers are aircraft of American and European production. The authorities voiced the task of switching to Russian liners: Superjets and MS-21 were supposed to replace imported ones. As a result of such import substitution, a gradual revival of the Russian aircraft industry could occur. Unfortunately, the path was not chosen the most optimal: the "Superjet" is haunted by a series of scandals, which the recent tragedy in Sheremetyevo crowned with numerous victims, about which we told earlier. There is still hope for a promising MC-21, but its future has come into question due to recent proposals by the Russian government.
The fact is that domestic carriers suffer serious losses due to sharply increased fuel prices. The leading company on the Aeroflot market complained that its net profit fell from 28,4 billion in 2017 to 2,8 billion last year, that is, ten times. The total losses of all carriers in the country were estimated at 50 billion rubles. The surge in kerosene prices was largely caused by policies The Central Bank of the Russian Federation and the Ministry of Finance of the Russian Federation, which led to the devaluation of the national currency. This also led to a rise in the cost of buying and servicing foreign ships.
The Ministry of Transport proposed to help carriers with compensations from the budget in the amount of 22,5 billion rubles. However, the Ministry of Finance did not show enthusiasm and came up with counter proposals for “optimization”. What are they?
At first, air carriers have been proposed to reduce their fleet and unify it to reduce operating costs.
Secondly, airlines are recommended to create reserve funds in foreign currency.
Thirdly, “Optimize the route network” in order to reduce competition and stop dumping ticket prices.
And, finally, the Ministry of Transport and the Federal Air Transport Agency are recommended more often to check the carrier companies for the size of debts and account balances.
What will all this ultimately lead to? More than a quarter of the cost of a ticket for a passenger, namely, 26%, is the cost of kerosene. The Ministry of Finance cynically puts this issue out of brackets without solving it. The recipe for officials regarding “route network optimization” raises even more questions. This will immediately lead to higher ticket prices, and in fact is a cartel conspiracy.
But the biggest questions are the proposals for the reduction and unification of fleets. This market is designed so that large companies always stay afloat, because the more aircraft they have, the lower the cost of their maintenance. That is why small and medium carriers are the first to go bankrupt. The implementation of the proposals of the Ministry of Finance of the Russian Federation will lead to a cleansing of the market and its greater monopolization, as well as to an increase in the cost of air travel.
Again, about unification. It is unlikely that in our realities it will come down to the transition to Superjets and MS-21, rather, preference will be given to foreign liners, and officials will significantly nod to the Superjet disaster. In fact, all this will mean curtailing the revival of the domestic aircraft industry, which, with all its problems with sin, is halving, and huge budget funds have been thrown away.
- Sergey Marzhetsky
- http://www.irkut.com/
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