Wednesday, August 7, 2013

Window on Eurasia: High Price of Domestic Flights Limiting Contacts among Russians

Paul Goble

            Staunton, August 7 – Because the Russian Federation is so large and because that country has such underdeveloped highway and rail networks, many Russians over the last half century have depended on the use of domestic aviation. But in recent times, ticket prices in that sector have risen beyond the reach of many and cut them off from contacts in other parts of Russia.

            Indeed, Anton Sevsk writes in an Ekho Moskvy blog, domestic airline tickets today are “an inaccessible luxury for the majority of Russians.”  A single roundtrip ticket between Moscow and Sochi, for example, costs 26,690 rubles (700 US dollars), approximately 75 percent of a Russian’s average monthly income (

            It is thus all very well to talk about the development of resorts in the North Caucasus, “but if even getting to them” is impossible for most Russians, then “for whom are they being built?”

            But that is the least of the problems that largely unsubsidized domestic airfares create. They make it impossible for Russians living in one part of the country to maintain ties with friends and family in other parts, and they thus have the effect of separating rather than integrating the country as a whole.

            Parents can’t visit children, students can’t go home for holidays, businesses have to maintain offices in places to which it is too expensive to fly to, and the hyper-centralization of Russia in Moscow is exacerbated rather than reduced.

            What makes this situation especially unfortunate, the Ekho Moskvy blogger says, is that domestic air tickets in the Russian Federation are far more expensive than those in Europe.  One can fly from London to Rome for less than 9,000 rubles (300 US dollars), a distance that is only 200 kilometer greater than between Moscow and Sochi for 60 percent less.

            Russian airline officials explain this by pointing to Russia’s “cold climate, enormous distances, and undeveloped infrastructure.”  There are few airports, little competition between them, and high costs involved in snow removal and heating during much of the year.  But those factors don’t explain everything, Sevsk says.

            In addition, Russian law “contains a number of provisions which block the reduction of prices for air tickets.”  It requires free food to be served and free carriage of baggage.  Moreover, it prevents hiring foreign pilots, giving Russian pilots an unfair advantage. Those arrangements helped kill Sky Express and Avianova, two Russian low-cost carriers.

            Some European low cost airlines are trying to break into the Russian market for international flights. One of them now offers flights from Moscow to London for less than half what Aeroflot charges for the same route – and about the same amount that Russian domestic carriers charge for the Moscow-Sochi roundtrip.

            The existence of competition on international routes and the lack of competition on domestic ones is the major explanation for this pattern, the blogger says. But what it means is that Russians can get a much better deal flying out of their country than they can when they try to travel within it.

            And that “hypothesis,” Sevsk says, is confirmed by official Russian avaiation figures which show that “in 2013 the number of people flying abroad exceeds the share of those who fly inside the country … and that this gap is increasing,” with international passengers increasing 27 percent while domestic ones are going up only nine percent.

            Several weeks ago, Prime Minister Dmitry Medvedev promised to find money to subsidize flights between Siberia and Moscow after officials east of the Urals pointed out that ever fewer residents of that region were visiting the capital. And over the last year, Kaliningrad officials have complained that the high cost of domestic flying means that enclave residents are more likely to go to Europe than to Russia.

            But in neither case have Moscow officials addressed the fundamental problems that Sevsk identifies, the absence of competition in nearly all sectors of Russian domestic aviation, an amazing situation in many ways given the extent to which Moscow and many in the West celebrate Russia’s embrace of the virtues of the competitive marketplace.

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