Olga Pleshakova is first deputy director general of Transaero, Russia's fourth airline in terms of passengers carried and a leading international carrier. A graduate of the Moscow Aviation Institute, she has been with Transaero since the company was formed. She was appointed to her present position in 1999.

She spoke to The Russia Journal about key issues facing the airline and the industry.

The Russia Journal: Could you tell us a little about Transaero's history?

Olga Pleshakova: Transaero, Russia's first private airline, was formed in 1990 as a result of political changes. Although the Soviet Union still existed, Russia was becoming more independent, and its government, headed by Ivan Silayev, made a decision to form a Russian airline independent of Aeroflot.

In 1991, Transaero obtained a certificate from the Civil Aviation Ministry for all kinds of air transportation and was registered with the ICAO (International Civil Aviation Organization). We celebrate the date of our first round-trip flight from Moscow to Tel Aviv on a rented TU-154 in November 1991 as Transaero's birthday.

In June 1992, the company purchased its first plane, an Il-86. Before 1998, the company leased more aircraft. We were the first Russian airline to introduce business class on domestic flights and to begin serving domestic passengers by international standards.

We introduced a flexible fare discount system and a bonus scheme for regular clients. Before 1998, 60 percent of our business was on domestic routes. In the wake of the collapse, we had to shift our focus toward international destinations. Now, domestic flights account for only 12 percent of transportation volume and 8 percent of income.

Although we had to cut many of our domestic flights to focus mainly on international destinations, we hope that Russia's economy will improve. We've already restored our flights to St. Petersburg and Novosibirsk this year and will introduce a flight to Yekaterinburg this fall.

RJ: How big is the airline's fleet at the moment?

OP: We still own the Il-86, and the rest of our fleet is leased — five Boeing-737-200s and two Boeing-737-700s. We have signed a leasing agreement on a new plane, the Airbus-310, which we expect to receive in early September. The new airplane will help us operate more effectively on our traditional routes in the short term, but we have more serious plans for it.

RJ: Tell us about Transaero's main routes.

OP: International flights remain our main priority in the short term. The most important destinations are Tel Aviv, Frankfurt and London. Transaero is a leading carrier to Israel, Kazakstan and Ukraine. For example, we fly to five Kazak cities in cooperation with Air Kazakstan. Recently, Transaero has introduced a flight to Baku.

RJ: Can you tell us more about your partners?

OP: In 1999, we signed the first code-sharing agreement in Russia, with KrasAir, and the results are quite optimistic. Later, we signed similar agreements with our CIS partners — Air Kazakstan and Air Moldova. In April 2000, we signed a cooperation agreement with Continental Airlines. This is not yet a full-fledged code-sharing agreement. It's too early to speak about the results, since during the summer we operate independently. But there is demand for connections with Continental flights in London and Frankfurt. We hope our cooperation will become effective when our winter schedule is introduced.

We're waiting for state approval of a code-sharing agreement with Ural Air and AZAL, the state airline of Azerbaijan, and we are looking for more partners. Transaero is open to cooperation with any partner. We don't want to elbow one another in the Russian air transport market, which, unfortunately, has been shrinking.

RJ: Experts say the Russian air transport market is likely to shrink for another two to three years, at least. What are Transaero's strategies for this period?

OP: If the situation in Russia changes in the next year or two, we'll be developing internal routes more actively.

We subsidize loss-making domestic flights from our incomes on international routes. We were profitable in the first half of this year. The company's profits from air transportation services in that period exceeded $9,945,000. We have no intention of giving up domestic routes. But the expansion process will not be as rapid as on international flights.

RJ: Can Transaero become a competitor to Western airlines on international flights?

OP: Since we already are operating international flights, we are already a competitor in that market. I believe that in the past five years, we have won over some passengers on our destinations in Germany from Western airlines. We have lured away business class customers from British Airways, since we have a very convenient schedule. Our flight from London is the last flight from Europe to Moscow. So a businessman who uses our services can take a flight to Moscow in the evening, work for a few hours in Moscow and take another Transaero flight back to London and be there at 2 p.m. local time [the next day]. Also, we have an upper hand on routes to Israel. Since we began flying there, we have always carried more passengers than El Al. So we already are a competitor.

RJ: What's the ratio of foreign to Russian passengers on Transaero flights?

OP: About 10-15 percent are foreigners on domestic and CIS flights, about 7-10 percent are foreigners between London and Russia and about 40-45 percent on Israeli destinations.

RJ: What are Transaero's plans for the future?

OP: We are planning to improve the company's profitability and financial performance. We will try to make larger profits in the markets where we have already established a presence. We will introduce more flights to popular destinations abroad, gradually restoring domestic flights. We also intend to increase commercial cooperation with other airlines.

FOUNDED: 1990.
FIRST FLIGHT: November 1991.
MAIN DESTINATIONS: London, Frankfurt, Tel Aviv.
FLEET: one Il-86 (owned); five Boeings-737-200 and two Boeings-737-700 (leased).
PROFITS: (January to June 2000): 275 million rubles.