Russia Flights Face 25% Price Increase After Transaero Collapse

  • Aeroflot will have monopoly on Moscow-New York from December
  • London route also set to suffer from reduced competition

Flights from Russia to cities including New York will cost 25 percent more following the collapse of Transaero Airlines, according to Aviasales.ru, the country’s biggest airline search engine.

Competition provided by Russia’s second-biggest airline had helped reduce fares by about a quarter on popular international routes, Aviasales.ru spokesman Janis Dzenis said in an interview in Moscow. “Once the airline stops flights the prices may go up to the previous level,” he said.

Transaero is poised to fold after Russian No. 1 Aeroflot PJSC last week decided against extending an offer to buy a 75 percent stake for 1 ruble. The smaller carrier, its margins hit by a weak currency and slowing economy, will end all operations by Dec. 15.

Flights to New York are among those likely to become significantly more expensive, based on Aviasales.ru data. Transaero offered the cheapest January ticket at 15,000 rubles ($241), with Aeroflot selling seats from 26,600 rubles. The Russian No. 1 will have a monopoly on the route from December, when Delta Air Lines Inc., suspends services for the winter.

The London-Moscow route, which can be served by two carriers from the U.K. and two from Russia under the bilateral treaty governing access, will be reduced to just two carriers -- Aeroflot and British Airways -- following the demise of Transaero after EasyJet Plc said it would scrap flights next March amid slumping demand.

Russia’s domestic airlines may be able to take up Transaero’s route rights to the most popular international destinations with time, but are unlikely to offer comparable prices because of their smaller size, according to Mikhail Ganelin, an airline analyst at Gazprombank in Moscow.

The Russian economy shrank 4.6 percent in the second quarter from a year earlier, while the ruble is down 36 percent against the dollar in 12 months.