Russian Airlines KD Avia Ceases Operations




Russian Airlines KD Avia Ceases Operations

By Mike Mitchell




September 8, 2009, Kaliningrad, Russia, KD Avia Airlines, one hundred percent privately owned was forced to cease operations today due to a lack of operating capital. The airline had been struggling for the past several months due to a decline in passenger and cargo revenue. All flights have been canceled.  

KD avia airline was established in 2002. In 2007, the airline began to operate flights from Russia to Europe with its main hub located Kaliningrad (Khrabrovo), Russia. The airline continued to grow with flights to London, Paris, Berlin, Hamburg, Hannover, Düsseldorf, Munich, Tel-Aviv, Barcelona, Prague, Rome, Milan, Kiev, Moscow, St. Petersburg, Kaliningrad, Chelyabinsk, Ufa, Nizhniy Novgorod, Omsk, Samara, Perm, Kazan, Ekaterinburg, Volgograd, Rostov-on-Don and Astana. 

The airline was the first private air carrier to successfully connect Russian and European cities via an air transport hub, the first of its kind in Russia. Passengers chose this airline as it offered a new, fast and convenient way of flying, connecting passengers with the largest cities in Europe, Russia and Kazakhstan. Passengers no longer need to fly to Moscow to move from one airport to another, resulting in lost time, high airfares, inconvenient flight connections, having to deal with additional flight registration and spending hours at the airport. In addition the airlines airfare were competitive.

KrasAir or Krasnoyarsk Airlines was another leading airline in Russia and based in Krasnoyarsk. It operated scheduled regional and international passenger services, freight transport, cargo handling and charter services from the main base is Krasnoyarsk Yemelyanovo Airport, as part of AiRUnion alliance. In 2008 Krasair suffered a liquidity crisis, and after a string of operational shutdowns, administrative and strikes, the company ceased operations in October 2008.


In June and August 2008 Krasair and AiRUnion fleets were grounded as the fuel suppliers denied further credit fuel to debt-ridden airlines. In June, Krasair and its principal supplier, Krasnoyard-based Sibir Avia Service, reached an agreement to resume fuel supply on condition that Krasair debt did not exceed 100 million roubles. By the middle of August the debt rose to 223 million roubles, and on August 19 Sibir Avia stopped refuelling, leaving thousands of passengers stranded in airports. Krasair blamed the crisis on rising oil prices. In first six months of 2008, fuel accounted for 54% of Krasair costs. Flights were also grounded in Moscow and Omsk airports.  

Analysts predicted that the fuel crisis would be resolved through intervention of Rostechhologii, a newly formed state conglomerate that controls substantial shares of AiRUnion companies, including Krasair; alternatively, the state may prefer to complete formal bankruptcy process and restructure AiRUnion assets under a new management. On August 24, Prime Minister Vladimir Putin specifically addressed the problem of the grounded airline, authorizing Sergey Ivanov to issue state funds and enable further operations. 

On August 26, media reports appeared to indicate that bankruptcy was inevitable. Russian Technologies, the principal shareholder, refused to pay AiRUnion's bills and its fleet remained grounded. The same day, the Russian Ministry of Transportation negotiated with Aeroflot, Transaero, S7 Airlines and Rossiya about taking over the routes previously operated by Krasair.  

On October 27, Krasair was unable to fly most of their aircraft due to a pilots' strike as a refusal by refuelling companies to extend credit to the airline. It was announced that Krasair would cease to exist on November 1, 2008.

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