Flying mood: the government will support air transportation
Russian Prime Minister Mikhail Mishustin has signed a decree according to which 3.5 billion rubles will be allocated to support air transportation by the end of the year. The funds will be used, among other things, to subsidize air travel for beneficiaries from remote and hard-to-reach settlements in the Far East and other parts of Russia. They are needed to cover the costs of organizing such flights from February 1 to July 31, 2024. Izvestia has investigated whether there are enough subsidized tickets and whether the list of destinations financed by the state can be expanded.
Main directions
Currently, only within the framework of the decree of 25.12.2013 № 1242 in the register are 297 subsidized routes (and in total there are more than 400 at the federal level), reminded "Izvestia" senior researcher of the Center for Spatial Economics of the Presidential Academy Andrei Makarov. At the same time, the list is constantly being adjusted, so, only at the beginning of the year 28 new routes were added
- In fact, both routes with a length of more than 4 thousand kilometers (for example, from Novosibirsk to the Czech Republic) and quite short routes (Irkutsk - Ulan-Ude) are subsidized. There are three federal subsidy programs in place (flights between regions without connecting in Moscow, subsidized routes in the Far Eastern Federal District, and a program for transportation of socially vulnerable groups of citizens), with federal funding exceeding RUB 25 billion in 2024, but it is necessary to take into account the significant role of regional flight subsidy programs as well. Tax benefits were extended until January 1, 2028, namely VAT at 0% for transportation of passengers and baggage through airports of the Far Eastern Federal District, Crimea, Sevastopol, in the Moscow air hub VAT was reduced to 10%, - said the expert.
According to the Ministry of Transport, the number of subsidized air routes has increased by 1.5 times over the past 6 years. The number of subsidized passengers has tripled. According to forecasts, by the end of the year their number may approach 4 million. According to some expert estimates, half of the routes could be closed because of low profitability in the absence of subsidy programs, said Andrei Makarov. In general, in the first half of 2024, airfares rose by 20% (over 1,500 rubles), which exacerbates the problem of inaccessibility of tickets at market price for residents of relatively small Russian cities.
Main challenges
- Among the challenges are the following. First, the risks of reduced funding. For comparison, 27 billion rubles have been allocated for subsidies in 2022, in addition, we must also take into account the inflation tax for this time. It is also necessary to take into account that the actual inflation for airlines may be higher given the dependence on foreign components and the process of ruble devaluation, - said Andrei Makarov.
The airlines themselves noted the high differentiation of the subsidies provided, which could differ many times on different routes. In this situation, according to the expert, taking into account the risks of further reduction of budget funding, on the one hand, it is possible to recommend a thorough expert and public discussion to select those routes that should be provided with substantial subsidies in the first place. On the other hand, it is possible to increase the flexibility of subsidies in terms of taking into account seasonal fluctuations in demand. Another direction is the combination of subsidized and commercial transportation, when transportation to the nearest large air center is subsidized and then the passenger is transported on a "regular" flight that pays for itself.
Another possible direction for improving the state program is the development of subsidizing flights not between regions, but within the region, believes Andrei Makarov.
- For example, this is relevant for Yakutia and other large regions with difficult ground connections, where aviation, including small aviation, may be in demand for access to health care facilities and other social objects. Researchers note that such areas are characterized by low population density and solvency, which may mean that it is impossible to develop small aviation on a market basis, while the average age of the fleet in small aviation is estimated at 20-40 years, which raises the question of state subsidies not only for flights, but also for fleet renewal," he said.
Price change
The 3.5 billion rubles is likely to be allocated primarily because of the rise in the price of aviation fuel and air services in general, said Alexei Stepanov, professor of the Department of Transportation Complexes Management at the State University of Management.
- On the other hand, the flows are increasing due to the fact that the price of subsidized tickets is decreasing, so since this year even less people started to travel abroad, Russians began to use domestic tourism more often, so there is also an increase. But not all categories are eligible for subsidized tickets and not all destinations," Alexei Stepanov told Izvestia. - One of the directions that will be subsidized is direct flights between regions, bypassing Moscow. That is, it unloads [the capital's airports] and loads the regional network so that it works as well. In principle, this is the right decision: we reduce the cost of travel, because we don't have to come to Moscow and fly somewhere else. Naturally, there are still Kaliningrad and the Far East and, accordingly, the categories to which tickets are subsidized.
It is impossible to calculate exactly whether these funds will be enough or not, but the program will work for the next period, says Alexei Stepanov. The implementation of this program allows to develop air transportation, to make it more efficient not only for airlines, but also for passengers, because they can pay less for travel. If Russian citizens will pay less, then, accordingly, they will fly more often and farther, and this creates economic incentives for the development of local industry, local services and so on. The flow of tourists will be increased, which creates opportunities for the territories to increase local incomes.
Subsidizing air travel to certain destinations is primarily aimed at ensuring transport accessibility of remote regions. Within the framework of this concept, significant changes in the list of destinations and the amount of subsidies are unlikely, Alexander Gushchin, senior director of the corporate ratings group of ACRA, told Izvestia. Besides, there are no facts indicating the government's plans to revise the state support of the aviation industry.
Allocation of additional funds may support the population in terms of restraining prices for subsidized tickets to the Far East. However, for the industry, these amounts cover the expenses already incurred by airlines for passenger transportation and the missing revenue to compensate for operating expenses, Elina Kulieva, senior director for corporate ratings at Expert RA agency, told Izvestia.
"Izvestia sent a request to the Ministry of Transport, but at the time of publication no response had been received.
Переведено сервисом «Яндекс Переводчик»
