German Gref and Andrei Kostin will fly on one wing

Sberbank and VTB will create an airline for regional transportation.
Two people close to one of these state-owned banks and two more people who knew about this from the project participants told about the government’s order to Sberbank and VTB to create an airline for regional transportation. The order was given at the beginning of the year, a business plan is now being created, the look of the future airline and options on the composition of shareholders are being determined, two Vedomosti interlocutors say. It is not yet known what the share of both banks will be and who else may become a shareholder of the new company.

The airline will be created no earlier than 2019. Its passenger traffic is planned at the level of 6-10 million people a year, continue to the interlocutors of "Vedomosti". Of course, this is a large-scale project, adds one of them. In Russia now only two players carry more than 10 million passengers - the Aeroflot group and the S7 Group (50.1 million and 14.3 million people, respectively, in 2017). The largest regional airline, Yamal, transported 1.8 million people in 2017, and 1.4 million in January-August of this year.

The project consultant selected Bain & Company, they know two interlocutors. According to the state procurement website and SPARK-Interfax, Sberbank and VTB signed consulting contracts with Bain for the same amount in September on the same amount - 55.47 million rubles. each. Documentation of the tender for public procurement was not published, only the notice of the conclusion of contracts. Bain's work should finish by December 31st. Taking into account the Bain project, the composition of the airport network for the airline will be determined which airports will be (ground for small aircraft or in large cities for main vessels), which vessels will form a fleet, says one of the Vedomosti interlocutors.

Regional transportation (between Russian cities, bypassing Moscow) became one of the topics of the May decree of Russian President Vladimir Putin: he commissioned by 2024 to increase their share in domestic flights to 50%. In 2017, it was only 23%, said Alexander Fridland, a professor at the State Research Institute of Civil Aviation. To fulfill the decree, regional transportation will have to be tripled, because flights from Moscow will also grow. In April, the Federal Air Transport Agency estimated costs in 2018–2024. to implement the decree of 182.4 billion rubles., including 113 billion rubles. - to restore the network of airfields. At the end of September Rosaviatsiya reported that the plan includes 65 airports (including 38 in the Far East), and 166 billion rubles will be required for their reconstruction.

Representatives of Sberbank, VTB and Bain declined to comment. Representatives of the Ministry of Transport and transport supervising vice-premier Maxim Akimov did not respond to requests from Vedomosti.

In summer, Aeroflot CEO Vitaly Savelyev said that Aeroflot will also develop regional hubs, now all airline flights begin or end at Sheremetyevo. The projects of banks and Aeroflot are in no way connected, says one of the interlocutors of Vedomosti.

“The decision to entrust this project to banks looks strange,” argues Aton analyst Mikhail Ganelin. “Probably they proceeded from the fact that there is no one else, and Sberbank and VTB have the funds, their leasing companies and a lot of experience in aviation leasing.” The participation of banks can be limited to the development of the project, because the arrival of such players would worsen the conditions of competition in an already difficult market and would damage the banks themselves, he adds.

“It is necessary to create a regional transportation development strategy and, based on it, choose priority mechanisms: resetting VAT on flights, bypassing Moscow (planned from 2019 - Vedomosti), subsidizing regional lines, supporting existing regional airlines or creating new ones,” says Researcher at the Institute of Transport Economics Fedor Borisov. The new airline should become a commercial project in order to maintain competition, and not to undermine it, adds Borisov.