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Russia still has barriers for low-cost airlines

September 10, 2014, 14:03 UTC+3 MOSCOW
One of the major barriers for a low-cost airline entering the market is the requirement to have at least eight planes for regular flights
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© ITAR-TASS/Dmitry Astakhov

MOSCOW, September 10. /ITAR-TASS/. Russia still has regulatory restrictions for the development of low-cost airlines, which prevent the sector from establishing new companies, as seen by PRIME in St. Petersburg State University of Civil Aviation’s interim report published by the Federal Air Transport Agency on its Web site Wednesday.

One of the major barriers for a low-cost airline entering the market is the requirement to have at least eight planes for regular flights. “Current regulations…are overstated and represent an almost impassible barrier for a new state company to enter the market,” the university said in the report.

Such a large aircraft park will generate only losses during the first one or two years of the company’s operation, the university said.

The other two major barriers are the company’s impossibility to carry international flights in the first two years of existence and restrictions on attracting international investment, as domestic owners must have control over any airline registered in Russia under current law.

Russia has made three attempts to launch a low-cost airline: Sky Express in 2006, Avianova in 2009 and Dobrolyot, a unit of national flag carrier Aeroflot, in 2014. Sky Express later became a usual airline, Avianova ceased operations in 2011, while Dobrolyot had to cancel its flights in July after the E.U. imposed sanctions on the company.

In August, Aeroflot said it plans to create a new low-cost affiliate, which can start flying from October 27, to replace the sanctioned Dobrolyot.

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