OREANDA-NEWS. Dmitry Medvedev: Today we return to discussing the issue of regional aviation, but of course, in the context of improving the accessibility of transport services across Russia. We have included the highly ambitious goal of increasing people’s mobility by 40% in the Government Policy Priorities we adopted.

Air transport understandably plays a key role in these plans. In many Russian regions, there are simply no other possibilities for reaching a required destination, a problem that railways or motor roads are unlikely to solve any time soon.

We already discussed the industry’s problems and potential solutions in Novosibirsk last August when we approved the so-called roadmap for regional air transport development. This year, the Government has allocated 3.5 billion roubles to provide for air service between European Russia and the Far East and Siberia. About 500 million roubles have been allocated to subsidise air transport to Kaliningrad during the peak season for all groups of passengers. Federal Government-financed enterprises have been established at several airports in the Far North and other remote areas. About 3 billion roubles were allocated in the form of subsidies for these enterprises in 2013, and another 2 billion will be provided to renew their aircraft fleet. At the same time, according to estimates, the costs of airport and navigation services for regional flights are much higher than those for long-range flights, in some cases up to 400%.

Therefore, it is the shared responsibility of the federal and regional governments and air carriers to work out a list of the most popular routes and ensure regular flights and affordable fares.

We have launched a project in the Volga Federal District to develop local air services, which involves more than 100 destinations as far as I know. Is that right? (addressing Mikhail Babich)

Mikhail Babich (Presidential envoy to the Volga Federal District): There are 114 destinations.

Dmitry Medvedev: The federal Government has allocated 300 million roubles to support the project, and regional budgets will provide proportionate co-financing. Special economy class fares will apply from April 1 through November 30.

The air carriers that will be selected for the project will have the largest aggregate frequency of flights and the largest number of Russian-made aircraft to be used for these flights.

This work needs to be based on a thorough and detailed study of the Russian market as well as an analysis of the best international practices and solid methodological support.

I have issued some orders and would like to hear your reports on the progress. Let’s discuss in more detail the implementation of the Volga project, considering that it is meant to become a pilot project for a new model of subsidising routes in other federal districts as well. The subject is clear. Mr Sokolov, take the floor please.

Maxim Sokolov (Transport Minister): Thank you, Mr Medvedev. Passenger air travel in this country has been developing steadily and three times quicker than the world average. Last year our airlines carried 74 million passengers, which represented a 15.4% increase in the number of passengers and over 18% growth in passenger-kilometres. World air traffic grew a mere 5%.

Our airlines carried 33.4 million passengers on domestic flights – about 45% of all flights by Russian airlines. This was a smaller increase, 8.2%, compared to 2011. A little over 4.76 million passengers were carried between regions, excluding direct routes to Moscow and St Petersburg. The growth in such flights was even less, but still 3.7% relative to 2011. This shows how small domestic flight segment is.

Next slide, please. The average cost of air travel on regional and local airlines in terms of seat-kilometres is several times higher than on long-range flights. It is about 2.5 roubles on long-range flights, five roubles on regional flights and 35 roubles on local ones. Moreover, the average price of air tickets…

Dmitry Medvedev: Is it for one kilometre? How is it measured?

Maxim Sokolov: Yes, the average cost for a kilometre. The high cost – 35 roubles – is due to the use of helicopters for local flights, which is much more expensive. Moreover, the average price of tickets for regional and local airlines (you can see it on the slide) is 20, in some cases 40 and even 45 times higher than in the United States and Canada, which are similar to this country in terms of territory and conditions. This shows that our airlines, primarily local ones, have low fuel efficiency and high operating costs for their fleet.

The average return economy fare on our regional airlines is 23,200 roubles. This is almost equal to the average monthly salary of our population. According to the Rosstat (Federal State Statistics Service), last year the average monthly salary was 26,350 roubles. Overseas, the price of a return ticket on regional airlines is no more than 5% of the average monthly salary.

We have 1,305 domestic regional air routes (next slide, please), including 121 routes that are linked with Moscow and St Petersburg. I’d like to mention for comparison’s sake that in 1990 we had almost 5,000 domestic routes. Practically 90% of passengers on these routes travel to Moscow and St Petersburg.