Moscow Vnukovo Airport

Avianova bankruptcy spotlights instability in alluring emerging markets

The bankruptcy of Avianova, Russia’s fastest-growing LCC, highlights the difficulties of emerging markets that lure investors and their LCC start-ups into complex but evolving sectors with promises of explosive growth. Avianova's bankruptcy follows financial difficulties after a dispute between its two shareholders, Russia’s A1 Investments and US-based LCC investor Indigo Partners, showcasing the risk of foreign-managed operations in markets that have only recently begun to open up. It is an experience Avianova CEO Andrew Pyne was exposed to at his previous start-up, low-cost long-haul carrier Viva Macau based in the captivating region of the Pearl River Delta. And in the other big growing market – China – LCCs are still trying to gain a foothold.

Avianova’s collapse is a major setback for the development of the low-cost sector in one of the world’s fastest-growing markets with low LCC market share. But the Russian market, despite its myriad regulatory, geographic and infrastructure challenges, remains a market brimming with potential for low-cost operators. LCC penetration remains very low, and demand for air travel, particularly in the short-haul space, continues to grow at breakneck speed. Further LCC start-ups are inevitable, but foreign-backed entrants are unlikely to be attracted.

Why don't women run airlines?

IT WAS INTERNATIONAL WOMEN’S DAY on the 8th of March, 2010, and the Indian Ministry of Civil Aviation proudly “acknowledged” flag carrier Air India’s historic flight between Mumbai and New York JFK. It was unique that day in that flight AI-141 operated with an all-female flight crew on the B777-200LR. There was no Air India man in sight. It was different at head office.

(This report, the first in a series of four, is taken from the Oct-2010 edition of Airline Leader.)

EC calls Olympic/Aegean merger into question

The European Commission has opened an investigation into the planned merger between Olympic Air and Aegean Airlines. There are concerns the proposed merger could raise serious competition concerns of very high, potentially monopolistic, market shares on all domestic routes and on a number of international routes where both parties operate.