A Russian travel management company has warned corporate clients that a new Russian law allowing the country's carriers to sell nonrefundable tickets could raise fares for business travelers in the short term. However, Continent Express general director Stanislav Kostyashkin told BTN that a wider package of deregulation in which the nonrefundable rule change was included eventually should lead to more mature corporate agreements with Russian airlines.
The legislative changes appeared in a bill approved this month by Russia's parliament, the Duma. In addition to removing the restriction on nonrefundable fares, the law also permits the hiring of foreign pilots, liberalizes restrictions on pilots' working hours and scraps a requirement for hot meals to be served on all scheduled flights.
"It is a positive solution. Russian airlines will be far more competitive with foreign carriers," said Kostyashkin. "Russian airlines often charge very high fares compared with European competitors. You can pay $300 with Lufthansa from Moscow to Munich but $500 to $600 with Aeroflot."
However, Kostyashkin added that business travelers could lose at the expense of leisure travelers. "The new law will allow Russian airlines to have much more elastic pricing," he said. "Until now, the lowest fares have been a little higher than they could be but the highest fares have been a little lower than they could be, so passengers flying to London traveled with British Airways if they wanted the cheapest seat but booked Aeroflot if they wanted to go in business class.
"Although some nonrefundable tariffs will leak into the corporate segment, I have predicted to my corporate clients that they will be hit twice," Kostyashkin added. "There will be an increase in semi-flexible fares in premium cabins and they will have to think twice about canceling tickets, which they didn't have to worry about in the past."
Nevertheless, Kostyashkin said that "it is the wheel of history" that Russia's aviation market be liberalized. "Aeroflot was being criticized by the government for its high fares, so it said it needed the same regulatory freedom as European carriers, including offering nonrefundable tickets," he explained. The new rules also will enable Aeroflot to launch a low-cost subsidiary, Dobrolet.
Continent Express claims to be the largest independent TMC in the Russian Federation, and the first to have offered travel management services when it launched in 1997.