OREANDA-NEWS. February 03, 2010. Russian Prime Minister Vladimir Putin agreed on Tuesday with proposals to transform the state transportation company Rossiya into a joint-stock company in 2010 and merge it with the flagship air carrier Aeroflot.

The St. Petersburg-based air carrier, which has been struggling to stay afloat amid tight competition on the market, will be corporatized along with other regional airlines that are run by the state-owned hi-tech corporation Russian Technologies before they are merged into Aeroflot.

At a meeting with Transport Minister Igor Levitin, Putin said the move was in line with the government's strategy to encourage the emergence of reliable and sustainable air carriers capable of safeguarding passengers' interests and competing successfully on international markets.

Aeroflot, which is more than 50% owned by the Russian government, controls over 42% of the Russian market of regular international flights. Its airliners perform flights to 169 destinations worldwide.

After the merger with Rossiya and other regional airlines, Aeroflot's share of domestic air traffic will rise 15-20% to 30-35%, Levitin said.

The transport minister said 15 air carriers had emerged in Russia after 2008 that control about 80% of the market in the country.

"This means that the process of the sector's consolidation is under way. This is a global trend and the same can be seen in other countries," he said.