The carrier is holding talks to establish a hub at Khabarovsk, near the eastern Chinese border, in co-operation with Khabarovsk-based Dalavia and Sakahlin-based Sakhalinskie Aviatrassy (SAT).

Dalavia serves 25 cities in Russia and South-East Asia with a 30-aircraft fleet that includes Tupolev Tu-214s. It also has links with Aeroflot through a joint Khabarovsk-Moscow service.

SAT has a more regionally focused network from Sakhalin Island, including connections to Japan and South Korea. It operates smaller aircraft, but has started supplementing its Soviet-era fleet with western types, including a pair of Boeing 737-200s.

The combined Aeroflot-Dalavia-SAT operation could also incorporate assets from the struggling Magadan-based carrier Mavia. But Vladivostok Avia, originally tipped as a participant, looks set to remain outside the project.

"Enlargement of air enterprises is unavoidable," says Dalavia general director Pavel Sevastyanov. "Our experience of joint operation with Aeroflot has shown prospects for increasing air transport efficiency, strengthening partnerships and modernising the fleet."

Absorption of local airlines would strengthen the intra-Russian and regional network of Aeroflot, providing a greater degree of connectivity for the flag carrier following its accession to the SkyTeam alliance. Regional operators see the potential consolidation as an opportunity to underpin their local economy.

"Participation of Aeroflot in this scheme would permit provision of up-to-date technology, service and safety, and construction of an effective route network," says SAT chief executive Konstantin Sukhorebrik.

Aeroflot's empire disintegrated following the Soviet Union's collapse. Although the number of separate carriers has fallen from 390 to 182 in the past 13 years, Russia's government wants to further reduce fragmentation. Carriers are opting for strength through consolidation, as demonstrated by Kras­Air's five-member AirUnion alliance and the merger of Pulkovo Airlines with state carrier Rossiya.

But a radical scheme floated last year to bring the assets of several state-owned airlines under Aeroflot's control was quickly dismissed by Aeroflot, which is selective about its partnerships.

The carrier's general director Valery Okulov says it is taking a conservative approach to expansion, but could invest in a Russian far east air transport company that would be competitive domestically and internationally.

It has a southern presence through Aeroflot-Don in Rostov and a northern counterpart, Aeroflot-Nord, after the acquisition of Arkhangelsk Airlines. In August both carriers started introducing 737-500s, their first Western types.

Source: Airline Business