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Russia watchdog seeks to strip Aeroflot of royalties

Published 06/09/2009, 09:26 AM
Updated 06/09/2009, 09:32 AM
EXAH
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MOSCOW, June 9 (Reuters) - Russian airline Aeroflot would be partly stripped of its prized overflight royalties under a proposal submitted to the government by the Federal Anti-Monopoly Service, the Interfax news agency reported on Tuesday.

The move could be the latest step in the government's effort to tighten its grip over the aviation industry, after it ousted the veteran chief executive of state-controlled Aeroflot, Valery Okulov, in March.

Citing the deputy head of the anti-trust watchdog, Anatoly Golomolzin, the news agency said the goal of the proposal was to redistribute the royalties, which analysts value at around $300 million per year, among various Russian airlines.

"Anti-monopoly officials do not have the authority to take away the royalties completely. Our aim is to ensure a level playing field for Russian aviation firms," Golomolzin told Interfax. He added that his agency's proposal had been submitted in a letter to Prime Minister Vladimir Putin's government.

Okulov, who had run Aeroflot for more than a decade, had been critical of the government's newly created carrier, Russian Airlines, a powerful new competitor for Aeroflot which he called a "pyramid scheme".

Analysts have said part of the motivation for creating Russian Airlines was for the state to get closer control of the royalties.

Russian Airlines is a unit of Russian Technologies, an industrial conglomerate wholly owned by the state and run by Putin's close ally Sergei Chemezov.

It was created in November last year, mainly by cobbling together about a dozen airlines bankrupted by the financial crisis.

The exact mechanism for redistributing the royalties, which airlines currently pay to Aeroflot for flying over Russia, is to be determined by the relevant government ministries and oversight agencies, Golomozin said, Interfax reported. (Reporting by Simon Shuster; Editing by Rupert Winchester)

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