Airlines will be given a quarter – Newspaper Kommersant No. 228 (7429) dated 12/08/2022

Russian airlines hope that the amount of compensation for transportation within the country will be doubled by 2023. The government approved the resolution itself to extend the subsidy for the next year, indicating that the federal budget for these purposes still provides only 25 billion rubles – four times less than this year. Kommersant’s sources in the Ministry of Transport report that the issue of additional funding has not been removed from the agenda.

The government of the Russian Federation has not confirmed to airlines the amount of anti-sanction subsidies they expect for flights within the Russian Federation. On December 7, the government announced the extension of the subsidy program for 2023, noting that the federal budget still provides 25.3 billion rubles for these purposes, four times less than this year. Back in September, Deputy Transport Minister Igor Chalik told reporters that the program would be extended from November, and its volume would amount to 50 billion rubles.

RUB 100 billion cost compensation program. for domestic flights was valid from April to October. More than half of this money came from the Aeroflot group. The second largest recipient was S7, in third place was Ural Airlines (see “Kommersant” dated November 14). Most of the funds have already been transferred to carriers’ accounts. Airlines were compensated 1.1 rubles. per passenger-kilometre, provided they provide at least 72% of passenger traffic for the same period in 2021.

Of the largest airlines, only Red Wings, Azimuth and Azur Air, which actively flew abroad, did not apply for state assistance. At the same time, according to Kommersant, Utair received most of the envisaged 4.6 billion rubles, but did not fulfill the conditions of the subsidy. According to Kommersant’s data, the carrier’s passenger turnover in April-September amounted to less than 60% of the level of the same months of 2021. Kommersant sent a request to all the listed airlines.

A source in the Ministry of Transport told Kommersant that the ministry still estimates the “necessary amount of funding” at 50.6 billion rubles.

“The issue of additional funding for the implementation of this program is currently being worked out,” the interlocutor of Kommersant noted. He also noted that the ministry submitted a draft resolution establishing the rules for granting subsidies to the Cabinet of Ministers in autumn. “The document was developed in the parameters of the current program of subsidizing airlines for completed passenger traffic,” he specified. It is assumed that airlines will be able to start applying from 2023, but will be able to receive retroactive compensation for flights from November 2022 to March 2023.

In Aeroflot, Kommersant was told that with any decision on the amount of state support, “the group will be aimed at maintaining the availability of air travel and maintaining an acceptable level of profitability of its flights.” But, they noted, “the tariff offer applied in 2022 did not fully cover the costs of airlines for flights, so state support for air carriers will remain relevant in 2023 to curb the growth of tariffs.” S7 previously calculated that without large-scale support in the form of subsidies, passenger traffic in April-October 2022 would be at least 20% lower. Support for the availability of air travel by the state remains an important issue for the industry, clarified Kommersant in the company.

Some interlocutors of Kommersant in the expert community note that without significant state support in 2022, airfare prices could increase by 20-30%.

Without commenting on these figures, Alexander Gushchin, director of the ACRA corporate ratings group, agrees that the reduction in the volume of subsidies can lead to an increase in the cost of tickets on domestic lines, “the volume of traffic is very sensitive to this parameter.” At the same time, he clarifies that the cost of transportation will largely depend on demand: “In our opinion, in the case of relatively stable external factors, if a drop in traffic occurs, it may be limited to 10–15%.” But additional measures of state support to those already announced “are able to give the market stability.”

Aigul Abdullina