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Air Travel Costs to Rise After Fuel Price Hike

Russias already expensive air fares look set to increase and hurt the industry.

Published: August 27, 2014 (Issue # 1826)



  • According to Rosaviatsia, the last three months have seen an average rise in the cost of aviation fuel of 6 to 7 percent.
    Photo: Denis Abramov / Vedomosti

A rise of up to 7 percent in the price of aviation fuel at Russian airports since May will push up costs for domestic carriers, making Russias already notoriously expensive air fares more costly and damaging the competitiveness of Russian airlines on the international market, aviation watchdog Rosaviatsia said Aug. 21.

Rosaviatsia monitored the cost of aviation fuel in 30 Russian airports over the last three months, finding average rises of 6 to 7 percent, the agency said in a statement.

This summers sudden increase in the cost of aviation fuel was not expected by airlines and was not part of their operational plans, the statement said. The result will be increased costs for passengers, it added.

Oleg Panteleyev, head of aviation news agency AviaPort, estimated that 100 rubles ($2.77) would be added to the average standard air fare.

The share of the cost of aviation fuel in the price of a ticket is around 30 to 40 percent, Andrei Sogrin, spokesman for Russias flagship carrier Aeroflot, told the newspaper RBC Daily.

Russias second-largest airline Transaero branded the price hikes as ungrounded and said they were harmful for domestic carriers and could lead to increased ticket prices for passengers.

Panteleyev blamed the rise in the cost of fuel on seasonal factors: July and August are peak months for airlines, and the oil companies skim the cream off carriers during this period, he said, adding that aviation fuel price also tracks the price of technologically similar diesel fuel, which is now being bought up by the government for its emergency winter reserves, creating supply shortages.

Over the course of 2013, the price of aviation fuel rose by almost 4 percent.

Dmitry Baranov, lead analyst at Finam Management investment company, said that the rise in prices was exacerbated by relatively low competition in the Russian aviation industry.

There are still monopolies in some segments [of the industry]. In many airports there is still only one choice of fuel depot, and an idea to create alternative fueling centers in airports previously voiced by the government did not work out, Baranov said.





 


ALL ABOUT TOWN

Saturday, Nov. 1


The men and women who dedicate their lives to fitness get their chance to compete for the title of best body in Russia at todays Grand Prix Fitness House PRO, the nations premier bodybuilding competition. Not only will men and women be competing for thousands of dollars in prizes and a trip to represent their nation at Mr. Olympia but sporting goods and nutritional supplements will also be available for sale. Learn more about the culture of the Indian subcontinent during Diwali, the annual festival of lights that will be celebrated in St. Petersburg this weekend at the Culture Palace on Tambovskaya Ul. For 100 rubles ($2.40), festival-goers listen to Indian music, try on traditional Indian outfits and sample dishes highlighting the culinary diversity of the billion-plus people in the South Asian superpower.



Sunday, Nov. 2


Check out the latest video and interactive games at the Gaming Festival at the Mayakovsky Library ending today. Meet with the developers of the popular and learn more about their work, or learn how to play one of their creations with the opportunity to ask the creators themselves about the exact rules.



Monday, Nov. 3


Non-athletes can get feed their need for competition without breaking a sweat at the Rock-Paper-Scissors tournament this evening at the Cube Bar at Lomonosova 1. Referees will judge the validity of each matchup award points to winners while the citys elite fight for the chance to be called the best of the best. Those hoping to play must arrange a team beforehand and pay 200 rubles ($4.80) to enter.



Tuesday, Nov. 4


Attend the premiere of Canadian director Xavier Dolans latest film Mommy at the Avrora theater this evening. The fifth picture from the 25-year-old, it is the story of an unruly teenager but the most alluring (or unappealing) aspect is the way the film was shot: in a 1:1 format that is more reminiscent of Instagram videos than cinematic art. Tickets cost 400 rubles ($9.60) and snacks and drinks will be available.



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