Vladimir Putin’s opening remarks:

Good afternoon, colleagues.

Today, our agenda includes an issue of the utmost importance – particularly for the residents of Russia's remote regions. We will discuss the air transportation development and accessibility of air travel. First and foremost, we must focus on the territories that have no alternative to aviation.

Undoubtedly, we will continue to pay special attention to all of the issues related to transport infrastructure. We have to efficiently integrate these territories into the national and global transport flows, that is, create new opportunities for promoting economic growth, attracting investments, and improving the quality of life in these regions.

You know that we launched a programme subsidising air travel in 2009 from the country’s Siberian, Far Eastern, and Northern regions to Central Russia. Later, we also included the city of Kaliningrad in this programme.

Over summer, ticket prices for young people, pensioners and residents of the Far East were halved. For instance, today, passengers pay 7,000-8,000 roubles to fly to Moscow from Magadan and Khabarovsk.  Almost 850,000 passengers have used the subsidy in the past three years. Am I right in terms of the ticket price and the number of passengers?

Remark: Yes, you are.

Vladimir Putin: When there are subsidies, passenger volume increases by almost 8%. The number of routes offered has expanded considerably. Initially, the programme included only 18 routes, but today there are over 30. In other words, the programme has proved its importance and efficiency, and is a big help to people.

Our citizens might have seen the Q&A session on the TV news, and a number of letters were received while preparing this session and other information that was shown on various channels. People are interested in whether we will continue to work on this programme. I can say that we will undoubtedly continue this work and preserve these subsidies. We will also develop and improve this programme, including by expanding the list of subsidised routes and the number of participants.

We have built 2.5 billion roubles for the subsidised air transportation programme into the federal budget for next year. The same goes for 2013 and 2014. The same funds for each year have been built into the three-year budget.

In addition, the programme will be supplemented with new routes as of 2012. They will include Moscow-Pevek, Moscow-Tiksi, and Moscow-Naryan-Mar.

The list is still open. I have requested that the Ministry of Transport, the Ministry of Finance, and regional leaders look into the issue of further expanding this list. As I already said, the subsidy can be used by young people and people over 60.

Women in Russia retire five years earlier than men. The basic retirement age for women is 55. It would be reasonable to reduce the age level for subsidised transportation for women to 55, or retirement age. This will require extra funding. I request the the Ministry of Transport and the Ministry of Finance calculate this figure. Yesterday, the newly appointed finance minister reported the approximate figure to me, and I think that this is acceptable for us. We must enable women who are 55 or older to use this subsidy as of April 1, 2012 and not later.

We should also think about – and I would like to see these calculations – extend this subsidy to other routes and other groups of citizens. Certainly, we should develop the entire air transportation infrastructure, and the local and interregional airline network, particularly here, in the Far East. This involves airport modernisation and renewing medium-haul aircraft. We will allocate 3 billion roubles to the regions of the Northwestern, Siberian, Urals and Far Eastern federal districts to develop interregional transportation. I request the Ministry of Transport submit a draft resolution on the approval of the rules for providing such subsidies in a timely manner.

And the last point. We must continue to create federal government enterprises that manage separate and remote airfields, namely in Yakutia, the Chukotka Autonomous Area, the Kamchatka Territory, and a number of other enterprises in the northern territories. This will allow us to preserve the network of local airlines. Maintenance costs for these airports will not be included in airport fees. This means that the tickets will be affordable.

And one more thing. I discussed the situation here in Magadan with the governor. This is one of those territories where it is impossible to get by in other ways than air transport. Therefore, we should help Magadan to introduce another route, an interregional route in this case, Magadan-Khabarovsk, as Khabarovsk has already been used and expanded as a hub. I also ask the Ministry of Transport and the Ministry of Finance to calculate the necessary costs. I know that this is an unexpected request, but I don’t think that this will require enormous funding. And it will really help the people. I mean these subsidies will apply to the same age groups: young people, women aged 55 and over, and men aged 60 and over.

This will be convenient for people as they will be able to use cars to travel from Khabarovsk, including to Siberian territories, or travel by railway. Khabarovsk has many more air transportation routes than Magadan. This is all that I want to say for now. Igor Levitin, the minister of transport, has the floor. Mr Levitin, please go ahead.

Igor Levitin: Thank you. Mr Putin, colleagues, here is the material. The slides are at your disposal.

The work to ensure air travel accessibility is conducted in five directions. The first line of work is allocating subsidies to the most socially vulnerable groups of citizens, which you, Mr Putin, just mentioned. All of the figures have been confirmed. Nearly 90% of these citizens fly with five largest companies operating in the Far East – Aeroflot, Transaero, Vladivostok Air, Yakutia Airlines, and S7 Airlines – company managers are present here. Transportation has been growing. The results speak to the success of this approach to passenger transportation. Other routes can be developed on the basis of this approach.

The programme seeks to provide priority to domestic aircraft, such as the Tu-204, Tu-214, Il-96, An-148, and An-140. Almost 50,000 passengers have flown on such aircraft this year, which is 67% more than in 2010. Next year, the list of domestic aircraft will be supplemented by the recently commissioned Sukhoi Superjet. The heads of regions have repeatedly proposed to expand both the age groups and the list of routes over the programme period. We have been working with an envoy from the Far Eastern Federal District and governors. Together with the Ministry of Finance, we will fulfil your decision concerning women who are 55 years old. The government resolution will be fulfilled in time and the service will be launched from April 1 when transportation begins. This is the first line of support.

The second line is the reconstruction of airfield infrastructure, flight navigation, and air traffic control facilities. You have just visited one centre. There will be 15 such centres in Russia. Previously, there were 100. New technologies and equipment have enabled us to consolidate them. To carry out the government’s instructions, a concept to extend an airfield network before 2020 has been developed and the funding mechanisms have been specified.

Almost 145 billion roubles were allocated for airfield provision from 2002 to 2010, which was the federal targeted programme's validation term. This prevented the airfield network from shrinking in size. That is, in 2010, airfield decommissioning stopped, and new airfields have emerged since 2011. We believe that we have an opportunity to increase the airfield network's size here in the Far East.

The third line of our work is creating federal government enterprises. Some governors who have launched them already are herea. Essentially, they promoted the restoration of these airfields, and certifying them to meet aircraft fleet requirements. There are 48 such airports and four such government enterprises. Government enterprises operating in the Magadan Region will join the airports of the north. The airports in the Krasnoyarsk Territory and the Amur and Sakhalin regions are also operating. The total number of employees working at these branches is 266. There were 414 before the creation of the federal government enterprises. Thus, the staff has been reduced, but service quality has improved. We seek to continue improving the network to allocate funds to support airfields and air traffic control and to reduce staff through the use of up-to-date equipment.

In the course of developing the legal safety framework, we would like to ask you… You have already noted that safety requirements are the same for large and small airports. This is a problem, as considerable funds are required for safety. We propose introducing a new classification – a fifth category – for such small airfields, so they are able to use other equipment. This will allow us to allocate a considerable part of the funds for maintaining the technical operational conditions of runways and aprons. We believe that safety will not suffer as a result, as the equipment installed at these airports to check passengers will be manual and less bulky. We will submit the proposal to the government.

The fourth line of work is as follows. Federal aviation rules require that all aircraft must be equipped with ground and air proximity warning systems as of Jan. 1, 2012. These are the safety system requirements. Some aircraft aren’t equipped with such systems, so they will be decommissioned. Thus, the government decided to allocate funds to support the purchase of aircraft designed for up to 50 seats over three years. We have focused on these issues at the regional level, and we need to replace the aircraft fleet next year. We believe that about 120-150 aircraft will be decommissioned and funds will be allocated to replace them with different aircraft. The draft government’s resolution envisages a flat subsidy amounting to 15% of the cost of leased aircraft with the number of passengers not exceeding 55.

Vladimir Putin: How much will it cost?

Igor Levitin: Some 6.4-6.5 billion roubles have been already budgeted for three years. The government resolution creates conditions for renewing the national aircraft fleet with up-to-date aircraft for regional and local transportation. This is how we should support regions and airlines. The draft resolution is coordinated with the Ministry of Finance and will be submitted to the government in the near future. We are also supporting national airlines through leasing. The funding amounts to about 800 million roubles a year, which is a different form of support.

Another form of support worth mentioning is connecting to the regional network. You just discussed the opportunity to connect Magadan and Khabarovsk. We believe that, first and foremost, we have to… Almost 3 billion roubles have been allocated so far for three years. We realise that these funds are insufficient for all of Russia's regions, but we propose to begin with the Far East and connect towns that have neither railway nor highway services. There are 52 such routes in the Far East. We will provide the governors with a list of such routes. These routes connect, for instance, Magadan and Khabarovsk, the Chukotka Autonomous Area, and the Kamchatka Territory. Further, from Khabarovsk, they will be able to use the subsidy that is used today on remote routes. Thus, we believe that we will be able to connect the regional network.

We have developed the principles. You said that this would include subsidising the age groups that are supported today – those under 23 years, men aged 60 and older, and women aged 55 and older. Towns that have no other communication will have priority. About 3 billion roubles have been allocated from the budget so far, but we have looked at all of these routes in Russia and the necessary annual funding may stand at about 7-8 billion roubles – with co-financing. Then we will be able to connect the country’s regional network with major transport hubs. Large aircraft, railway or motor vehicles will travel from there.

I would like to request your support. These funds have been budgeted. On the whole, almost 55 billion roubles are budgeted for all five lines of work to ensure aircraft efficiency over three years. Thank you!

* * *

Vladimir Putin’s closing remarks:

The issue is important, particularly for residents of remote regions, including the Far East. Today, we have already expanded the age groups for people eligible for subsidised travel and have increased the number of routes. As I said at the beginning, we will continue these efforts both on increasing the number of routes and perhaps also expanding the age groups.

In addition, we face other objectives in this field. We must ensure that local transportation is efficient. Let’s note what the Ministry of Economic Development has proposed: together with the Ministry of Industry and Trade we should think about home-made aircraft for these purposes.

Thank you very much.