FX.co ★ Russia's Aeroflot to launch budget air carrier

A low-cost air carrier of Aeroflot Russian Airlines will soon emerge in Russia. The key idea is the direct competition with the railway transport in terms of fares. From now on, an air ticket is not supposed to carry a higher value than an upper berth in a third class sleeper. In case it turns out well to sustain air fares similar to the railway service by means of a would-be volume of passenger traffic, the low-cost airline will be able to compete with Aeroflot itself. The domestic air colossus schedules to start up the new air company as early as in 2014. The standard product of Aeroflot’s new subsidiary will differ essentially from the other company’s offers. The budget airline is going to offer fares 20-40% lower, than the similar tariffs from other air companies. To ensure the feasible profitability of the project, it is essential to make amendments in the Air Code and the Federal Aviation Regulations: to entitle the air carrier to give up on meals and to collect a baggage charge, to release non-refundable tickets for sale and to permit foreign pilots employment. Airports also have to come to terms with no-frills airlines: to impose lower tariffs on an aircraft service and to reduce time between landing and taking off. Apart from Aeroflot, TransAero and UTAir are also thinking of founding low-cost subsidiaries. Governors of several regions expressed readiness to provide local airports for low-cost operators on easy terms.