OREANDA-NEWS. October 11, 2013. The Federal Antimonopoly Service (FAS Russia) is compiling a database of the’ tariff plans of the airlines that exercise passenger transportation on domestic and international routes.

All data are structures according to:

- Routes (direct domestic and international transportation)

- Booking trending (the tariff a day, a week, a month, six months before departure)

- A class of service (economy, business).

A carrier can set several passenger fares between two destinations that differ by the sum of money and the fare conditions. The number of passenger seats offered for booking at the fare levels is determined by a carrier in view of an aircraft loading and flight cost effectiveness.

The low base level of the tariff is typically determined by the net cost of transportation, which depends on the length of the route, the costs of organizing the flight, including the costs of fuel, airport services, etc. Domestic air transportation is also subject to VAT.

Under market pricing, the upper price level is influenced by consumer demand and competitive supply. Competitive routes do not only have lower fares but also smaller price fluctuations determined by demand, both seasonal and other types (demand in the vacations period, holidays, for convenient flights, demand formed due to particular events and circumstances).

To a considerable extent prices depend on booking trending. Probability to purchase a lower-fare ticket is higher for earlier booking.

Due to a number of reasons, low-tariff transportation is underdeveloped in domestic civil aviation, in contrast to a significant share (up to 30%) on the European air transportation market. It is the pricing policy of low-cost airlines that offers relatively inexpensive flights possible to an optimized route network, use of minor airports, operating a single type of aircraft, minimizing on-board services, etc. The task for developing such type of transportation is an integrated one ad requires system-wide measures for updating the legislative framework, modernizing the airport infrastructure, establishing a fleet of aircrafts, etc. Currently such measures are being devised in the form of Road Maps approved by the Government of the Russian Federation.

Understanding that competition is an important factor for decreasing the costs of services, there is a consistent increase of a number of competitive routes. The proportion of passengers transported on competitive routes serviced by three or more carriers increased from 71.2% in 2007 to 85% in 2011.

The most difficult regional and local routes (typically, routes with limited competition) transportation is subsidized, in 2013 – over 3 billion RUB. 300,000 residents of the Far East, Siberia and Provolzhie Federal Districts shall benefit from support programmes. The most support successful programees are the in Provolzhie Federal District.

To restore and modernize the airport infrastructure, including regional one, reduce the costs of services, a set of measures is being implemented: abolishing excessive requirements and restrictions for airport (aerodrome) certification, encorporating the principle of reasonable sufficiency which is a necessary conditions for developing low-cost transportation, capable to stimulate restoration of regional and local transportation networks.

Measures designed to develop competition in airports include additional requirements for liberalizing markets of airport services. For the first time such requirements were set in 2009 by the Rules for providing access to the services of holders of natural monopolies in airports, approved by the Government of the Russian Federation. The Rules created conditions for alternative operators of several airport services. Absence of discrimination, equal conditions for access to the markets, establishing the mechanisms for protecting the rights of market participants are the principles, following which is necessary to form the modern market environment. Additional requirements towards protecting competition in airports have been devices and are submitted to Government of the Russian Federation.

The outcome of such measures is recent sustainable growth of transportation: in four years the number of passengers increased by 60% (74 million in 2012 in comparison with 45.1 million in 2009).