FAS to check pricing of airlines
Release Date: 2009-07-23
The Federal Antimonopoly Service (FAS) is to check the pricing chain for plane tickets. Source: KommersantAccording to FAS, carriers should reduce the prices according to the reduction of aviation kerosene price. Airline representatives claim that their tariffs are at their minimum with negative profitability and increasing state duties.
FAS will analyze the pricing policy of Russian airlines, as Igor Artemyev, head of FAS, announced yesterday. As he noted, kerosene prices recently decreased about 30% so that the price of plane tickets should decrease at least 15%: share of the kerosene in the ticket price is about 40%.
“We’re watching how the airlines were acting. The decrease remained at 5-7%" - claims Artemyev. FAS will also check the system of ticket sales that, according to Artemyev, look like hidden commissions in the banks. He also claims that selling un refundable tickets makes no sense. "If you can return railway tickets and theatre tickets, why can’t you do this with plane tickets?", quotes Interfax.
Some of the carriers do not fully agree with Artemyev. "On routes with limited competition, such as Moscow-Paris, ticket prices do not change even if the costs are less”, comments Andrey Martirosov, General Director of UTair. He added that this is the result of applying the access system to international routes on the basis of interstate agreements. However, prices plummeted on the domestic market, with highest competition in aviation as compared to other industries. UTair, as Martirosov told, has reduced prices, including all taxes, by 20% this year. Transaero also says that prices dropped. "Since the beginning of autumn and till the end of the year, we’ve reduced prices for domestic flights by 30%; fuel charges were cancelled for flights in the CIS and to Israel however very insignificant changes in kerosene price were seen in some Russian airports", - comments Sergey Bykhal, press secretary of Transaero.
Marina Bukalova, General Director of Sky Express, notes that airlines did not manage to increase tariffs during the last year’s jump of fuel prices. “After the crisis, passenger flow fell sharply and that forced carriers to reduce prices in winter and spring". As a result, airlines were operating below production costs in autumn and the beginning of 2009 in order to “keep the passenger”, and it is now that they’re reaching the margin that still remains negative with the majority of market players”.
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