08:40 GMT +318 October 2017
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    Americans setting up first budget airline in Russia

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    MOSCOW, July 11 (RIA Novosti) - Russia's first budget airline will start flying in September 2005, a daily reported Monday.

    A reliable source told Biznes, a popular business paper, that the private American firm Indigo Partners and TPG Aurora, an eastern European division of Texas Pacific Group, were almost ready to launch the new airline.

    The airline has been registered as a private company, Aurora, and personnel have already been hired. The airline will operate 40 Airbus A-320 planes. Advance payment has been made for the first 15.

    Under the Airbus contract, the first planes will be supplied in late 2007 at the earliest. So the airline can start flights before then, it has ordered second-hand A-320s. The first two will arrive early next spring, and then one will be delivered every month thereafter. The new airline is to operate routes between Moscow and other Russian cities, and also between the Russian regions.

    Experts see a number of serious obstacles. "Regional airports will probably defend the interests of their main carriers," Boris Rybak, general director of the consulting firm Infomost, said.

    Utair chief executive officer Andrei Martirosov agreed: "Russia has no regional airports suitable for budget operators." He added, "In Russia the Internet is not sufficiently developed to cope with budget airline ticket sales. To be cost effective each plane should be in the air for 12-14 hours a day. This will be difficult in Russia, where airline passenger numbers are 30 million, about the same as those of the Irish company Ryanair."

    In addition, Martirosov said: "A budget airline in Russia will mean dumping practices, and dumping cannot be sustained for long."

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