Can Air India finally merge by agreeing union representation and will Russia cut off Trans-Siberian cash flow to Aeroflot?

Victoria
By Victoria August 5, 2014 08:16

Can Air India finally merge by agreeing union representation and will Russia cut off Trans-Siberian cash flow to Aeroflot?

As Air India looks to hire an additional 225 cabin crew there is cheer to be had in the possibility that the airline might be able to successfully move forward with its plans to cut union power. Air India is to conduct elections among its 15 labour unions with the aim of electing five out of the 15 unions — two for the airline and three for its engineering and ground-handling units. This move will be a significant step in merging the two employee bases from what was Air India and Indian Airlines, something that should have been done many years ago.
 
The conflicting wishes of the 15 unions have delayed and shelved many plans over the years to bring in a common salary and career progression structure. If Air India can manage this process to fruition then it will be a significant step towards finally merging the legacy staff from the two airlines.
 
Meanwhile in Russia authorities have re-iterated their threat from March 2014 to restrict or even completely prohibit transit flights by European carriers, en route from Europe to Asia, through Russian airspace. See our in-depth comment on this issue from March 2014.
 
According to Russian media, the Russian government is currently conducting internal consultations between the Ministry of Transport and the Ministry of Foreign Affairs on the matter. But Moscow’s hand is being stayed by the fact that any such move will negatively affect Aeroflot as Western carriers use the shortest route – the Trans-Siberian – to fly from Europe to Asia, and pay transit fees for it to Russia flag carrier “Aeroflot”. Total transit fees paid in 2013 came close to $300m. Thus at a time when Aeroflot is seeing Russian tourist traffic dry-up to almost nothing and the Ruble is crashing in value, any such measure by Moscow will have a serious impact on Aeroflot, especially given the high number of aircraft it has on lease in US dollars, the cost of which is soaring due to the fall of the Ruble.
 
Indeed, further to yesterday’s editorial we can confirm that the BBAM owned 737-800 MSN 41991 (Bermuda registration: VQ-BTS) with CFMi56-7B on wing has been leased directly to Aeroflot and all agreements are with the same and not the subsidiary venture Dobrolet and as such at this time the aircraft is not affected by EU sanctions that forced the closure of Dobrolet and the aircraft remains on lease directly with Aeroflot – safe and sound.

Victoria
By Victoria August 5, 2014 08:16