Russian Transport Ministry proposes cutting import duties on foreign planes

AP Worldstream; Sep 01, 2006
ALEX NICHOLSON

Russia’s Transport Ministry will propose cutting or scrapping import
duties on foreign aircraft, a spokeswoman said Friday, a day after the
prime minister called for overhauling flight safety standards for
Russia’s aging civilian air fleet and airports.

A proposal to change the unpopular 20 percent duty on imported foreign
aircraft would be submitted to the government later Friday, a ministry
spokeswoman said, speaking on condition of anonymity because the
proposals had not yet been submitted.

The ministry is hoping to have the tax eliminated altogether, she
said.

Aviation experts have said the import duty has put planes such as
Boeing and Airbus out of the reach for cash-strapped airlines, forcing
them to buy aging foreign planes or domestic aircraft. In the past,
only national flag carrier Aeroflot and private carrier Transaero have
been given state breaks to purchase new foreign jets.

The proposal also calls for building additional runways at 12 Russian
airports, including Moscow’s Sheremetyevo and Domodedovo and
St. Petersburg’s Pulkovo airports, the ministry spokeswoman said.

More than 400 people have died in the past year in a series of airline
crashes involving the airline industry in Russia and other ex-Soviet
republics, prompting government officials to call for better safety
standards.

Prime Minister Mikhail Fradkov on Thursday told a Cabinet meeting on
flight security that Russia should not rely solely on new foreign
planes, but needed to quickly reform its struggling aviation sector
and accelerate homegrown production.

Despite a substantial production capacity, Russian factories produced
just a handful of civilian aircraft last year, while Russian airlines
imported 20 used foreign jets. In total, 200 foreign aircraft are used
by Russian airlines, the Vedomosti business daily reported Friday.

Russia also lacks an affordable leasing system that would allow
companies to acquire new Russian planes, meaning companies typically
chose instead to buy older foreign or domestic jets.

In a bid to boost domestic production, the government is pushing ahead
with the creation of a national aircraft holding company to unite
Russia’s civilian and military producers under one corporate roof. The
United Aviation Corp. has been promised hefty state funding and will
be 75 percent controlled by the state.

Last week, a Tu-154 jet belonging to Russia’s Pulkovo Airlines crashed
in Ukraine after encountering a storm, killing all 170 people
aboard. In July, an Airbus A310 belonging to Russian airline S7
skidded off a runway and burst into flames in the Siberian city of
Irkutsk, killing 124 people.

In May, an A320 belonging to the Armenian airline Armavia crashed into
the Black Sea in rough weather while trying to land in the Russian
resort city of Sochi, killing all 113 people aboard.