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Russia May Expand Regional-Plane Fleet to Evade Crimea Sanctions

Aug. 14 (Bloomberg) -- Russia may boost regional aircraft production to create an airline providing flights to recently annexed Crimea after the discount operator that had offered services there was grounded by European Union sanctions.

The government is looking at reviving output of Ilyushin Il-114 turboprop planes while evaluating the plan for an airline serving Crimea with Russia-produced aircraft, Deputy Prime Minister Dmitry Rogozin said on his Twitter account yesterday.

Russia became a target of U.S. and EU sanctions after its annexation of Crimea from Ukraine in March. Retaining an air link is seen as vital since the territories lack a land border, while catching a ferry through Kerch strait can take more than a 24 hours because of traffic jams that saw as many as 2,700 cars waiting to board today, according to Rossiyskaya Gazeta.

OAO Aeroflot’s Dobrolet unit, Russia’s first low-cost carrier, was grounded on Aug. 4 after commencing flights in June as EU measures compelled companies to halt provision of services including leasing and insurance.

The airline, which served Simferopol in Crimea, has a handful of Boeing Co. 737-800 single-aisle jets in the fleet out of 12 on order and has said it intends to purchase 16 more.

The Il-114, which seats about 65 people and can fly no further than 1,500 kilometers (930 miles), was made in Uzbekistan until 2012, when manufacturing stopped.

President Vladimir Putin this week ordered a study into the resumption of the plane’s production at the Aviakor plant in Samara, southeast of Moscow, controlled by billionaire Oleg Deripaska. Results of the assessment are due next month.

Elena Tikhonova, a spokeswoman for Russian Machines, which manages Aviakor, declined to comment on the issue, as did Nikita Anisimov, Rigozin’s spokesman.

Russian carriers S7 and Orenair, another Aeroflot unit, still fly to Crimea, with their services there long pre-dating the peninsular’s annexation.

To contact the reporter on this story: Yuliya Fedorinova in Moscow at yfedorinova@bloomberg.net

To contact the editors responsible for this story: John Viljoen at jviljoen@bloomberg.net Christopher Jasper, Robert Valpuesta

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