By Atom MarkarianAn Armenian travel agent and a Turkish company’s subsidiary have been fined about $1,170,000 each by a state regulator for violating anti-trust regulations and thus making passengers pay more for flying to Istanbul and back.
The State Commission on the Protection of Economic Competition ruled on Wednesday that Armenia’s Bagrat Tour Co. selling the national carrier Armavia’s tickets and the Turkish Kule company’s Armenian subsidiary, Tower Travel, had reached an agreement that resulted in unfair competition on the local air traffic market.
After working on Armenia’s air traffic market for about a year, Bagrat Tour and Tower Travel signed a deal in February of this year according to which the latter agreed to suspend orders for Istanbul-Yerevan-Istanbul flights from the Turkish Fly Air company. As a compensation Bagrat Tour committed to transfer to Tower Travel $50 from each sold Armavia ticket to Yerevan-Istanbul-Yerevan flights.
Thus, the Turkish company received a hefty sum doing nothing, while Armavia got a monopolistic position on the market.
Meanwhile, according to the Commission, had there been competition between the two companies, the price of air tickets would be considerably lower.
The Commission qualified this as unfair competition and obliged either company to pay one percent of their annual revenues to the public coffers.
Bagrat Tour Co. Executive Director Bagrat Navoyan did not look much dissatisfied with the fine applied against his company as he talked to the media following the sitting of the Commission.
“It is a big sum for us, but if we are in the wrong. It is important for every organization to admit its fault,” he said.
Furthermore, Navoyan said that only by signing a deal with the Turkish company did it become possible to get rid of the monopolistic pressures of once Armenian national carrier Siberian Airlines.
“They stifled us, did not want us to expand on the market, but thanks to us ticket prices went down from $400 to $250-300, which I think is a normal price, considering the fact that a coach travel costs about $200-220,” Navoyan said.
Yet, he found it difficult to explain why a Yerevan-Moscow-Istanbul return flight costs for Armenians approximately as much as a Yerevan-Istanbul-Yerevan flight – $300. Meanwhile, a trip from Yerevan to Istanbul and back is 2.5 times as shorter.
Navoyan tried to explain it by the increase in the price of air fuel in Turkey.
Yet, just like in Yerevan, a ton of kerosene in Istanbul costs about $750, while in Moscow a ton of kerosene costs about $420.
The state regulator also fined the Russian Aeroflot company for confusing consumers with its so-called Autumn 2005 discount action.
Having studied the issue, the Commission came to the conclusion that it was practically impossible for passengers to buy Aeroflot tickets at discount prices (reduced nearly three times as declared by Aeroflot) during the time of the action on September 15-24. This, according to the Commission, resulted in a shortage that entailed a stir on the market and caused queues of people hoping to get Yerevan-Moscow return tickets at the declared discount price of $99 instead of the regular price of $320.
The Russian company did not inform the public in advance how many discount tickets it was going to offer for sale and was guided by a lottery principle.
Unlike Bagrat Tour Co., Aeroflot was let off the hook this time around with a merely symbolic payout of 100,000 drams (about $225).
The company’s representative in Armenia Garnik Ghahramanyan refused to comment on the decision, saying that an official response would be available only after the Commission’s decision had been forwarded to Aeroflot’s head office in Moscow.
Yet, there is also another problem with Aeroflot’s Moscow-Yerevan-Moscow flight that has not yet caught the Commission’s attention. The matter concerns the loading of half of aircrafts flying to Yerevan from Moscow with kerosene instead of passengers’ baggage. As a result, passengers arriving in Yerevan get their baggage with considerable delays. Aeroflot explains this by the difference in fuel prices in Yerevan and Moscow: “Fuel in Yerevan is expensive, we need to economize.”
But what is the fault of the passenger? Does Aeroflot treat its passengers going to Washington or Frankfurt the same way, or is it allowed to do everything to an outpost?