The Russian Transport Ministry has been instructed to submit proposals for the potential sale of Aeroflot’s subsidiary Rossiya, the Vedomosti business daily reports.
Although no official reason has been given for the move, it is believed that there are concerns being raised over Aeroflot Group’s dominance on the Russian market and Rossiya’s financial performance.
Aeroflot assumed full control of Rossiya on March 30, 2014 having acquired the carrier from Russian state tech-industrial corporation, Rostec, in 2011. It has since positioned the airline as a mid-tier consolidated entity to cover the domestic and regional leisure market, increasingly shifting its operations from St. Petersburg to Moscow Vnukovo.
Deputy economic minister Yevgeni Yelin told Vedomosti, “We should develop air connections not only from Moscow but from St. Petersburg as well. We back privatisation and competition”.
Earlier this year the Aeroflot Group merged its Donavia, Rossiya and Orenair subsidiaries into one encompassing airline under the Rossiya brand as part of a drive aimed at adapting its multi-brand strategy to new market conditions.
However, government sources have said that Aeroflot has failed to turn Rossiya’s finances around as the airline is still making losses and has been unsuccessful in overtaking rival S7 Airlines, as the second busiest carrier in Russia in terms of passenger numbers so far this year.