OREANDA-NEWS. June 26, 2008. The Federal Antimonopoly Service (FAS Russia) continue with analyzing prices for aviation kerosene and investigating cases, initiated for violating Article 10 of the Federal Law "On Protection of Competition".

According to FAS Russia, prices for aviation fuel and lubricants practically unchanged from January 2006 to November 2007, while the price for aviation kerosene jumped by 70% from November 2007 to June 2008. It was revealed that in about 20 Russian airports prices, set by the operators of fuelling stations, exceed the average price level in Russia and in foreign airports. Based on these facts, FAS Russia either has initiated antimonopoly cases or has undertaken antimonopoly investigations.

Last week the Antimonopoly Service initiated several cases regarding the situation in three Russian airports. On 18th June 2008, the central office of FAS Russia initiated a case against "Supplying Company" CJSC for violating Article 10 of the Federal Law "On Protection of Competition". It is suspected that the company set monopolistically high price for the aviation fuel in Yuzhno-Sakhalinsk airport and unreasonably refused to conclude a contract with "Vladivostok-Avia" for storing fuel in Yuzhno-Sakhalinsk airport.

As stated by Anatoly Golomolzin, Deputy Head of FAS Russia, Yuzhno-Sakhalinsk has the highest prices of aviation fuel and lubricants, which exceed the average level in Russia by 17-18% and is higher than in foreign airports, for instance, in Beijing. The fuel refilling company deprives airlines of a chance to choose a cheaper supplier, debarring their legitimate right to store fuel in fuel refilling stations".

On 18th June 2008, Krasnoayrsk regional office of FAS Russia, upon a petition of "Krasnoyarsk Airlines" OJSC, initiated a case against "Siberia Avia Service" CJSC. The latter is accused of imposing unfavorable conditions for buying-selling aviation fuel and lubricants, offering services for refilling aircrafts and unjustified reduction of supplies of aviation fuel. The hearing is scheduled on 16th July.

Novosibirsk regional office of FAS Russia has initiated a case against "Tolmachevo Airport" OJSC for violating Part 1 Article 10 of the Federal Law "On Protection of Competition". The antimonopoly office suspects that the company created obstacles to "Airjet-Tolmachevo" Ltd. for entering the market of aircrafts refueling. The hearing is scheduled on 24th July

Other regional offices of FAS Russia continue processing cases initiated earlier. For instance, in January 2008 Kamchatka regional office of FAS Russia, upon a petition of "Kamchatka Airfuels" Ltd., started investigating "Kamchatnefteproduct" OJSC for evading (refusal) to offer services for transshipment and storage of aviation fuel and lubricants. Anatoly Golomolzin said that "Kamchatka Airfuels", which has recently become a second refueling operator in the airport, offers fuel for at least 200 Rubles cheaper. In those Russian airports where there is competition between refueling companies, price are on average 15% lower".

There are ongoing investigations of the airports in Ulan-Ude, Chita, Makhchkala, etc., which had the highest prices for aviation fuel and lubricants, including those at fuel refilling stations. Antimonopoly offices are also scrutinizing the situation with supplying fuel to the Moscow air complex, which services over 65% of all passengers.

The Antimonopoly Service does not rule out possibility of initiating proceedings against oil companies - the main producers and wholesale suppliers of fuel and lubricants. According to Deputy Head of FAS Russia, "one of the reasons why prices for aviation fuel and lubricants in Russia are higher than in foreign airports, is that the gap between the ex-works prices of oil refineries and the "into-plane fueling" prices is much higher in Russia than abroad". FAS Russia is examining how the monopolistic element develops: due to resale margin set by fuel refilling complexes, or oil companies. Preliminary data suggest that wholesale prices for aviation fuel and lubricants sold by some oil refineries abroad are lower than wholesale prices for similar fuel supplied to the domestic market.

Anatoly Golomolzin also emphasized that the Antimonopoly Service has started, in particular, by request of the General Prosecutor's Office, inspecting air carriers and tour operators on the main tourists routes. FAS Russia is also analyzing ticket prices for regular flights on the domestic market, and the level and administration of fuel levies by the airlines.