<B> On Supporting Russia</B>
By Les Baker
<i>Les Baker is vice president of Prism Group Inc., a management consulting and technology company in Albuquerque, N.M.</i>
A stable, democratic Russia provides lasting benefits for Russians, world economic growth and peace. Having recently returned from Russia, I am concerned about the Russian travel market. Currently, 30 percent of the Russian population is under the poverty level of $32 per month. Barter has replaced currency for 75 percent of all transactions and one of the largest companies, Gazprom is paying its $1 billion tax bill in food. Hotel occupancy in Moscow and St. Petersburg is down from October's 80 percent average rate to 20 percent. Restaurants are empty.
The travel industry provides a rare opportunity for Russians to obtain hard currency, but our policies may well further the country's collapse.
Russian aerospace is one of the few solid industries that remain. However, U.S. banks have financed Aeroflot's $350 million loan with loans guaranteed by the Export-Import Bank. Aeroflot has a hodgepodge fleet from every western manufacturer. Meanwhile, three dozen Russian-built Aeroflot planes lay idle in local airports.
Attempting to fly Delta home a day early on standby, I ended up using Plan B, Aeroflot. No one spoke English at the Aeroflot counter. The lowest fare turned out to be a roundtrip excursion, and the Aeroflot agent winked at me regarding the return date. The flight was one-third full, with two passengers in business class and none in first. Only three Americans were on the flight. Cabin service, however, was acceptable.
Aeroflot, with 68 percent of the Russian market, has just reduced its schedule by 25 percent. Transaero, the number-two Russian carrier, has reduced service by 30 percent. In early November, Aeroflot announced a $260 roundtrip fare, from Moscow to New York/Washington/Chicago.
Aeroflot is probably the largest air carrier with no airline partners, and it has no corporate business product, connecting feeder system or frequent flyer program. Few travel managers or agencies consider it, despite its 3.9 million passengers, service to 147 destinations in 77 countries, and 14,000 employees.
International carriers have completely outmarketed the former communists. The Russian economy will continue to deteriorate, and Russians will not be able to purchase Western products, including airline tickets, for some time.
A few simple steps would help. English-speaking staff, signs and information desks are necessary at major airports. A typical example: Luggage carts can be rented, in rubles only, on arrival in Moscow, but there is no exchange facility in the baggage claim area.
Taxis controlled by organized crime charge exorbitant prices, with no alternative. Switching from the international to the domestic terminal at Moscow, immediately across the runway, is a $30 cab fare.
Is our idea of supporting the Russian economy to sell Western products, which it can not pay for? If yes, it will indenture the Russian people and diminish their credit worthiness. Travelers, by omitting Russian travel providers, help stifle any hope for Russian economic recovery.
Marketing is an emerging science in Russia. Western airlines' marketing expertise, through alliances and infrastructure development, could contribute to stability and opportunity.