Moscow’s Failure to Subsidize More Seats on Domestic Flights Effectively Cutting Off Far East from European Russia, Economists Say

Paul Goble

            Staunton, February 24 – The Russian government has a program to subsidize the cost of air tickets between cities in the Russian Far East and those in European Russia, but the size of the program is too small to meet the demand; and the excessive prices of unsubsidized tickets, reflecting primarily the cost of fuel, means that the Far East is cut off from the rest of the country.

            That is the conclusion of two scholars, Maksim Sokolov and Igor Naumov at the Russian Economics University, who say that the demand for subsidized tickets far exceeds the supply and that Moscow’s decision not to fund any seats on two of the eight carriers servicing the region this year makes the situation worse (profile.ru/economy/podletnoe-vremya-pochemu-dalnij-vostok-nedostupen-dlya-ostalnoj-rossii-691121/).

            Moreover, they say, competition for the available subsidized seats is certain to increase this year because the central government has eliminated preferences for young people and for pensioners. Given that about 450,000 of the Far Eastern region’s 8.1 million residents want tickets but that far fewer are available, many are not going to be able to get them.

            The differences in prices between subsidized and unsubsidized tickets are enormous, Sokolov and Naumov say, with the unsubsidized ones costing three times more and thus putting them beyond the reach of Far Easterners who want to go to Moscow or St. Petersburg or Russians from west of the Urals who want to visit for work or vacations the Far East.

            Most of the difference reflects far higher fuel costs in the Far East than elsewhere. The average cost of aviation fuel for Russia as a whole is about 47,000 rubles (650 US dollars) a ton, but in Sakhalin, it stands at 71,000 rubles (1,000 US dollars); and in Kamchatka, at 64,000 rubles (900 US dollars).

            Differences in incomes and pensions, both of which are higher in the Far East than in most of European Russia, help compensate for this. But in fact, the two economists say, what Moscow is doing with its subsidy program is making up for differences in fuel costs that should be reduced by new public-private cooperation enterprises.

            Until that happens, however, the two regions of Russia will be increasingly isolated one from the other, with all the social, economic and even political consequences that entails.