Russian Airline Alliance?

Russian news agency RIA Novosti is reporting that a 25% stake in number-two Russian airline S7 might be transferred to flag-carrier Aeroflot if the two airlines establish an alliance. If no alliance occurs, then the stake will be put up for auction.

The government, which owns the 25% stake, has been trying to sell it as part of its privitization plan. Of course Aeroflot is pleased with the idea of holding a large stake in its biggest rival, which focuses on services out of Moscow, Novosibirsk and Irkutsk. Aeroflot has one hub - Moscow. Their slogan might as well be 'All routes lead to Moscow' - a system that's pretty inefficient. For example, if you want to fly from Petropavlosk-Kamchatsky to Vladivostok, you have to fly to Moscow - a ten hour flight and then an eight and a half hour flight. However, S7 has a direct route between the two cities that cuts travel time considerably.

Of course, there are government critics of the transfer, who say that the transfer could make Aeroflot more capable of blocking S7's route expansion, especially on international routes, where Aeroflot dominates. But even if that's the case, Aeroflot is a long way from the Soviet days, when it was the only Russian airline.