Insurance reserve needed in case of airline bankruptcies - regulator
MOSCOW. Aug 16 (Interfax) - An insurance reserve needs to be set up to protect travellers from potential bankruptcies of airlines, the head of Russia's Federal Air Transport Agency (Rosaviatsia), Alexander Neradko said in an interview published in Rossiyskaya Gazeta on Thursday.
"Indeed, no one is insured against a repeat of the situation. And we are proposing to use the experience of other countries, which has proven itself very well. An insurance reserve needs to be created," Neradko said.
This should not be an insurance fund that would draw funds from other purposes, he added. Reserves are created by travel associations in case of force majeure circumstances, Neradko said.
"Money from this reserve is handed over to the aviation authorities so that they insure additional aircraft. This will only cost the passenger an extra 30-60 rubles in the price of the ticket," Neradko said.
He said the agency is prepared to discuss the issue with travel companies, and with relevant ministries and agencies, to decide on what platform the insurance reserve should be created.
"So that here the mechanism can work not only for tour operators, but also for any person who buys a plane ticket," Neradko said.
At the same time, he said that the financial health of Russian carriers is currently stable. "We already don't have any government-funded carriers left, they went bankrupt earlier," Neradko said.
He also said that the concentration of the air travel market is growing among the top 15 airlines. "While last year they provided 79% of services, this year it's already 87%," he said.
Commenting on the issue of bringing down air fares, Neradko said this is a relevant issue that is being considered at the government level.
Measures that should help lower prices for domestic flights include the introduction of "non-refundable" rates and exclusion of certain services that are included in the price, he said, referring to baggage, passenger check-in at the counter, and onboard food and beverage service.
It is also possible to reduce the tax burden on airlines by reducing value-added tax to zero for interregional and local flights, and "of course we need to expand programs for subsidizing aviation services, as is now done for the Far East, Siberia and Kaliningrad," Neradko said.
In addition, the development of competition in the airport sector could "weaken the pressure on prices," he said.
"We are considering the issue of introducing multiple operators at airports. It is also necessary to improve the regulatory foundation in the area of non-discriminatory access to services at airports for the operators of fuelling facilities," Neradko said.
The price of fuel makes up a fairly large share of the ticket price, from 20% to 50% depending on the type of aircraft, he said.
"Therefore, we are proposing to develop alternative fuelling facilities at airports in order to reduce the price of jet fuel. Rosaviatsia, together with the Transport Ministry, is now preparing proposals for the government in all of these areas," Neradko said.