St Petersburg airport to trial open-skies project

St Petersburg airport Russia’s transport ministry has approved a dozen out of 33 destinations suggested by Pulkovo airport for liberalisation (Pulkovo)

The Russian government has finally agreed to introduce a partial open-skies regime over St Petersburg’ Pulkovo (LED) airport – a measure which has been solicited by the airport’s operator Northern Capital Gateway (NCG) for several years as a way to boost the airport’s traffic.

Of 33 routes suggested by NCG for the so-called seventh-freedom traffic rights, the country’s transport ministry has now approved a dozen or so, reports Kommersant business daily. NCG believes such liberalisation will attract European low-cost carriers to Russia’s fourth busiest airport, a move that would drive down airfares. On the downside, the measure may also damage local airlines’ business prospects.

The nation’s vice-premier Maxim Akimov, who supervises the country’s transport industry, has expressed support for introducing the open-skies regime as a trial project at St Petersburg, Russia’s second-largest city. The seventh-freedom of the air in ICAO terms allows airlines to carry passengers or cargo between two foreign countries without any continuing service to/from the carrier’s own base country. For example, an Irish airline could launch flights between St Petersburg and Paris, without the need to transit Dublin. Fifth-freedom traffic rights, which entitles airlines to board passengers at a stopover during a flight between their country of origin and a third country, was also on the agenda, but no decisions have yet been finalised.

In July, the St Petersburg administration joined NCG in its effort to justify the open-skies case with the federal government and managed to win president Vladimir Putin’s support.

The move would enable the airport to boost its traffic by 75 per cent, bringing it to 35 million passengers annually by 2025. However, the current position is only a partial solution, as the government is also searching for a suitable compromise to protect the interests of Russian airlines.

Each of the 33 routes suggested by NCG is being negotiated separately, and only one third of the number has so far been approved. On each of them, either a fifth- or seventh-freedom is on the agenda, with secondary airports also included in the negotiations. These restrictions may take the gloss of the whole setup for foreign airlines that will also have to apply for additional approvals from national authorities on routes originating in third countries.

“We’ll test all those connections with foreign low-cost carriers and, if they pick up, in five years time we’ll either switch to Russian airlines, or stay with the foreign carriers,” Akimov explained. He also instructed NCG to work out a plan to measure passenger and tourist traffic in order to assess the new regime’s efficiency. In turn, the authorities will come up with a list of countries eligible for these liberalised flights, so that the foreign carriers could plan their operations in the long term. The list may be expanded in time, but may not shrink.

“We have never before attempted such levels of liberalisation for our [foreign airlines] competitors, but we realise the extent of support and development that this solution will offer to the city [of St Petersburg],” admitted Akimov.

Russia’s aviation authority Rosaviatsiya nevertheless insists that the liberalisation process must be balanced with the interests of Russian airlines as “the parity principle must be observed in relation to flights between countries,” a statement points out.

Industry experts see flaws in the supposed liberalisation plan associated with the seasonality of St Petersburg as a travel destination. They point out that the market may become exceedingly crowded in the summer whilst, in the winter, carriers would abandon the routes – leaving state-owned Aeroflot and Rossiya Airlines which would be forced to stay. Thus, the Russian carriers would suffer from a revenue drop in the summer and face losses in the low seasons.

It is highly probable that the proposed liberalisation may make Pulkovo more attractive for large European low-cost carriers (LCCs) and some Asian airlines, but it may also deal a blow to Russian airlines which serve a mixture of domestic and international routes and in doing so are able to partly offset their domestic programmes with higher revenue-generating international destinations.

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