A Whole New Flying Experience

In Russia, the private airline Transaero gives state-owned Aeroflot a run for its money

MERE mention of the name Aeroflot is usually enough to prompt a flood of horror stories of delayed flights, filthy aircraft, and surly crew from travelers in the former Soviet Union.

But since the start of this year, a new private airline called Transaero is offering the giant state-owned Aeroflot its first taste of real competition.

From the foot of the stairs to their leased Boeing 737, a recent Transaero flight to Kiev was future-shock a la Rus. Instead of Aeroflot's boarding procedure of making passengers queue endlessly in the rain or blinding snowstorm at the foot of the steps, the Transaero passenger is whisked aboard and led to a seat that actually corresponds to the number on the ticket.

The flight offered a number of other curiosities for those accustomed to the tender mercies of Aeroflot, including flight safety instructions, a printed card on how to exit the aircraft, seat belts that have two ends, a pleasant, smiling stewardess, not to mention on-time departure.

The hour-and-a-half flight to Kiev provided happenings akin to UFO sightings for the seasoned Aeroflot passenger - beverage service and breakfast, complete with silverware and napkins imprinted with the Transaero logo. Service in the air

"In Aeroflot, the main task was to fly," explains Transaero Senior Vice-President Gregory Gurtovoy. "We say it is the pilot's job to fly. For all the rest, the main task is to serve."

While pilots were recruited from Aeroflot, when it came to the stewardesses, "one of our main requirements was that they not have spent even five minutes with Aeroflot," Mr. Gurtovoy says. The cabin crew was trained by Air France, while the flight crew was trained by United Airlines in Denver.

The response of Russian passengers to the opportunity to get service while flying, even at a substantially higher cost, has been a surprise even to the executives of this fledgling company.

Transaero began regular service in January with flights to Norilsk, a mining city in Russia's Arctic north, populated by rich miners and connected to the outside world only by aircraft. Although Transaero charges 40 percent more than Aeroflot for its ticket to Moscow, and 60 percent more for flights to Sochi, the Black Sea resort where many miners vacation, twice-a-week flights are booked to capacity.

"After people have a good rest on the Black Sea, they don't want to be treated like cattle on the way back," Gurtovoy explains. "Every day we get letters saying that we should increase our flights. They want to fly with us. It is the first time they feel like normal people on an aircraft. We never predicted it would be so impressive for Russian people."

Indeed, among the oddities is the fact that business class, which Transaero first introduced here, fills up before economy class does. The price difference is not that great - about $70 compared with $56 on a one-way ticket to Norilsk.

"People want to be treated better," Gurtovoy says.

Transaero began in October 1990 as a seven-man company. Most of the employees, like Gurtovoy, were entrepreneurs who came out of the aircraft manufacturing industry. Its original shareholders included the Soviet Ministry of Transportation, the Moscow City government, Vnukuvo airport (one of Moscow's several domestic airfields), and the Yakovlev and Ilyushin design bureaus, the two major designers of civilian aircraft.

When the Soviet Union was still in existence, the company worked with the Russian Federation government on a project to create a separate Russian airline. That project went nowhere, but Transaero decided to go ahead and build an airline from scratch.

In November 1991, Transaero began charter flight operations, using Aeroflot aircraft but its own crews. Its primary business came from operating the Moscow-Tel Aviv flights for Jewish emigres, a lucrative route.

Transaero's ability to get itself licensed during the Soviet era and to snag such business opportunities is widely rumored to be the result of one of its founders' high-level connection to the KGB, a charge Transaero officials deny.

What is undeniable is the company's ability to take advantage of the opportunities provided by the breakup of the Soviet Union, and consequently the breakup of Aeroflot. Kiev-based aircraft, operating the Kiev-Moscow route, became the property of newly formed Air Ukraine. The international arm of Aeroflot, with a fleet of 109 aircraft, became a separate airline. And the domestic Russian routes are divided among a number of regional fleets based on the airfields they fly from, although all the planes stil l carry the Aeroflot flag. Far-flung destinations

The Russian Federation government designated Transaero to fill the empty slot of the Russian flag carrier for a number of routes to the newly independent republics, including Minsk, Kiev, Riga, Vilnius, Alma Ata, Tblisi, and Baku (due to the unsettled conditions, service has not begun to the last two cities). In addition, Transaero competes with the domestic fleet in regular runs to Sochi and Norilsk, with two major Siberian cities soon to be added.

A large number of charter airlines have spun out of the same tangled mess of Aeroflot's collapse.

Many of these airlines run what are called "business tourism" flights, taking Russian traders to places such as Beijing to buy cheap goods for sale back home. Transaero operates these kinds of flights to Turkey and to Shardjah in the United Arab Emirates. But it is the first independent airline to begin regularly scheduled flights here.

Currently, the 450-personnel company operates four aircraft - two Boeing 737s leased from International Aircraft Services in Ireland and two brand-new Ilyushin-86s, a Russian counterpart to the Airbus, with an interior redesigned for a business-class area and more leg room.

Transaero has set up a ticket office in a downtown Moscow hotel and with its interline links it is able to issue tickets on United Airlines, Delta Airlines, and other US and European carriers.

Like Aeroflot, Transaero sells domestic tickets in dollars to foreigners, while offering Russian citizens cheaper ruble fares. A round-trip business class ticket to Alma Ata, for example, costs $360 or 164,000 rubles (about $164).

The company's current earnings are more than $1 million a month, but it hopes to quickly reach $25 million a year. The company is looking to expand, including North American routes, but it is limited by the difficulty of raising capital. Under conditions of high inflation, Russian commercial banks will not loan for periods longer than three months.

"We are looking for investors from the foreign side," Gurtovoy says. "We need the Western banking system to come more confidently in giving loans to Russian companies."

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