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Despite state support, Russian airlines remain unprofitable. In 2016, their losses grew by 17.6% to 10 billion rubles (almost 175 million USD), compared with 8.5 billion rubles loses in 2015. The industry fears that 2018 may be dramatic insofar as no extension of the VAT relief is envisaged, released Wings Herald.

The biggest losses are in domestic shipments. Despite a temporary 10% reduction in VAT, these flights have brought airlines 33 billion rubles of loss, compared with 44.9 billion rubles in 2015, commented the President of the Association of Air Transport Operators Vladimir Tasun. The operational earnings from flights abroad did not compensate for domestic losses, as it has reached only 23 billion rubles or 37% less than 2015.

Inland freight services grew by 7.3%, while international flights shrank by 18.6%. Leased aircraft and airport charges, which have increased, remain the main costs.

With the introduction of tax breaks, airlines are rapidly increasing passenger traffic by the end of 2016. In the period January-April it increased by 20.8% to 27.1 million people. According to Vladimir Tasun, it is early for optimism as the market overheats because of the low prices that companies are trying to keep passengers.

Meanwhile, Russian Prime Minister Dmitry Medvedev said yesterday that the government will continue to subsidize airlines in 2017, thanks to which domestic relief flights will increase.