CC BY
98
M. Grancay
The EU-Russia civil aviation market has doubled in volume in the last decade. It clearly has a potential to become the second most important market for the EU after its North-Atlantic counterpart. However, while numbers of flights and passengers have been increasing steadily, the dynamics of regulatory changes is low. The goal of this paper is to identify the main trends in EU-Russia civil aviation relations and to forecast their development. We come to the conclusion that it is of very little interest for Russian authorities to push for liberalization of the EU-Russia civil aviation market and as a result, liberalization will only materialize in small changes of bilateral air service agreements. On the other hand, cooperation of airlines and airframe makers will continue to develop rapidly.1
Keywords: civil aviation, European Union, Russia, Siberian overflights, Emission Trading Scheme
Introduction
International civil aviation has recently faced an interesting combination of liberalization and regulation. While important intercontinental routes, such as EU-USA, EU-Canada or EU-Brazil have been liberalized, regulation of other fields of air transport business has increased. Airport access, air passenger rights, environmental footprint and tarmac delay rules are just a few examples of areas where regulation has tightened over the last couple of years. The dynamics of international air transportation markets is high as never before.
The EU-Russia aviation market is an exception from this general trend. The rules governing civil aviation between Russian and EU airports have remained virtually unchanged for the last decade. They are stuck at a highly protectionist level with little hope for change. While some issues have admittedly been solved (e. g. the dispute about Siberian overflights, as we demonstrate in the third section of the paper), still other problems remain. For example, British Airways has recently applied for a permission to use its largest aircraft Boeing 747 on Moscow-London route. However, Russian civil aviation authorities did not approve the aircraft. A few months earlier, Russian carrier Transaero had unsuccessfully applied for the same right. Such fights between Russian and European civil aviation authorities are common and hinder full development of the market.
The main goal of this paper is to offer a brief overview of the current state of EU-Russia civil aviation relations. We focus on identifying main trends in the relations and forecasting their development in short and medium-term future. The paper is structured into five main sections. After a brief introduction we proceed with the analysis of air traffic patterns between Russia and the EU. Later we focus
1 The paper was supported by grant VEGA no. 1/0911/11 "Styri slobody pohybu v EÚ" coordinated by prof. Lipková at the Faculty of International Relations at the University of Economics in Bratislava.
2 The 747 issue was solved on March 26th 2012 when Russian authorities finally approved the use of the aircraft.
on current intergovernmental regulatory framework and major issues in EU-Russia civil aviation relations, such as Siberian overflights and the inclusion of aviation in the EU ETS. Finally, we study aircraft sales, cooperation in aircraft manufacturing and we offer conclusions.
1. Air traffic
The European Union is the most important market for Russian airlines. Although the years when more than 50 per cent of all Russian passenger traffic was directed toward EU destinations are gone, it still maintains a 40-per-cent share. In a three-year period 2007 - 2010 the number of passengers increased by 24 per cent (table 1). Approximately a fourth of the traffic flows to Germany, an important business center and a home of a significant Russian minority. Other important destinations are Italy, Spain (vacation favorites) and France. The most important city pair is Paris (Charles de Gaulle) - Moscow (Sheremetyevo), currently served by 10 flights daily.
Table 1: EU-Russia annual number of passengers transported by air 1993-2010 (in thousands)_
COUNTRY 1993 1999 2002 2005 2006 2007 2008 2009 2010
European Union 27 - - - - - 10,591 11,897 10,711 13,112
European Union 25 - - - 8,157 8,897 10,152 - - -
European Union 15 - 2,347 - - - - - - -
Czech Republic - - 240 409 476 551 664 699 885
France - - 630 866 852 885 1,016 886 973
Germany 1,154 1,221 1,765 2,377 2,495 2,869 2,982 2,811 3,157
Greece - - - 376 518 604 814 687 941
Italy - 245 434 719 931 1,159 1,259 1,023 1,312
Spain - - 489 582 657 833 995 799 1,124
UK - 375 501 814 791 767 786 671 750
Source: Eurostat, 2012.
Since 2004 the number of daily flights between EU airports and Russia has nearly doubled (table 2). Although the growth was negatively hit in 2009 - 2010 by global economic crisis, in 2011 it strongly rebounded, achieving a remarkable 22 per-cent year-on-year increase. The most dynamic market is Spain where the number of daily flights has increased almost five times since 2004. Another better-than-average performers are Cyprus, Czech Republic and Latvia.
Table 2: EU-Russia average number of daily flights 2004-2011
COUNTRY 2004 2005 2006 2007 2008 2009 2010 2011 Growth 2011/04
Austria 5.0 5.6 6.6 8.2 10.6 10.1 10.8 12.1 242.0 %
B elgium/Luxemb ourg 1.7 2.0 2.1 1.4 1.1 1.0 2.0 2.4 141.2 %
Denmark 3.0 2.9 3.1 3.7 4.1 2.8 2.5 2.5 83.3 %
Finland 4.9 4.8 4.9 5.1 6.2 5.6 5.5 6.0 122.4 %
France 10.7 11.7 12.0 12.3 13.9 12.8 11.9 14.0 130.8 %
Germany 36.4 36.2 40.4 47.6 49.7 45.9 44.6 53.7 147.5 %
Greece 3.1 2.0 2.9 3.7 4.1 3.5 4.4 7.2 232.3 %
Italy 5.0 6.6 8.4 10.9 11.3 10.9 12.4 13.5 270.0 %
Netherlands 3.1 2.7 2.8 4.1 5.0 5.2 5.5 5.7 183.9 %
Spain 1.7 2.9 3.0 6.2 7.0 6.0 7.0 8.9 523.5 %
Sweden 3.2 3.1 3.1 3.2 3.7 3.1 3.2 3.5 109.4 %
UK 7.1 7.4 7.8 9.5 10.5 10.5 10.2 11.3 159.2 %
OLD MEMBERS 84.9 87.9 97.1 115.9 127.2 117.4 120.0 140.8 165.8 %
Bulgaria 2.0 1.9 2.0 2.6 2.6 2.5 3.3 4.9 245.0 %
Cyprus 1.6 1.6 1.8 1.9 2.3 2.4 3.6 5.6 350.0 %
Czech Republic 5.2 5.6 6.3 8.3 10.5 11.2 11.5 13.2 253.8 %
Estonia - - - - - 0.7 1.2 2.2 -
Hungary 2.3 2.2 2.2 2.4 2.7 2.2 2.2 2.9 126.1 %
Latvia - - - 0.7 2.2 2.7 3.5 7.3 -
Lithuania - - 1.6 2.2 3.2 2.1 2.0 2.1 -
Poland 3.5 3.6 4.1 4.3 4.3 3.8 4.3 5.4 154.3 %
Slovakia - - - - - - - 0.5 -
Slovenia 0.8 1.0 1.0 1.0 1.0 1.0 1.1 1.2 150.0 %
NEW MEMBERS 15.4 15.9 19.0 23.4 28.8 28.6 32.7 45.3 294.2 %
TOTAL EU 100.3 103.8 116.1 139.3 156.0 146.0 152.7 186.1 185.5 %
* Traditional scheduled and low-cost flights, per direction. Charter flights are not included in the data - in 2011 they averaged 9 flights a day, majority of them to Italy. Data for Portugal, Ireland, Romania and Malta are not available. Source: Eurocontrol: STATFOR Interactive Database, 2012.
While more than 75 per cent of EU-bound flights land at airports in old member states, the role of 12 newcomers (countries that joined the EU in 2004 and 2007) has been increasing steadily (figure 1). On a flight-to-population basis, new member states have already surpassed the importance of old members: in 2011 the share of EU population in new member states reached almost 21 per cent; however their share on flights to Russia exceeded 24 per cent. This is a very interesting, perhaps unexpected result. Compared to old members, new member states have worse aviation infrastructure, older aircraft, fewer airlines and lower income to spend on travel. Geographic location of some of them allows for efficient ground transportation to Russia, as for example bus connections between Tallinn and Sankt Petersburg, directly competing with air transportation. Moreover, ten of the countries used to be under a strong influence of the Soviet Union and after the
events of 1989 their perception of Russia turned negative. In many cases, it still is negative today. Considering all the factors mentioned it would be easy to come to a wrong conclusion that the demand for flights between Russia and new EU members is low. Conversely, it is relatively high due to other important factors that fuel air traffic growth:
• Latvia and Estonia are a home to significant Russian minorities, reaching more than 25 per cent of population.
• Czech Republic and Cyprus have become popular destinations with Russian tourists, particularly the Czech capital Prague.
• Air Baltic, an airline based in Riga, Latvia, has successfully launched a new business model in 2004 and is today a major provider of connecting flights between Russia and the EU.
Figure 1: EU-Russia average number of daily flights 2004-2011 - new vs. old member states
L00,00% 95,00% 90,00% 85,00% 80,00% 75,00% 70,00% 65,00% 60,00%
2004 2005 2006 2007 2008 2009 2010 2011
OLD NEW
Source: Eurocontrol: STATFOR Interactive Database, 2012.
In line with general trend in global aviation, low-cost airlines' share of the EU-Russia market has been increasing steadily. However, due to complicated regulatory environment and nationality restrictions (see part 3 of the paper) it still lags behind expectations and currently holds only 8 per cent of the market. Main low-cost carriers offering service to Russia are Germanwings (Germany), Windjet, Air One (Italy) and Vueling (Spain). As soon as the EU-Russia civil aviation market is liberalized, we expect a rapid take-off of in the number of destinations offered by low-cost carriers. Nevertheless, as we will argue later in the paper, liberalization is not to be expected anytime soon.
Figure 2: EU-Russia average number of daily flights 2004-2011 - low cost vs. traditional airlines
2004 2005 2006 2007 2008 2009 2010 2011
■ TRADITIONAL ■ LOW COST
Source: Eurocontrol: STATFOR Interactive Database, 2012.
2. Regulatory framework
In 1944, United States of America organized an inter-governmental conference in Chicago. The aim of the US government was to create a liberal international aviation regime, where all the airlines from all the countries of the world would have the same rights and would be able to operate scheduled flights between any major airports in the world without restrictions. However, US opinion was not shared by the majority of participants. European countries were afraid that liberal rules of international civil aviation would give a huge competitive advantage to US airlines. Therefore, they supported a protectionist structure based on bilateral air service agreements (ASAs). These have governed international civil aviation ever since.
The principle is simple. If an airline from country A wants to operate regular scheduled flights between its home country and country B, a bilateral agreement between governments of the two countries has to be signed. This agreement sets specific rules for operating flights between the countries: names of airlines that gain access to the market, types of aircraft allowed, airports to be served, weekly frequencies, pricing etc. If an airline wants to operate flights from its home country to 100 other countries, 100 bilateral agreements are needed. To complicate things even further, each of these agreements would probably be unique and will contain a different set of rules.
Understanding the problems connected with such a complex structure of thousands of different ASAs, in 1978, USA started signing more liberal and simple "open market" agreements [Doganis, 2007]. In 1992 the process evolved into even more simple "open skies" agreements. The European Union, originally lagging behind, launched a liberalization campaign in the beginning of the 21st century. It started signing so-called horizontal agreements with major partners. These mean that instead of 27 separate agreements (one for each member state) only one bilateral agreement is needed to govern aviation relations with foreign partners.
Today, there are no separate USA-Germany, USA-Italy or USA-France bilateral ASAs any more; instead, only one common USA-EU agreement exists. However, the status of EU-Russia civil aviation relations is different.
Air transport between the EU and Russia remains highly fragmented, governed by separate bilateral ASAs. These are of a highly protectionist nature. We already mentioned the example of British Airways and Transaero not being able to use Boeing 747s on Moscow-London route because civil aviation authorities failed to give approval. Currently, authorities have a right to ban almost any change in air services, be it entry of a new airline, addition of a new route or increase in flight frequency. This is clearly an advantageous situation for Russian airlines and it is therefore not surprising that Russian authorities are not willing to accept a change. Their stance is in many ways similar to that of US authorities before 2007. Main factors of Russian aversion against change include:
• While robust evidence exists that liberalization leads to increased consumer surplus [see for example Alford and Champley, 2007 or ATAG, 2008], it would most likely negatively impact Russian airlines, which are as of yet not ready for fully competitive marketplace.
• Technically, rules of the EU-Russia aviation relations are strictly reciprocal. However, the concept of 27 separate agreements gives an advantage to Russian airlines (specifically Aeroflot): While they can operate flights from Russia to any EU member state, EU airlines can only operate flights to Russia from their country of registration.
• EU carriers operating hub-and-spoke model have a competitive advantage from geographical location of their hubs. As a result, liberalization of EU-Russia air transportation market would lead to increased number of indirect flights to Russian destinations operated by EU airlines. Russian airlines would lose market share.
• Liberalization would allow European low-cost airlines such as Ryanair, easyjet or Wizzair to aggressively expand to Russian market, further decreasing market share of Russian airlines.
Probably the longest-standing issue in EU-Russia civil aviation relations is that of Siberian overflights. In 1986 the Soviet Union started charging European airlines for flying over Siberia en route to Asian destinations. The idea behind introduction of the fees was to compensate Aeroflot for lost traffic. European airlines had to sign commercial agreements with Aeroflot for the use of trans-Siberian routes. The charges amount to more than 300 million EUR a year, most of them going directly to Aeroflot [Europa.eu, 2011]. The EU has long maintained these agreements were contrary to international law. Siberian overflight charges were one of the crucial obstacles in Russia's accession to the World Trade Organization (WTO). Finally, after long negotiations, the two parties agreed in
3 An important rule is that only German airlines are allowed to fly from Germany to Russia, only French airlines from France to Russia etc. Conversely, Russian airlines can fly to all EU countries.
2006 and 2011 to phase out the discriminatory fees by January 1st, 2014. Any charges EU airlines will be obliged to pay from 2014 on will be "cost-related and transparent" [Europa.eu, 2011]. However, the process is now endangered by decision of the European Commission to unilaterally include international aviation into the Emission Trading Scheme (ETS). Russia has publicly threatened to reinstate Siberian overflight fees as a countermeasure.
The EU ETS is a scheme requiring large emitters of CO2 within the EU to annually report their emissions and to pay for any emissions above the allowance allocated to them by the EU. Since January 2012, international civil aviation has been included in the scheme. All airlines flying into and out of European airports have to have carbon credits and have to pay for any emissions above the allowance. The scheme has attracted growing criticism. Opponents claim it is not an effective way to battle climate change and its only goal is to increase incomes of the EU budget. Moreover, it applies not only to emissions produced above the territory of EU, but to emissions produced for the duration of flight, regardless of where the aircraft started or where it is headed to. It is therefore clearly extraterritorial. A typical argument demonstrating ineffectiveness of the scheme would go on like this: If a Russian airline wanted to operate direct flights from Vladivostok to Warsaw, it would have to obtain emission credits for the whole route. A cost-conscious airline could add a short stop in Moscow. The flight would thus become indirect and the airline would only have to obtain emission credits for the Moscow-Warsaw section. The airlines would save money, however, total emissions would increase, as take-off and landing produce a considerable amount of CO2.
The vast majority of world governments have declared their dissatisfaction with the scheme. Some, for example China, went even further and banned its airlines from participating in the ETS. Several major aviation players (including Brazil, China, Japan, Russia and the US) met in Moscow in February 2012 and signed a joint declaration against the scheme. However, the European Commission refuses to back up. While there is still some time before the situation has a potential to escalate (first carbon credit check is planned for 2013), it has already been adding tension to already uneasy EU-Russia relations. It is obvious that any liberalization of the EU-Russia civil aviation market will not materialize before the EU makes radical changes to its ETS project.
3. Aircraft sales
In the last couple of years Russia has seen a number of deadly aviation accidents. In 2006 an Armavia Airbus A320 crashed near Sochi, killing all 113 people aboard. Later that year an S7 airlines A310 crashed near Irkutsk leaving more than 100 dead. In
2007 an UTair Tupolev 134 crash in Samara led to a loss of 6 lives. An Aeroflot Boeing 737 crashed on approach to Perm in 2008 and a Polish presidential Tupolev 154 near Smolensk in 2010. In September 2011, members of a KHL ice hockey team died in a Yakovlev 42 accident near Yaroslavl. Another four deadly accidents in 2011 involved Antonov and Tupolev aircraft. Due to poor maintenance of old aircraft,
inadequate pilot training and non-professional crew behavior several Russian airlines were added to the list of airlines banned within the EU.4
As a result of the bad safety record of airlines, several Russian carriers have lost their operating license. President Medvedev stated that the situation in Russian civil aviation is critical and he pledged to change the situation "The value of human life overrides other considerations, including support for the domestic producers," he said [Bloomberg, 2011]. The reform of Russian civil aviation is expected to include the following elements:
• Decrease the number of Russian airlines to guarantee that they have the resources and funding to operate aircraft safely. This could be accomplished by means of acquisitions and mergers as well as by revoking air operator's certificates.
• Set a minimum number of aircraft of a particular type an airline can operate. The logic behind this interesting rule is that an airline with just one or two aircraft of the same type is not able to guarantee their safe operation and efficient maintenance. However, some aviation experts have warned there is no direct connection between the size of the airline, its fleet age and the safety standard. There is also a risk of small communities losing air service [Aviation Week, 2011].
• Make terrain and traffic collision-avoidance systems mandatory. The system has been absent from many Ukrainian and Russian-build aircraft.
• Boost the number of Western-built aircraft in fleets of Russian airlines. The government is expected to offer subsidies for purchases of Airbus and Boeing wide-body aircraft. Purchases of foreign narrow-body aircraft will probably not be supported, as they would directly compete with the new Sukhoi Superjet 100 and planned Irkut MS-21.
Probably the most important element of government's effort to increase passengers' confidence in Russian airlines is fleet renewal. Traditional foreign aircraft choices include products by European manufacturer Airbus and its US counterpart Boeing. Their orders are not only commercial contracts, but also results of complicated political games. (Both Airbus and Boeing are major foreign cash earners for their countries and hence their sales are often supported by politicians, including presidents Sarkozy and Obama.) EU's major player on the airliner market is Airbus - as of January 31st 2012 Russian airlines operate 179 Airbus aircraft and have additional 66 on order (table 3). This compares favorably with Boeing, however, Boeing's order books are thicker than the order books of Airbus. EU officials have been greatly disappointed by Aeroflot's decision to order 22 Boeing 787s and 16 Boeing 777s, while choosing only 22 Airbus A350s. In another setback to Airbus, no Russian airline has yet ordered the A380 super jumbo; still, Airbus claims it sees a market for 22 very large aircraft in the region over then next 20 years [Airbus, 2011].
4 Currently, no airlines from Russia are on the blacklist.
Airbus considers Russia the 8th most important aviation market in the world (after USA, China, Germany, India, UK, United Arab Emirates and Brazil). It forecasts almost 700 aircraft worth 73 billion USD will be required by Russian airlines by 2030 [Airbus, 2011]. Obviously, the manufacturer supported by European politicians aims to deliver the majority of those airplanes. However, the Airbus-Boeing duopoly has come to an end and any sale of single-aisle aircraft to Russian customers will be increasingly difficult.5 Provided it meets declared technical specifications, the clear winner in this market segment will be Irkut MS-21 - a new aircraft developed by Irkut in cooperation with Yakovlev, expected to enter commercial service in 2016. Russian airlines have already ordered more than 150 machines, including Aeroflot's order for 50. Another serious competitors include Chinese COMAC 919 (2016) and on the lower end Sukhoi Superjet 100 (already in service) and Bombardier CSeries (2013).
Table 3: Airbus aircraft ordered, delivered and operated by Russian airlines (as of 31-Jan-2012)_
A319 A320 A321 A330 A350
Or De Op Or De Op Or De Op Or De Op Or De Op
AEROFLOT 4 4 15 1 1 43 26 18 18 11 3 14 22
AVIANOVA 0
I FLY LTD 1
KOLAVIA AIRLINES 2 3
KUBAN AIRLINES 3
NORDWIND LLC 1
ROSSIYA AIRLINES 9 6
S7 AIRLINES 20 23 9
TATARSTAN AIRLINES 2
TRANSAERO AIRLINES 8
URAL AIR 7 13 9
VLADIVOSTOK AIR 7 3
VYBORG AIRLINES 0
YAMAL AIRLINES 1
TOTAL 4 4 49 39 1 81 26 18 31 11 3 18 22 0 0
Aircraft neither ordered nor operated by Russian airlines: A300, A3 Source: Airbus, 2012.
8, A340 and A380.
5 The market for double-aisle aircraft is different - Airbus and Boeing still hold a duopoly and no programs that could endanger this market structure have been announced. It is not expected that China or Russia will build a successful wide-body airliner within the next 10 - 15 years.
Other EU-built aircraft currently operated by Russian airlines include ATR42, ATR72, LET L-401, SAAB 340 and SAAB 2000.
Table 4: Russian aircraft ordered and operated by EU/EEA airlines (as of 31-Jan-2012)___
Aircraft type Ordered Operated Additional information
Sukhoi Superjet 100 10 0 Italy - Blue Panorama Airlines (8/0), Switzerland -Comlux (2/0)
- ? Some Central European governments still operate a few Tupolevs and Yakovlevs.
Source: Sukhoi Superjet, 2012; Flight International: World Airliner Census 2011, 2011.
While there is a long list of Russian operators of EU-built aircraft, no major EU airlines operate any Russian-built aircraft. Primary reasons are economic: Russian aircraft currently on the market have higher operating costs and offer lower passenger comfort than their Western-built counterparts. There is also a psychological factor that needs to be counted with - EU passengers simply do not want to fly Tupolev or Ilyushin aircraft. However, things might soon start to change. Two small Italian and Swiss airlines have already placed an order for a total of 10 Sukhoi Superjet 100s (table 4). If the aircraft proves successful, additional small orders might follow. A large order of Superjets or MS-21s is for now out of question; although aggressive airlines like Ryanair might surprise the market.6 Moreover, Russian aircraft-manufacturing industry has considerably enhanced its position in the last couple of years. In 2003, Airbus created an engineering center in Russia that has worked on major projects including Airbus A380 and Airbus A320 neo. Russian companies are also significantly involved in producing components for A320, A3 50 XWB and A3 80. Airbus seems set to follow a strategy of cooperation with potential future competitors. Therefore, even if large orders of Russian aircraft by EU airlines can not be expected, the role of Russian subcontractors in EU aviation will keep increasing.
4. Conclusions
International civil aviation has recently undergone a turbulent period. Wave of airline bankruptcies in the first years of the new millennium was followed first by economic upturn, later by deep economic crisis leading to even more bankruptcies, and then by the most profitable year in the history of aviation (2010). The European Union has led a broad initiative of liberalizing air transport services, but on the other hand has also tightened regulation of customer service and environmental aspects. Today, facing increased competition from China and the
6 Ryanair planned to place an order for 200 Boeing aircraft in 2009, but did not manage to obtain contract conditions it had hoped for. It announced it was not going to buy Airbus airliners either and would wait for the Chinese and Russians to advance with their COMAC 919 and Irkut MS-21. In the end, Ryanair would probably buy aircraft from the producer it can secure the best deal with.
7 It does so with Irkut as well as with Chinese COMAC. Airbus believes this strategy will help the company increase its sales on the local market; it also lowers the cost base. On the other hand, some experts are afraid it will lead to an unwanted transfer of know-how and a fierce competition of several aircraft manufacturers in the future.
Middle East, as well as possible foreign operation restrictions caused by EU's unilateral inclusion of aviation in the ETS, EU airlines are operating in a tough business environment. Russian airlines have problems of their own - Russian aviation market has been hit by a high number of accidents reducing passengers' confidence.
In this paper we have identified the main trends in current EU-Russia civil aviation relations. They include:
• Steady increase in annual number of passengers and flights.
• Rising importance of air transportation between Russia and the new EU members.
• Rising share of low-cost airlines on the market; however, due to high degree of protectionism their share is less than 8 %, compared to approximately 40 % on the internal market of the EU.
• Continuing unwillingness of Russian authorities to relax protectionist bilateral air service agreements. Inability of the European Commission to negotiate changes.
• Increasing tensions due to EU's policy of including international civil aviation in the Emission Trading Scheme.
• Intensifying cooperation of Russian and EU civil aviation authorities in field of aviation safety.
• Ongoing integration of Russian contractors into production process of Airbus.
We have argued it is of very little interest for Russian airlines to push for liberalization of the EU-Russia civil aviation market. The main carriers are against complete liberalization for fear of losing market share. Russian government has a strong record of listening to the voice of domestic carriers and pursuing national interest. It is therefore obvious that no radical changes of market regulation can be expected. Rather, liberalization will be pursued in small steps, in response to increasing passenger demand. An example of this strategy could be seen in February 2012 when Russia and Bulgaria amended their bilateral air service agreement to increase frequencies on Burgas-Moscow and Varna-Moscow routes. They also changed the number of designated airlines allowed to operate Russia-Bulgaria routes from one to two from each side.
Sour relations between civil aviation regulators will be counterbalanced by cooperation of airlines and airframe makers. Airbus will further increase its cooperation with Russian contractors and subcontractors. Also, airlines will continue their practice of code-sharing and engaging in alliances - Aeroflot joined SkyTeam in 2006 and S7 Airlines entered oneworld alliance in 2010. We can therefore conclude that although regulators are set to confront the pressures of globalization, commercial sector has already become an integral part of it.
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