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A VOLGA REGION PILOT PROJECT DEVELOPED BY AVIACENTER LAUNCHED SUCCESSFULLY  02.04.2013 20:21

On April 1st a project of developing regional air transport in the Volga Federal District (VFD) of the Russian Federation has been launched successfully.

The project is implemented as part of the Resolution of the Government of the Russian Federation from 16/01/2013 #1, at the basis of which lies the Program of Developing Regional Air Transport in the Volga Federal District for the Period up to the Year 2025, prepared by the Center for Strategic Development in Civil Aviation (AVIACENTER) in 2012.

Anton Koren, the head of the Center for Strategic Development in Civil Aviation, reported that "the essence of the Program of Developing Regional Air Transport in the Volga Federal District is connecting all the regional centers of the VFD by high-frequency air service, both direct and utilizing transfer and transit service schemes, with an aim to save budget funds, allocated for subsidizing the air carriers' shortfall in income".

Five airlines take part in implementing the pilot project: Tatarstan, AK BARS AERO, UTair, Avia Management Group, Orenburzhye.

Anton Koren, the head of the Center for Strategic Development in Civil Aviation, noted that "the start of the project implementation can be considered successful: the load on some of the first flights was 80%. The first passengers highly appreciated time saving when the travel time was cut from 8 hours by surface transportation to 1 hour by plane.

Average flight time within the subsidized route network, according to the AVIACENTER calculation, constitutes about 1 hour.

The program mechanism implies that federal and regional public authorities will take part in its implementation, and the subsidies will be awarded on competitive terms. The principle of co-financing the subsidies is used: 50% come from the federal budget, 50% come from regional budgets of the subordinate entities of the Federation that take part in the program.  The total volume of subsidies from all budgets in 2013 will constitute 600 million rubles.

Anton Koren noted: "For the first time passenger age restrictions as well as restrictions based on the residence district of the passengers are not applied in subsidy principles. This approach makes it possible to provide equal transportation terms for all citizens of Russia, and the most important is that it provides for the increased economic activity of the population, lower barriers for high-speed transportation of business passengers within a macro-region, and new conditions for business contacts integration and economy growth”.

According to calculations made by the Center for Strategic Development in Civil Aviation, when the program has been implemented, the passengers of the Volga Federal District will be able to save up to 1.5 million hours of travel annually. The total number of serviced interregional airlines within the VFD will constitute 114. Last year there were only 10 of them.

It should be noted that the number of passengers will also increase more than fourfold. Anton Koren noted that according to calculations made by AVIACENTER experts, when the program has been fully implemented and all the 114 routes have been launched for yearly operations, the number of passengers should exceed 170 thousand people per year.   

"When developing the program, for the first time in 25 years we used high-precision demand forecast models for regional air transport, considering passenger flows on all modes of transport.  We used the demand analysis of air, railway and bus modes of transport for calculations. The 2 latter types of transport began to be used by passengers in recent decades due to the absence of regional air transport" - said Sergey Skvortsov, Managing Director of the Center for Strategic Development in Civil Aviation.

Support from the industry participants is important for this program.  For example, VFD airports gave discounts of 40% to 100% for airport charges and ground handling services.  Airports and refueling complexes also provide support for the project by lowering the cost of aviation fuel, the expenses on which constitute about 30% in the cost structure of regional and commuter air transport.  Besides, airports and subordinate entities of the Russian Federation that belong to the VFD can provide significant support by offering advertising opportunities to promote the project.

It should be mentioned that the air carriers realize the project payback period of several years as well as the importance of additional measures for promoting sales: when passengers have been losing the habit of flying for over 20 years, it will not only take time, but also appropriate marketing tools to teach them to use air transport again.  For example, Tatarstan Airlines plan to use special discount tariffs starting at 300 rubles (around 10 dollars) to promote demand for the subsidized flights.

According to calculations made by the experts of the Center for Strategic Development in Civil Aviation, the fiscal performance of the program makes it possible to speak about returning subsidies as taxes and deductions within the first year of its functioning.

An important aspect is the continuation of the project and launching it for year-round operations.

Anton Koren, the head of AVIACENTER noted that a significant input into the implementation of this project has been made by the Office of the Presidential Plenipotentiary Envoy to the Volga Federal District and the Federal Air Transport Agency (Rosaviatsiya).

Thanks to the concerted effort of the federal public authorities and business, the correct vector of revival and development of regional air transport in Russia has been defined.


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