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EBRD participates in launch of Russia’s 1st budget airline
Bank takes 20 percent stake in Sky Express low cost carrier
The European Bank for Reconstruction and Development is participating in the
launch of Russia’s first budget airline by acquiring an equity stake in Sky
Express. The privately-owned airline aims to revolutionise the Russian
domestic transport market by offering low-priced internal flights on modern
and comfortable western aircraft, using innovative marketing techniques and
making tickets affordable.
The Bank’s initial investment in Sky Express is $10 million, but this is
envisaged to rise in several stages and could go up to $20 million. The
airline’s start-up capitalisation is $48 million. The other shareholders
include Boris Abramovich, director-general of Krasnoyarsk Airlines, Russia’s
third largest carrier.
The launch of this low cost airline, whose prices will compete with those for
train journeys in a country which is the world’s largest landmass, is vital
for stimulating competition in the Russian air transport sector, a process
which should both yield benefits for users and help push the consolidation and
modernisation of the industry, said Riccardo Puliti, Director of the EBRD’s
Transport team.
The EBRD particularly welcomes company’s commitment to implement training
programmes which will enable it to meet international safety standards. Under
the terms of its agreement with the Bank, Sky Express will be operating in
compliance with Russian and international environmental standards, including
in the sphere of fuel consumption, engine emissions and noise.
Sky Express has said it would operate a fleet of six airliners by April 2007,
initially from Moscow’s recently-modernised Vnukovo airport, and plans
further, rapid expansion. A train shuttle and improved road links connect
Vnukovo to the centre of Moscow. The airline’s aim is to fly to the main
Russian cities and it does not have any plans to operate abroad.
It is also targeting increased efficiency and punctuality by being the first
Russian airline to set the turnaround time for its flights at 35 minutes.
Sky Express’s plans include rolling out Russia’s first ticket-less technology
in 2007 and selling pre-paid cards which customers can use to book flights
over the telephone. It has also negotiated a marketing agreement with the
Russian post office, VTB, one of the country’s main banks, and Euroset, one of
the biggest Russian commercial retailers, giving it a huge number of outlets
throughout the country where customers can buy tickets.
By the end of 2007, Sky Express aims to secure a market share of about seven
percent in Russia and hopes to boost this to 25 percent over the longer term.
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