Russia's Aeroflot defies sanctions to create new low-cost airline Dobrolyot

Russian Prime Minister Dmitry Medvedev (top) inspects a Boeing 737-800 NG, owned by Dobrolyot airline, with Minister of Transport Maxim Sokolov (right, bottom) and Aeroflot CEO and director-general Vitaly Savelyev (second right, bottom), at Sheremety
Russian Prime Minister Dmitry Medvedev (top) inspects a Boeing 737-800 NG, owned by Dobrolyot airline, with Minister of Transport Maxim Sokolov (right, bottom) and Aeroflot CEO and director-general Vitaly Savelyev (second right, bottom), at Sheremetyevo International Airport outside Moscow on June 10, 2014. Aeroflot will create a new low-cost unit after Western sanctions grounded its first effort to enter the market, the airline's chief executive said on Sunday. -- PHOTO: REUTERS

MOSCOW (AFP) - Russian flag carrier Aeroflot will create a new low-cost unit after Western sanctions grounded its first effort to enter the market, the airline's chief executive said on Sunday.

"We will after all register a new airline," Aeroflot chief executive Vitaly Savelyev was quoted as saying by Russian news agencies.

He said the company's low-cost carrier, Dobrolyot, had worked well during the six weeks it was allowed to operate.

Dobrolyot was forced to shut down because it flew to Russian-annexed Crimea and was therefore hit by EU sanctions imposed over the Kremlin's alleged support for pro-Russian rebels in Ukraine, including the cancellation of the leasing contracts for its Boeing aircraft.

"We are holding talks with leasing companies and the first steps show that they want to work with us," said Mr Savelyev.

He said possible routes were still being worked out, but that the new airline could begin operations from the end of October when the winter schedule begins.

Mr Savelyev said flights to Crimea, which Russia annexed from Ukraine in March, would depend on demand.

Services to the popular Black Sea summer resort are usually cut back during the winter months.

New fuel-efficient jets are key to the success of low-cost airlines as the high cost of fuel often makes it their biggest expense.

Leasing allows new airlines the opportunity to acquire aircraft more quickly without huge up-front investments.

Dobrolyot, which operated two Boeing 737-800 aircraft when it was forced to shut down, had planned to lease another six this year to begin flying to a handful of Russian cities.