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Human life is, at last, more important than profits of the aviation industry

08:07, 9 сентября 2011

The Yak-42 plane crash near Yaroslavl that took 42 lives made President Dmitry Medvedev take a closer look at the aircraft industry. He demanded that the number of airlines, operating in the country, is significantly reduced. He also said that constant renewal of the plane fleet is a very important requirement.

The President stated that the only airlines that should prevail are the ones that “have the resources and strength to service their fleets, hire qualified staff and pay decent wages”. Earlier deputy prime-minister Sergey Ivanov too addressed the issue of keeping only the strongest airlines on the market. “I’ve already said – garage-airlines should not exist at all! It means that companies owning 2-6 planes, should not work in passenger transportation”, - he stated in August.

Yesterday Valery Okulov – Deputy Head of Ministry of Transportation (Mintrans) – said in an interview, that his department did not have a detailed plan on reducing the number of airlines yet. Mr. Okulov also reminded that new restrictions come into action next year. All the planes have to be equipped with ground proximity warning systems and traffic collision avoidance systems. Without such upgrades the planes will not be allowed in the sky. It’s commonly known that most Tu-134 and An-24/An-26 are not equipped with such systems.

According to Mintrans, the number of airlines in Russia has been cut by half since 2000 – there are only 130 companies left on the market, but 85% of the traffic is handled by 10 of these companies. And the fact is that most plane crashes happen with airlines that cover only 15% of the traffic. The number of accidents involving civilian aircrafts has risen 50% in 2011, compared to last year’s numbers.

Furthermore, the government will have to make some tough choices regarding Russian-made aircrafts. As Dmitry Medvedev stated yesterday, “of course we have to support our manufacturers at home, but if they can’t deliver the needed quality, we need to buy the vessels abroad”. The President also said that decisions about purchasing foreign equipment should be made without any delay in the country of origin, even though it’s hard on the budget.

It seems the government has admitted that the custom duties on foreign aircrafts do not have much use, and that’s a very positive dynamic thinks general manager of Infomost, Boris Rybak. “During the 15 years of restrictions against import of foreign equipment there were no positive results. The fact that custom duties and VAT might be canceled seems like a positive thing. But I’m afraid the reduction of airlines’ quantity will not have the expected effect, because it won’t make an impact on safety issues, - said Mr. Rybak to RATA-news. – Now everyone’s saying that the problem is in the old aircrafts. In fact, there’s a term called airworthiness. If the controlling authorities did their job the way they should, there would be no planes in the sky, which do not meet the safety requirements. And these requirements in Russia are as strict as those of USA or Europe”.

Chief Editor of “Aviation Transport Observer” Alexey Sinitsky thinks that the reduction of the number of airlines will have a negative effect. The expert fears that these measures will affect the far regions of the country, because it’s where the small airlines work the most. “Of course it’s possible to oblige the biggest companies to start flying from Lower Kotly to Upper Kotly. But that’s going to affect the prices, because it sure is going to affect the airline’s expenses”, - thinks the expert.

The cancellation of custom duties and taxes, on the other hand, will not damage the aviation market, thinks Mr. Sinitsky. According to him, after Russia joined the customs union, custom duties were dropped a little, but not fully. It affects the safety, because the duties apply not only to aircrafts themselves, but also to service parts, for instance – engines. “And here we have to deal with the time issue. Say you want to service one of your planes. But the customs clearance of the needed part might take weeks”, - noted Alexey Sinitsky in an interview to RATA-news. The budget will not suffer a severe blow if the custom duties are cancelled, on the other hand, the expansion of the plane fleet will bring in a lot of tax-money, he added.

By trying to reduce the number of airlines, the government has admitted that they cannot guarantee the safety of air transportation, thinks Oleg Panteleiev, head of the analytics department at “Aviaport” agency. “Of course, the only choice in a situation like this is purchasing aircrafts from abroad”, - he said in an interview to RATA-news.

Experts in the travel market too consider the government actions to be controversial towards the aircraft market. “If the decision to reduce the number of airlines is made, there will be transport access problems to the farthest regions of the country. And, of course, it will affect the domestic tourist flow”, said in an interview Irina Tyurina, press-secretary of thr Russian Union of Travel Industry. A country as large as Russia simply needs many airlines, but they all, certainly need to be well-supplied with quality up-to-date equipment, Mrs. Tyurina goes on. “Furthermore, we need to develop our small aviation and create specialized airlines as soon as possible, otherwise life in far regions, where there are sometimes no roads, will come to a complete standstill. Moreover, companies’ fleets and their safety are two things that are not necessarily connected. Reduction and prohibition are the easy ways out, - notes the expert. – The question is “will the government be willing and able to help the airlines renew their fleets?” And in this light Dmitry Medvedev’s words of “human life being more precious and valuable than business interests, even if they are of home manufacturers” give hope that Russia has at last chosen the right way and that out aviation will be supplied with reliable vessels”.

“What’s the connection with the airline’s size? It’s actually easier to control a small company compared to managing a huge “monster”, - says Alexander Morozov, general manager of “Aviacharter”. – It’s hard to imagine the President of France insisting on closing down a number of domestic airlines all over the country after an accident on one of them. On the contrary – Russia needs to develop healthy competition on the aviation market. Healthy competition, opposed to what’s going on right now. Reducing the number of air carriers will only help the “monsters” and in the end the burden will be passed to the passengers, because ticket prices will go up, and even now they are pretty high”.

According to RATA-news sources, the cause of the accidents is in the overall condition of the aviation market, which the experts refer to as “horrible”.

“The security level on Russian airlines is the result of total chaos in our civil aviation. Boeings and Airbuses can break down just as fast, - says deputy general manager of “Jet Travel” Maksim Pristavko. – Our company has been working for some years strictly with foreign carriers. For example, the whole winter skiing program is based on foreign airlines. Even for a destination like France, where most operators use Russian charter flights, we prefer to use Swiss flights to Geneva”.

It’s worth mentioning that for some time the Russian Union of Travel Industry has been advocating for changes in the custom duties for aviation equipment. For instance, in 2007 Sergey Shpilko, president of the RUTI addressed the XI conference: “How can we solve the safety and delays issues without constantly renewing the fleets? And how can we achieve that without at least lowering the custom duties or, at best, accepting the open-sky policy? Since 1993 there’s a 20% customs tax for aviation equipment plus 18% VAT. Airlines have appealed to the government multiple times to cancel the custom duties and VAT as well. The officials have been figuring out a solution for five years, and still didn’t come up with anything”.

Two years later, on the XII conference, the RTU president stated: “Reduction of custom duties for long-haul aircrafts and business jets is a very important step toward easier renewal of airline fleets. But still, there are custom barriers for medium-haul aircrafts, spare parts and other aviation equipment. Of course, the Union supports the domestic manufacturers and their projects, for instance Sukhoi Superjet 100. But we’re certain that the protection strategy should not damage the passengers and the competitive abilities of the industry in general”.

Note, that lobbying of home industries delivers a blow to safety in other in the aviation industry. We can see the same situation with long distance passenger buses. The nullification of custom duties in 2009 for buses with Euro-4 engines that were in service less than 5 years, resulted in a lot of new comfortable and safe machines appearing in Russia, serving tourist all over the country. But some three weeks ago the “GAZ Group”, which is part of Oleg Deripaska’s “Base Element”, appealed to the Ministry of Economic Development and Trade. They asked that the custom duties for Euro-4 buses be raised from 0 to 20%. That measure, according to the second largest car manufacturer in Russia, should help “modernize and bring in new investments to the industry”. The RUTI is strongly against such decisions because none of the domestic manufacturers can produce buses that comply with international safety, comfort and quality standards. And if the government will again take the Russian manufacturers’ cue, the bus transportation market will be thrown back, possibly with tragic consequences.

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