The prospect of open skies in St Petersburg sparks excitement around Europe

The prospect of open skies in St Petersburg sparks excitement around Europe

Europe’s largest budget airlines—Ryanair, EasyJet and Wizz Air—are rushing to establish direct connections to St. Petersburg after the Russian city’s Pulkovo Airport indicated it would soon be the first Russian airport to offer “seventh freedom flights.”

So-called seventh freedom flights allow international carriers to operate direct flights without passing through their country of registration. In practice, for example, this means Irish airline Ryanair, currently only allowed to operate direct flights between Ireland and St. Petersburg, could soon open up direct flights between Paris or London and the Russian city.

As well as Ryanair, Britain’s EasyJet and Hungary’s WizzAir have applied to operate direct flights between Pulkovo and 33 countries—and other European airlines may be quick to follow. “These are the [airlines] that reacted first before the official announcement of the initiatives. In practice, the real demand will be greater,” Leonid Sergeyev, head of Pulkovo Airport’s managing company Northern Capital Gateway, told Russian media.

According to a spokesperson, Pulkovo could be allowed to operate seventh freedom flights for a five-year trial period. At the end of the five years, these routes could be “either handed to Russian airlines or stay with the foreigners.”

Underpinned by a broader push to facilitate tourism

Deputy Prime Minister Maxim Akimov backed the proposal last month, hailing the seventh freedom plan as “unprecedented for Russia”, while the plan also has the support of St. Petersburg officials who are hoping the initiative will greatly increase tourist numbers in tandem with a new e-visa system.

President Vladimir Putin has promised to offer e-visas to foreign visitors from select nationalities from 2021, in what is no doubt a bid to collect $15.5 billion in annual tourism revenue by the end of his current presidential term in 2024. Travellers from around the world have frequently pointed to difficulties in obtaining visas as a major roadblock thwarting their plans to visit Russia.

The 30-day e-visa program went into effect in St. Petersburg and the surrounding Leningrad region on 1 October, and is expected to extend to the rest of the Russian Federation in January 2021. Hopeful tourists will be required to apply for e-visas on the Russian Foreign Ministry website no later than four days before their arrival; applicants will not be charged a consular fee.

Russian airport operators poised to take advantage

This unprecedented liberalisation of Russian skies is not without its critics. Russian airlines in particular have voiced concerns that they will lose their competitive edge against foreign competitors. Russia’s aviation authority Rosaviatsiya has accordingly called for the liberalisation process to be balanced with the interests of Russian airlines, citing the need for the parity principle to be “observed in relation to flights between countries.” Still, there is hope that other countries will match the move St. Petersburg is contemplating by offering Russian airlines similar benefits abroad.

Meanwhile, a number of other companies are set to come out on top from the reform. Airport operators are clearly in a good position to take advantage of the new freedoms. Northern Capital Gateway (NGC), which controls Pulkovo, has been pushing for seventh freedom flights for several years as a way to boost airport traffic.

In the same way, major regional airport operator Novaport, one of Russia’s largest and fastest-developing regional airport operators in the country, stands to benefit from the ongoing liberalisation. As of December 2018, the company holds a major equity stake in 14 regional airports across the Russian Federation: Novosibirsk, Chelyabinsk, Volgograd, Tomsk Astrakhan, Chita, Tyumen, Perm, Murmansk, Kemerovo, Kaliningrad, Mineralnye Vody, Ulan-Ude, Vladikavkaz and owns minority interests (48-49%) in Barnaul and Stavropol airports.  Novaport’s airports in Kaliningrad and in Siberia’s Ulan-Ude, near tourist hotspot Lake Baikal, are two of the four Russian airports who have already been granted fifth freedom flights— allowing airlines to pick up passengers at a stopover between their country of origin and their destination.

Sources at Ulan-Ude airport say the destination is enjoying particular interest from Asian carriers, such as those from South Korea, Mongolia and China—unsurprising since it’s the closest international airport in Russia to the Mongolian border. Kaliningrad’s airport, meanwhile, has benefitted from a major overhaul by Novaport which more than doubled its size and could set it up to become a major hub for flights between Europe and Asia.

Novaport and its shareholders are, predictably, in favour of the movement towards welcoming foreign firms into Russia’s aviation industry. As Yevgeny Feld, founding principal of Meridian Capital Limited, a Hong Kong-based investment firm which holds 50% of Novaport, put it: “We are extremely supportive of the on-going liberalisation of Russia’s skies. Novaport continues to devote significant resources to the modernisation of regional airport infrastructure and believes that the potential impact on economic development is enormous”.

Tourism boost

Local tourism authorities are likely to agree that the move to open up may herald economic development for their regions, as the removal of barriers to travel has been shown to boost visitor arrivals and regional GDP. In the Ulan-Ude airport near Baikal, for example, annual passenger traffic is expected to reach up to 1 million in just a few years, mainly thanks to high interest from tourists in China and Southeast Asia.

Similarly, the Sochi region has enjoyed a boost since the Sochi International Airport acquired Open Skies status in 2015. While the airport managed to cope with Olympic-sized intake when over 600,000 guests and participants arrived to soak in the 2014 Winter Olympic and Paralympic Games, the years since have seen foreign airlines operate transit flights between countries with a stopover in Sochi. The initiative has been a resounding success: 100,000 additional international tourists have passed through the airport, and some 13 percent of Sochi passenger traffic is now made up of international passengers.

The liberalisation of Russia’s skies bodes well for the country’s tourism industry, and airlines and airports alike should be welcoming the move with open arms. Travellers certainly will be.

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