Russia's Government has announced it is considering divesting part of its majority stake in Aeroflot to lower the country's budget deficit (AFP, 17-Oct-2010). Finance Minister Alexei Kudrin stated that the Government would continue to hold a controlling interest and foreign investors have already shown interest. Russia’s current budget deficit is 6.8%, which is aims to cut to under 4% through the sale of government stakes in oil companies, telecommunications, banks, railways and airlines.
Russia considers Aeroflot sale to boost budget
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Airline disruption: it will happen in the next decade - but no one is preparing for it
Why so unprepared? It seems inconceivable that the structure of an industry with so many artificial constraints can remain intact much past 70 years, while all around it has changed.
This decade alone has been witness to major disruptions in the travel and transportation industries. Most prominent have been in ride sharing – Uber – and in hospitality – Airbnb. Telecommunications, media and music industries have also been turned on their heads; banks and payments are in the firing line; retail generally is being rapidly transformed. There is scarcely an industry whose fundamental structure remains intact. Except the airline industry.
In all cases disrespectful startups, usually applying relatively simple but sophisticated IT solutions, have taken on legacy operations. The legacy industries under attack typically involve extensive capital investment, and are often characterised by significant, unhelpful, and highly intrusive government regulation that restricts competition.
Certainly the legacy airlines have had to deal with a new breed of low cost operations, long and short haul. But almost without exception those legacy operators are still there, fundamentally unchanged.
In terms of other industries, this is no more than fiddling around the margins. And time is running out.
Mongolia aviation: liberalisation, end of MIAT protection needed to drive growth at new airport
Mongolia’s stagnant aviation market is at an important juncture as the country prepares to open a new airport at the capital Ulaanbaatar in May-2018. In order to drive growth and ensure the new airport does not turn into a white elephant, the government needs to adopt a new more liberal aviation policy and stop protecting its flag carrier.
Mongolia’s international market has not grown in the past four years due, in part, to protective policies. In the latest examples of protectionism, Mongolia has refused to allow Kazakhstan’s Air Astana to launch flights and has not approved more capacity for Turkish Airways that is needed for new nonstop flights from Istanbul.
The Mongolian market has huge potential, and increased tourism would have an overall economic benefit far greater than the negative impact on the government owned MIAT Mongolian Airlines from increased competition. With the new airport about to open, it is even more crucial for Mongolia to liberalise – not only by opening up to all interested foreign airlines, but also by ending MIAT’s monopoly on ground handling services and making sure the airport’s charges are low enough to support new flights.