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Air Travel Costs to Rise After Fuel Price Hike

Russias already expensive air fares look set to increase and hurt the industry.

Published: August 27, 2014 (Issue # 1826)



  • According to Rosaviatsia, the last three months have seen an average rise in the cost of aviation fuel of 6 to 7 percent.
    Photo: Denis Abramov / Vedomosti

A rise of up to 7 percent in the price of aviation fuel at Russian airports since May will push up costs for domestic carriers, making Russias already notoriously expensive air fares more costly and damaging the competitiveness of Russian airlines on the international market, aviation watchdog Rosaviatsia said Aug. 21.

Rosaviatsia monitored the cost of aviation fuel in 30 Russian airports over the last three months, finding average rises of 6 to 7 percent, the agency said in a statement.

This summers sudden increase in the cost of aviation fuel was not expected by airlines and was not part of their operational plans, the statement said. The result will be increased costs for passengers, it added.

Oleg Panteleyev, head of aviation news agency AviaPort, estimated that 100 rubles ($2.77) would be added to the average standard air fare.

The share of the cost of aviation fuel in the price of a ticket is around 30 to 40 percent, Andrei Sogrin, spokesman for Russias flagship carrier Aeroflot, told the newspaper RBC Daily.

Russias second-largest airline Transaero branded the price hikes as ungrounded and said they were harmful for domestic carriers and could lead to increased ticket prices for passengers.

Panteleyev blamed the rise in the cost of fuel on seasonal factors: July and August are peak months for airlines, and the oil companies skim the cream off carriers during this period, he said, adding that aviation fuel price also tracks the price of technologically similar diesel fuel, which is now being bought up by the government for its emergency winter reserves, creating supply shortages.

Over the course of 2013, the price of aviation fuel rose by almost 4 percent.

Dmitry Baranov, lead analyst at Finam Management investment company, said that the rise in prices was exacerbated by relatively low competition in the Russian aviation industry.

There are still monopolies in some segments [of the industry]. In many airports there is still only one choice of fuel depot, and an idea to create alternative fueling centers in airports previously voiced by the government did not work out, Baranov said.





 


ALL ABOUT TOWN

Wednesday, Oct. 1


The St. Petersburg International Innovation Forum 2014 kicks off today at Lenexpo, where it will be presenting the latest and greatest ideas until Oct. 3. Focusing on economic development and the decisions and measures necessary to encourage development in Russias most important industries, the event is a possibility to discuss the innovations currently available in a variety of fields.


Representatives of the Russian and international media industries arrive in St. Petersburg for the first ever International Media Forum being hosted by the city until Oct. 10. With a variety of events on tap, including workshops, lectures and film screenings, the event plans to reemphasize the citys reputation as the countrys culture capital and as an emerging market and location for the visual arts.



Thursday, Oct. 2


The celebration of the bicentennial of the birth of Mikhail Lermontov continues with todays free exhibition in the citys Lermontov Library at 19 Liteiny Prospekt. Titled Under the Rustling Wings, the temporary exhibition will feature the costumes and scenery used in the 1917 production of Lermontovs play The Masquerade, which he wrote in 1835 when he was only 21 years old.



Friday, Oct. 3


Learn more about how to manage and evaluate employee performance during SPIBAs Human Resources Committee meeting this morning on Employee Assessment: Global and Local Trends. Starting at 9:30 a.m., the discussion will touch on such topics as the partnership between HR and business, reliable assessment strategies and more, with Tatiana Andrianova, the head of the SHL Russia and CIS branch in St. Petersburg, as the featured guest. Confirm your participation by Oct. 2 by emailing office@spiba.ru or calling 325 9091.


AmChams Procurement Committee Meeting is at 9 a.m. this morning in their office in the New St. Isaac Office Center on Ulitsa Yakubovicha.



Saturday, Oct. 4


Wine and cheese lovers will get their chance to revel during Scandinavia Country Club and Spas Wine Market Weekend. Going on today and tomorrow, wining diners can listen to live music, take part in culinary classes and, of course, sample a variety of fine wines from around the world. The cost of admission is 400 rubles ($10.30) for adults and 200 rubles ($5.15) for children.



Sunday, Oct. 5


Look for the latest fall fashions at the Autumn Market today in Freedom Anticafe at 7 Kazanskaya Ulitsa. The minimarket plans to offer clothes more flattering than the puffy jackets that are a staple of the citys cold-weather fashion, while offering the same amount of protection from the biting winds blowing off of the Baltic.



Monday, Oct. 6


SKA St. Petersburg, the citys KHL affiliate, welcomes Slovakian club HC Slovan in a match-up tonight at the Ice Palace near the Prospekt Bolshevikov metro station. The puck drops at 7:30 p.m. and tickets can be purchased on the clubs website or in person at either the arenas box office or the clubs merchandise store on Nevsky Prospekt.



Tuesday, Oct. 7


Learn more about Russias energy industry at the St. Petersburg Energy Forum that begins today and runs through Oct. 10. Attracting industry experts and political and business representatives, the forum plans to welcome more than 350 plus companies and their representatives to discuss the future of Russias largest economic sector.



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