Russia's economic policy committee of the State Duma, the lower house of Russia's parliament, submitted a bill intended to amend the legislation on competition and natural monopolies in Russia to limit the maximum share of any airline on the domestic market to 25% (RIA Novosti/Kommersant, 07-Apr-2011). The amendments to the legislation may be approved by the Duma by the end of 2011. There are currently no local airlines in Russia with a domestic market share of more than 25%. The largest carrier in the market, Aeroflot, accounts for around 15% of domestic market share. However, the carrier has claimed the bill in its current form may jeopardise the company's plans to become a global Russian airline. "These amendments, after Russia's accession to the World Trade Organisation, will not allow Aeroflot to compete with the world's other largest airlines," the carrier said. The committee also reportedly instructed the Federal Anti-Monopoly Service to work out common air ticket pricing criteria for all airlines and admit foreign companies to the domestic market, if the demand for air tickets exceeds supply. The Service stated it is not against the bill but added that it had not taken any part in its development. It also said that the country's regulatory base had to be improved to resolve the problem of prices on domestic services.
Russia may admit foreign airlines to domestic market
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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.
Aeroflot Group's transformation: driven by strategic refocus, guided by the hand of Russian State
In recent years, the Aeroflot Group has undergone a significant transformation. From 2009 to 2016 the group's passenger numbers increased fourfold, its load factor improved by 11.3ppts and its revenue grew almost five times.
During this time the group's structure has moved from one of non integrated subsidiary airlines to a clearly focused multi brand approach targeting different market segments. The Aeroflot Group has also refocused its fleet strategy, reducing the number of aircraft types from 18 in 2011 to seven in 2016.
Some measure of the success of Aeroflot's transformation, beyond the obvious growth in scale, can be seen from its improved financial results. In 2016 it reported record profits, in spite of a second successive year of a shrinking economy in Russia. These results were helped by lower fuel prices and by currency movements, but Aeroflot Group's operating margin of 12.8% was better than those of other major European legacy airline groups.
Aeroflot's achievements also owe much to the government directed consolidation of the Russian market in recent years. Indeed, the Russian government's influence has long been a guiding force in Aeroflot's development.