«We risk finding a whole bunch of real disadvantages — both for airlines and for passengers»
The State Duma plans to set upper limits on prices for air tickets. This means that the current system of dynamic, market pricing, no matter how bad and even predatory it may seem, will be replaced by directive regulation. That in reality is incomparably worse, explain the experts interviewed by MK. According to them, the innovation will create a huge tangle of problems for both air carriers and passengers.
The initiative comes from the Duma Committee on Transport. A working group of deputies intends to involve the Ministry of Transport and the Federal Antimonopoly Service (FAS) in solving the problem and, with their help, determine the price ceiling for certain categories of tickets by the end of the year. According to deputy Nikolai Kharitonov, it should be established as a priority for preferential groups of passengers and on a number of additional routes. At the same time, the parliamentarian added, the initiators took into account the arguments of the Ministry of Transport and the FAS about the increase in airline costs — on fuel, on maintenance…
It turns out that we are talking about some kind of compromise solution on the part of the state, and not about an artificial limitation on the cost of all air tickets without exception. The problem is that this scenario in itself is an interference in the market mechanisms of the air transportation sector, discrediting the dynamic pricing system.
The motive is clear: according to the results of the first quarter of 2024, the cost of domestic flights in economy class — the most popular segment of transportation — amounted to 7,015 rubles, which is 25% more than for the same period in 2023. However, the paradox is that rising tariffs do not in any way affect demand: today almost all planes are filled to capacity, passengers are ready to pay any money just to get by air to the point they need on the map.
“In fact, maximum tariffs have been applied for more than ten years, this applies to programs with a subsidized flight price from the budget — federal, regional, municipal — recalls Oleg Panteleev, director of the AviaPort agency. – That is, the state invests its own funds to compensate airlines for a certain share of costs and make air travel (for example, from the European part of the country to Kaliningrad and the Far East) more accessible to citizens. In this practice, the price ceiling is set within the program itself. In other cases, there is the “Air Code of the Russian Federation”, which clearly states: pricing is the prerogative of the carrier. There are no upper tariffs.”
Yes, the issue can be resolved legislatively: it is not difficult to make changes to the Air Code. But you need to understand what this will lead to, argues MK’s interlocutor.
“Of course, something needs to be done about prices, but not at the expense of airline revenues,” says Panteleev. – We need to look at what causes the increase in the cost of transportation, maintenance and repair, and costs at airports. Driving the industry into losses and creating a supply shortage is a simple matter, especially if you act using populist methods. But then it will have to be revived — again, at the expense of the budget and taxpayers. Since the authorities understand this, it is unlikely that the parliamentary initiative will be continued.”
According to Roman Gusarov, editor-in-chief of the Avia.ru portal, unlike the situation with the sanction ceiling on Russian oil prices, it is practically impossible to set such a limit on the cost of air tickets in the Russian Federation. It will be necessary to take into account a lot of poorly compatible data — different distances, airport fees, the price of kerosene, different aircraft with different fuel consumption and flight costs. Moreover, even on one route, carriers can use different aircraft — depending on the season, day of the week and even time of day. This is a colossal amount of work, and it is unlikely that the FAS is ready to take on such functions: there are not enough staff to calculate everything for each specific flight or direction.
“It is also impossible to guarantee that today or tomorrow oil companies will not raise kerosene prices, catching carriers by surprise and without any justification. Since such cases are not uncommon, let’s then introduce a ceiling on the price of kerosene,” says Gusarov. — Finally, the most important thing: the average bill for air tickets is formed thanks to dynamic pricing. The carrier needs to fill the flight; it is not profitable for him to fly empty. Therefore, the cheapest tickets are sold out first, and when sales cross the equator, prices begin to rise. As a result, passengers who are willing to pay dearly subsidize with their money fellow travelers whose financial capabilities are much more modest. If airlines are deprived of the right to sell expensive tickets, then cheap ones will disappear. Accordingly, socially vulnerable citizens will suffer first of all.”
That is, in pursuit of an imaginary, dubious advantage, we risk finding a whole bunch of real disadvantages — both for airlines and for passengers. In addition to the fact that the entire system of market pricing in the field of air transportation will be destroyed, the idea is also flawed from the point of view of social justice. It would be one thing if there was only one monopoly carrier in Russia, as in Soviet times. But we have more than a hundred of them, and all are in a natural competitive environment, Gusarov sums up.