IMPLEMENTATION LEVEL

National

AFFECTED FLOW

Inflow

ANNOUNCED AS TEMPORARY

No

NON-TRADE-RELATED RATIONALE

No

ELIGIBLE FIRMS

state-controlled

JUMBO

No

TARIFF PEAK

No
← back to the state act
Inception date: 02 Feb 2010 | Removal date: open ended
Still in force

Bailout (capital injection or equity participation)

On February 2, 2010, the Russian Prime Minister, Mr Vladimir Putin, approved a plan for the merger of 6 airlines into Aeroflot. This deal would increase the share of Aeroflot from 15 percent to 30-35%.
After the collapse of the Soviet Union, Aeroflot's monopoly was broken up into many smaller carriers which were handling regional flights.
The government has soughtways to bail out the country's aviation sector since the crisis hit. It had planned to merge the six state-owned airlines - Rossia, KavMinVody, Vladivostokavia, Orenburg, Saratov and Sakhalin airlines - into a new state airline, Rosavia, which would have been owned by Russian Technologies (the state enterprise). It is important to emphasize that since the crisis began, Russian Technologies has been struggling to manage lots of loss-making assets such as AvtoVAZ (Russian car producer).
The state owns 50.01 of shares in Aeroflot. Currently the Russian Federation is buying 25.8 of Aeroflot shares from the Russian businessman Alexander Lebedev.
From the six airlines, only Rossia and Vladivostokavia are attractive prospects. St Petersburg-based Rossia carries 50 per cent of traffic from St Petersburg's Pulkovo airport. The government, however, cannot permit itself to bankrupt the airlines because key cities in Russia's far- flung regions would remain without sufficient links to the rest of Russia.
Aeroflot, the biggest airline, transported 8.75 million people in 2009. Rossia, KavMinVody, Vladivostokavia, Orenburg, Saratov and Sakhalin airlines together transported 6.7million people in 2009. After the deal, Aeroflot will have a passenger transportation volume which is 3.5times more that the second company (Transaero).

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