Budget aviation in Russia takes another hit as Alexander Lebedev’s Red Wings gets shut down

On February 3rd Russia’s federal aviation regulator Rosaviatsia cancelled the license of low-cost carrier Red Wings, which had operated charter flights to over a dozen international destinations since 1999. The airline had operated a fleet of 10 mostly Russian-made Tu-204 passenger jets, being the largest purchaser of the plane. Red Wings had carried over 817 thousand passengers to mostly tourist destinations in 2012, making it Russia’s 17thbusiest airline.

Citing financial problems that effected safety in its report, Rosaviatsia nonetheless claimed that its decision had nothing to do with a December 29th, 2012 accident at Moscow’s Vnukovo airport in which one of the company’s planes skidded off the runway and onto a highway, killing five people.

The company is owned by opposition-leaning billionaire Alexander Lebedev, who also owns The Evening Standard and Independent newspapers in the U.K. He said the regulator’s decision had come as a surprise to him and that he would appeal to the government directly as his company is one of the largest domestic purchasers of Russian-made aircraft.

The decision comes as another blow to Russia’s nascent budget airline industry. The only other two key players, Avianova and SkyExpress, simultaneously went bankrupt at the end of 2011 (the former, despite operating flights to over 30 destinations, because of a conflict among investors). Major carriers Aeroflot and Transaero have also expressed a willingness to enter the budget segment numerous times but have never realized these plans.

Major barriers include a shortage of trained pilots (a ban on foreign pilots is pushing wages at Aeroflot up to about $13 thousand per month), lack of legislation allowing for non-refundable tickets and other no-frills options and cheap airports in the Moscow region.

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