People keep asking me (as a former member of Aeroflot’s board of directors) what I think about the Dobrolet–Aeroflot situation.
Here’s what I think:
First, a description of the situation: Dobrolet (an Aeroflot subsidiary) was operating flights to Crimea, and therefore was hit with sanctions, which effectively destroyed the project by making its business model unworkable.
Russia says that in response it will close so-called “Trans-Siberian overflights” to foreign carriers. These routes allow foreign airlines to save a great deal of time and fuel. We get paid overflight fees for this, but foreign carriers benefit far more than they pay.
Aeroflot’s shares fell on this news, because it is the company that receives most of these overflight royalties.
I think this is all extremely dangerous, ill-considered nonsense that will hurt us badly. The government’s job should be to keep civil aviation in general—and Aeroflot and these royalties in particular—as far away from this political dispute as possible.
It’s important to remember that (a) these royalties are basically a lucky historical relic for Russia, the result of successful negotiations in a favorable historical context. Other countries and airlines are constantly raising the issue of getting rid of them. If we shut down Trans-Siberian overflights now for political reasons, then in a year or two we’ll reopen them anyway—but without the royalties;
(b) Aeroflot is not the only one receiving this money (though it gets the largest share). The amount varies from year to year. Aeroflot—and the government—treat it as secret, so I won’t name the figure either, even though everyone knows it. The estimates in this article look accurate.
(c) Aeroflot is constantly at odds with the Transport Ministry over this money, and it’s important to understand that the company gets it only in exchange for being saddled with idiotic political projects that are completely unprofitable for the airline. - Buy Sukhoi Superjets, and we don’t care that they cost money but don’t fly. - Medvedev thinks ticket prices to Sochi (or Vladivostok / St. Petersburg) should be lower. - Buy up and cover the debts of loss-making airlines in the Russian Far East. and so on.
Some of these projects have at least some rationale, and Aeroflot is simply acting on behalf of the state, handing out subsidies; others are pure arbitrary stupidity. Aeroflot could refuse the royalties, but then the whole arrangement would collapse.
(d) Civil aircraft manufacturing was a genuinely competitive industry in the USSR, but now it has been almost completely destroyed—and the “credit” for that belongs specifically to Putin’s government, which looted everything and let everything fall apart. You can’t pin this one on Yeltsin or Gorbachev. Plenty has been written about it; you can find it yourself.
Right now, Russian civil aviation is TOTALLY dependent on the West. That dependence needs to be overcome, but it will take decades (if we even start, which we are not). It’s a complex industry with enormous competition. Building competitive civilian aircraft is harder than building military ones.
You often come across all kinds of nonsense like, “We’ll just switch to the Sukhoi Superjet,” or “But they did build a plane.” No one is going to switch to the Superjet. For now it is unprofitable (it breaks down), and there are no major prospects in that sense; most importantly, this decent aircraft—even if and when it is finally finished—will cover only one of the many niches in air transport. As for “but they built such-and-such a plane,” there is an enormous gulf between a single aircraft and the production of several that are actually fit to fly.
(e) Aeroflot is one of the few companies operating under real international competition and subject to a huge amount of international regulation. Any attempt to “stick it to” foreign carriers will result in us getting hit so hard we won’t know what hit us. The EU can also call in its own “Onishchenko” (a reference to Gennady Onishchenko, the Russian official known for politically motivated bans) if it wants.
(f) These flights to Crimea—loss-making for Dobrolet and unnecessary for it—were a purely political scheme that Aeroflot had no way of wriggling out of. In effect, the government set the company up, since the possibility of exactly this kind of sanctions was pointed out from the start.
(g) Obviously, by the rules of diplomacy, Russia has to respond somehow to these sanctions. Fine—but it should respond where we won’t get painfully smacked down right away. For example, let Channel One (Russia’s main state TV channel) stop buying foreign TV series and licenses for entertainment shows.
In summary: civil aviation is not the sector into which we should be dragging political score-settling and macho posturing. We are in no shape here to measure ourselves against anyone. Banning foreign carriers from Trans-Siberian overflights would amount to punishing Aeroflot twice: first it was pushed into sanctions, and then we “retaliated” for those sanctions by depriving it of royalties.
To all the belligerent guys who want trade wars, sanctions wars, and other kinds of conflict with Europe and the United States, I recommend looking at this picture more often:
If we want to take part in—and win—“sanctions wars,” then we need to grow the size of our economy. We need development, economic growth, and investment. Stop stealing people’s pensions, and make the courts honest.
Unfortunately, you cannot build your own aircraft—and tell the Europeans to go to hell—by means of TV propaganda.