{"id":591,"date":"2016-05-17T10:42:31","date_gmt":"2016-05-17T08:42:31","guid":{"rendered":"http:\/\/www.aviationadvocacy.aero\/blog\/?p=591"},"modified":"2019-07-23T11:46:02","modified_gmt":"2019-07-23T09:46:02","slug":"airlines-continue-to-tolerate-legacy-subsidies","status":"publish","type":"post","link":"https:\/\/www.aviationadvocacy.aero\/blog\/?p=591","title":{"rendered":"Airlines continue to tolerate legacy subsidies"},"content":{"rendered":"The Russian economy is struggling. Falling oil prices, economic sanctions and the decline in the value of the Rouble\u00a0have pushed the country into recession. Fortunately its national airline, Aeroflot, can still count on a steady income stream, thanks to the overflight fees it levies on foreign airlines flying across Russian airspace.\r\n\r\nAeroflot has had the right to levy overflight fees on airlines using the trans-Siberia route since the Soviet era. Various reports have put this as being worth anything between $170m and $420m a year. Given that\u00a0Aeroflot’s\u00a0reporting\u00a0operating profits have often been less than $200m in recent years, these fees can be the difference between making a\u00a0profit or\u00a0a loss.\r\n\r\nFollowing negotiations between the European Commission and Russia, overflight\u00a0payments to Aeroflot were supposed to have been phased out by 1 January 2014. It was agreed that overflight fees would not to be abolished entirely, but replaced with a cost-related and transparent fee that was payable only to the responsible authority, namely the Russian Air Navigation Service Provider.\r\n\r\nThat date came and went. The Russian Vice-Minister of Transport then promised to implement the agreement by mid-2014. That deadline was missed too. As of February this year, the agreed process to phase out overflight fee payments to Aeroflot has still to be implemented. The European Commission is not happy<\/a>.\r\n\r\nThe airlines have been very quiet on this issue. This is not a surprise.\u00a0Aeroflot poses no great competitive threat, and therefore such subsidies can be safely ignored.\r\n\r\nMore importantly, the airlines\u00a0fear that any criticism of the Russian government\u2019s policy on this issue could lead to them not being able to use the trans-Siberian airspace.\u00a0On nonstop flights between Europe and Asia, the trans-Siberia route is estimated to save up to four hours of flying time. As the aviation industry knows too well, time is money. One estimate is that Lufthansa alone would lose $4 billion a year if it could not use the trans-Siberian routes.\r\n\r\nThe European Commission is on its own here. In the meantime, we are adding this\u00a0to our growing list of\u00a0airline subsidies\u00a0that are\u00a0acceptable to the aviation community.","protected":false},"excerpt":{"rendered":"

The Russian economy is struggling. Falling oil prices, economic sanctions and the decline in the value of the Rouble\u00a0have pushed the country into recession. Fortunately its national airline, Aeroflot, can still count on a steady income stream, thanks to the overflight fees it levies on foreign airlines flying across Russian airspace.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[13,15,12],"tags":[],"class_list":["post-591","post","type-post","status-publish","format-standard","hentry","category-air-traffic-management","category-airlines","category-competition"],"_links":{"self":[{"href":"https:\/\/www.aviationadvocacy.aero\/blog\/index.php?rest_route=\/wp\/v2\/posts\/591","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.aviationadvocacy.aero\/blog\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.aviationadvocacy.aero\/blog\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.aviationadvocacy.aero\/blog\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.aviationadvocacy.aero\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=591"}],"version-history":[{"count":4,"href":"https:\/\/www.aviationadvocacy.aero\/blog\/index.php?rest_route=\/wp\/v2\/posts\/591\/revisions"}],"predecessor-version":[{"id":595,"href":"https:\/\/www.aviationadvocacy.aero\/blog\/index.php?rest_route=\/wp\/v2\/posts\/591\/revisions\/595"}],"wp:attachment":[{"href":"https:\/\/www.aviationadvocacy.aero\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=591"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.aviationadvocacy.aero\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=591"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.aviationadvocacy.aero\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=591"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}