Russian authorities will open the domestic airline industry to unfettered competition after eliminating the flight quota system entirely on 1 April.
Civil aviation watchdog GSGA expects the move to lower fares and spur consolidation in the market.
Last summer regulators abolished quotas for all but 13 of the most lucrative routes connecting Moscow with the biggest regional centres and popular leisure destinations. As a result, traffic to Sochi and Mineralniye Vody nearly doubled while fares dropped by up to 30%, says GSGA.
Licensing department chief Stanislav Ovcharenko says booming passenger traffic is a major factor behind the market liberalisation, which falls in line with the national transportation development strategy.
The authorities introduced flight route quotas in the early 1990s following the disintegration of the Soviet-era Aeroflot. The aim was to restrain unwanted competition and protect financially fragile regional carriers.
"From 1 April, we cease regulating the market through commercial or administrative restrictions," says Ovcharenko. "We'll focus exclusively on safety issues and financial control, as well as on developing ground infrastructure."
A string of top Russian carriers has hailed the decision because it allows them to expand domestically. Experts forecast a major shake-out in the industry, as many second-tier players will have to merge or face going out of business.
Consolidation is already well under way, demonstrated by the 32 airlines that were wound up last year. Of the remaining 200 registered airlines, 24 account for 85% of the country's passenger numbers, while the top five - Aeroflot, Sibir, Pulkovo Airlines, UTAir and Kras Air - handle half the traffic.
Source: Flight Daily News
