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Leonid Bershidsky

The Russian Airline That Was Too Big to Fail

Transaero's state-sponsored rescue will only make things worse.
Aeroflot's a growing family.

Aeroflot's a growing family.

Photographer: Miguel Medina/AFP/Getty Images

The board of Aeroflot, Russia's flag carrier airline, is expected Thursday to approve the purchase of three-quarters of its biggest private competitor, Transaero, for the princely sum of one ruble (less than two U.S. cents). The de facto government rescue is a symptom of Russia's crisis in domestic demand, and of a misplaced faith in state interference that is deepening the country's economic problems.

I first wrote about Transaero in 1994, the year after it became the first Russian airline formed independently of the former Soviet state carrier to run scheduled flights. "Transaero: New King of the Skies," said the headline. That may have been a bit starry-eyed, but Transaero, indeed, represented a stark contrast to the Aeroflot splinters, known as "babyflots," which plied the country's domestic routes using old, unreliable Soviet-made planes.