Airline Fuel Crisis Closes down Flights

MOSCOW, Nov 6, 2000 -- (Concise Aerospace) Far Eastern airline Polyarny Airlines has not been flying for over two weeks with the result of almost all the region's northern airports being cut off from regional hub Yakutsk.

According to the Deputy General Director of the airline, A. Gabyshev, the company simply does not have the funds for fuel payments and is therefore unable to fly without external help. In an attempt to resolve the issue, Gabyshev has met with the Deputy Chairman of Il Tumen, the Sakha parliament, V. Filatov.

The airline's problems are a rerun of those last winter when the airline only survived fuel shortages because of some judicious reserving as product went both short and expensive. The finances of the airline have however, been rocky for some time and there are reports of unheated facilities at he end of 1999 due to the inability of the airline to pay its utility bills. Local sources attribute the airline's current situation to the regional government's policy towards air transport and Gabyshev thinks there are two ways to resolve the problem:

Compensate the airline promptly for losses as a result of price fixing by the regional government

Let the airline independently set fares, with the goal of at least breakeven

The setting of fares independently at breakeven, would however, result in fares that are considered to be beyond the reach of most of the region's residents, according to reports in the local media. The intervention of government subsidy to keep the routes going therefore appears to be the only viable option. The cost of such action to the government however, is continuing to rise, as the airline encounters increasing costs, largely the aviation fuel used by its An-2's selling at 25,000 rubles a ton, three times the price of locally available gasoline. Suggesting that the regional government has not sought to intervene and fix prices as they did last winter. Filatov is reported to have undertaken to make the region's government aware of the airline's problems and to get the government debts to the airline cleared .

The closure of Polyarny's flights has however, given an opportunity to the other local operator Yakutiya Airlines. According to the local press it is looking to start services to the region's northern airports. The latter having largely absorbed the activities of Sakhaavia, the other state controlled regional airline suggests a high level of government support.

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-- Martin Thompson (mthom1927@aol.com), November 06, 2000