21 Aug 2009 13:55

Situation with Aeroflot royalties for use of Russian airspace to change soon

MOSCOW. Aug 21 (Interfax) - Changes will be made in the near future to the practice of Aeroflot-Russian Airlines receiving payments for the use of Russian airspace by foreign aircraft, Federal Antimonopoly Service (FAS) chief Igor Artemiev said during a press conference at Interfax on Friday.

"Under existing legislation, [the FAS] does not have the capability to change the situation with royalties. The Transportation Ministry will handle this. The situation will change in the near future. We will follow it closely," he said.

The FAS cannot legally resolve the issue of canceling the royalties since the volume and terms of payments for the use of airspace are fixed in commercial contracts that Aeroflot signed with foreign airlines, he said.

"We were glad to hear new [Aeroflot] general director Vitaly Savelyev's statement that the company is prepared to decline the royalties," he said.

The FAS decided to look into the situation after the founders of a new airline (with the working name Rosavia), the Moscow government and the Russian Technologies state corporation, issued a statement late last year calling for a review of the system under which Aeroflot is the sole company to receive payments for Trans-Siberian flights.

After taking over Aeroflot in April 2009, Savelyev said one of his first jobs as general director would be to reduce expenditures and prepare the company for life without the royalties. The company would have been operating in the red for the last several years if not for the royalties, he said.

About 20 foreign airlines pay for the Trans-Siberian flights. The payments are made to compensate for the revenue Aeroflot loses out on as a result of airlines making nonstop flights from Europe to Southeast Asia. Aeroflot said such payments total about $300 million per year.

FAS deputy chief Anatoly Golomolzin said in early June that the service had prepared new proposals on the distribution of the compensation for these flights under which several Russian airlines that fly internationally would receive the payments instead of just Aeroflot.