Give Air Drays Back To Urals

25.01.2010 — Analysis

Social and economic connections inside Urals region could be much strengthened if short range aviation were revived. The RusBusinessNews observer found out that certain steps in this direction have already been made. New air transportation system, however, will differ significantly from that of Soviet times. 

In the recent few months the topic of the revival of the short range aviation in the Sverdlovsk Oblast is back on the agenda. The new Governor Aleksandr Misharin has established a Ministry for Transport and Road Facilities, a novelty for the region. According to experts one of the priorities is the revival of local air transport.

In December 2009 Mr Misharin declared that the Sverdlovsk Oblast wants to obtain the federal 40% share in the Ekaterinburg Koltsovo airport. "It is too soon to give up the state ownership in the airport but it would be better to have the Sverdlovsk Oblast as a proprietor for a more efficient management and the development of regional transport. This is a low profit and sometimes loss-making activity but if we do not organise it there will be no long-range development either," the Governor pointed out.

Today at least two air carriers announced their plans to develop local air transport in the Sverdlovsk Oblast. Air carrier Arktika established in Ekaterinburg in the autumn 2009 announced the signing of preliminary contracts for purchasing 5 Cessna 208B aircraft and 10 Eurocopter ВО-105 helicopters this year. Arktika is considering the possibility for modernisation of the Ekaterinburg Uktus airport or the construction of a new airport in the region.

According to Denis Pavshinskiy, the Director General of Region-Avia, his air carrier at the moment is developing new routs for transporting passengers from remote towns to main Russian regional air hubs. In order to expand the air transportation network it is planned to establish a fleet of 35 Embraer-120 aircraft. According to the air carrier's business plan it is planned by 2010 to run regional flights from five largest air hubs including Ekaterinburg.

However, the two Ekaterinburg airports, Koltsovo and Uktus, made categorical statements to RusBusinessNews that they had no requests came to them to run regular passenger services to towns of the Sverdlovsk Oblast or to the neighbouring large cities - Perm, Tyumen, Magnitogorsk.

Transportation network connecting the Sverdlovsk Oblast capital with 23 airfields located in remote and hard-to-reach territories of the region had been established in the middle of last century and functioned for about 50 years. Local haulage had been carried out on An-2 planes and Mi-8 helicopters by the Second Sverdlovsk Air Carrier based at Uktus airport. 100% of the company is in federal property.

In the conditions of free market regular passenger transportation on local airlines started making losses the last of these had been done about 5 years ago. "Today the Second Sverdlovsk Air Carrier is under external administration, this company is bankrupt. Since 2005 when the Sverdlovsk Oblast's budget was in surplus we requested for it to be transferred from federal to regional property for the revival of local air transport but this had not been done. At the moment, due to the crisis, we cannot get involved with it," Yuri Kozhevnikov, the Head of the Department for Transport and Road Facilities of the Ministry of Industry and Science of the Sverdlovsk Oblast, told RusBusinessNews.

"If the Oblast gets involved in the issue of the regional aviation I am ready to work with any structure to implement this programme," Anatoly Menyayev, the Director of OJSC Second Sverdlovsk Air Carrier assured RusBusinessNews. At the same time he pointed out that no calculations on necessary subsidies for the development of local aviation have been done yet.

Experts name at least two key reasons why local air transport should be revived in the Sverdlovsk Oblast. The first one has been named by the Governor himself, it is the development of Koltsovo airport into the regional hub connecting local flights with national and international services. This would enable to increase the volumes of passenger transportation in Koltsovo and turn it into a largest air transportation hub to the East of Moscow.

Some years ago the partnership of two airlines Region-Avia and Aviaprad attempted reaching the same goal. The former had been running services from the Tyumen Oblast, Orenburg, and Perm to Ekaterinburg. The latter transported passengers from Koltsovo to some large cities in Russia and abroad. This partnership survived only for a year and collapsed due to the bankruptcy of Aviaprad.

The second reason for the revival of local air transport carries not only economic but also social importance which makes it much more significant. "Each region can be measured by the degree of the labour mobility, many other social and economic indicators follow - labour productivity, standard of living," Serghey Lukyanov, the Director of Business Education Programmes of the Economics Department of the Ural State University, an expert on aviation, told RusBusinessNews "If we start subsidising Uktus airport and the operations of the Second Sverdlovsk Air Carrier then about 50-75 thousand passengers could be transported annually - workers from remote towns and villages. In this situation Ekaterinburg will not have to attract migrants from Central Asia."

Yuri Kozhevnikov reckons that there is no need to revive the network of local air connections to its former state. "There are high speed motorways in our region which is why in many cases there is no longer any need in air transportation. There are a few remote areas which remain a problem, the areas which have no access by road. The Oblast gives 10-14 million roubles annually as subsidies to people living in these areas for helicopter flights to locations reachable by road. These flights are carried out by the Second Sverdlovsk Air Carrier."

According to Serghey Lukyanov the three local destinations have to be revived as a priority - Ekaterinburg to Severouralsk, Ivdel in the North of the region and Tavda in the East with 3-4 intermediate landings and flight frequency of 3-5 times a week. At the same time he reckons that the costs involved in the revival of local airfields are not that high as technical requirements for flight operations on short range aircraft are not strict. In practice they need unpaved or metal runway.

Much more money will be required for the Oblast or federal budget subsidies to subsidise air carriers which are brave enough to get involved in the local air transport revival. Taking into account low paying capacity of people living in small towns and districts of the Sverdlovsk Oblast and the competition from railways and automotive transport the price of a one way ticket should not exceed 1,000-1,500 roubles. Roughly the same sum of money will have to be subsidised by the state to make the operation profitable. This means that the provision for the annual transportation of 50-75 thousand people depends on the help from the state in the amount of 50-100 million roubles.

We should not expect large air carrier to be bothered with local flights. In developed countries this is done by small regional carriers which have 2-3 planes in their fleet. They purchase a franchise from a large air carrier and fly under its brand thus getting the needed client loyalty. A North American company Delta Air Lines, for instance, cooperates with many franchise operators. The Region-Avia carrier operated in the Urals under the Aviaprad brand. This is why in the future the Second Sverdlovsk Air Carrier might work under the brand of the Ural Airlines.

In addition to financial and organisational components, the issue of aircraft maintenance remains open. At the moment the Second Sverdlovsk Air Carrier is a proprietor of a Yak-40 (it is involved in business transportation) and eight An-2 designed to transport 12 passengers. An-2 made in the sixties of the last century can easily work for another 20 years. Anatoly Menyayev stresses that "These planes, of course, do not offer the same comfort as modern aircraft. This is why we consider an option to use a Czech plain L-420 for flights within the Oblast; this aircraft is also perfect for flights to the neighbouring Tyumen and Chelyabinsk Oblasts".

Experts are unanimous that the revival of local aviation in the Mid Urals will help the process of the socio-economic integration of the region. This will require the use of joint resources of business and the state.

Pavel Kober