Why harm Russian airlines and consumers?
Updated: 11 hours ago
Policy Pulse - 24 June 2019 - George Anjaparidze
On 21 June 2019 Russian president Putin issued a executive order prohibiting Russian airlines to carry passengers from Russia to Georgia starting 8 July 2019. This was followed by a statement from the Russian Ministry of Transport indicating that Georgian airlines will not be allowed to land in Russia. If implemented, these measures mean there would no longer be direct commercial flights between Russia and Georgia.
Eight Russian carriers currently operate 111 direct flights per week between Russia and Georgia and offer about 76% of the available seat capacity. We estimate that the prohibition to directly serve the Russia-Georgia travel market will translate to a loss in revenue of over $225 million per year for Russian carriers. In comparison, there are only two Georgian carriers that operate flights between Russia and Georgia and have about 24% of the seat capacity (See Chart).
Furthermore, Georgia has a highly competitive tourism sector in the Eurasia region. Leading tourism magazines, such as the Lonely Planet, have consistently ranked Georgia as a top destination to visit. This means Russian consumers will find it hard to find alternatives in the region that can offer the same value for money to meet their travel and tourism needs. The ban will impose higher costs on Russian consumers due to increased travel time to Georgia or because of having to settle for less suitable substitutes.
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