Why Russian LCCs are a flop show in providing cheap flights?

LCC success stories have been well scripted world over, irrespective of the countries where these fly and the unique challenges that these have to overcome in each of the country. There have been different models of the low cost carrier operations as well. Some which only provide the cheap flights and charge for every other thing are called the ultra LCCs. Some others are the value-added LCCs which provide some amenities and free allowances for people who do flight booking with them. However, Russian Federation is one exception of a major country where the LCC model has been a failure. There is a single LCC left flying as of now, with all other others being closed, and that too is very close to being out of operations.

The reasons for failure of the LCC model in Russia are:

  1. High cost of financing for imported aircraft: This makes for 40 percent of the total operating costs which is highly disadvantageous for the LCCs. This is one factor which is low for the LCCs operating in the other countries.
  2. Government monopoly over the inputs: The government controls the prices of the inputs to the civil aviation which does not give much leeway to the LCCs operating in the country to provide cheap flights.
  3. Another reason is the non-existence of the separate infrastructure for the operation of the LCCs. This includes the low cost airports which are suited for handling the best known models of LCC aircraft. This is an important limitation for providing the cheap flight booking.
  4. The airlines are not allowed to sell the non-return tickets. LCCs depend a lot on the sale of the non-return tickets for providing the cheap tickets which is not allowed by law in Russia.

These are some of the reasons which have led to the failure of this model in Russia. Russian government is also mulling the prospects of allowing the foreign carriers to fly low cost aircraft on domestic airspace.

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