"Aeroflot/ Sheremetyevo Terminal 3 Is On"

Tuesday, November 16, 2004

Aeroflot/ Sheremetyevo-3 Is On
Russia - The Moscow Times


Fed up with years of bureaucratic gridlock, Aeroflot said Monday it will
finally go ahead and build a badly needed third terminal at Sheremetyevo
Airport, despite fierce opposition from the Transportation Ministry.

Construction will begin sometime next year "and be completed in 2007,"
Aeroflot deputy general director Lev Koshlyakov said by telephone.

Koshlyakov's remarks came after Kommersant published details of a
confidential memo from Transportation Minister Igor Levitin to Federal Air
Transportation Agency chief Nikolai Shipil in which Levitin threatened to
sue Aeroflot if it tries to build the terminal without his permission.

Levitin and Shipil are both on Aeroflot's 11-member board, which is chaired
by Viktor Ivanov, a top aide to President Vladimir Putin. Levitin, who is
also chairman of state-owned Sheremetyevo, wants to revamp the airport's
existing international terminal before deciding whether to build a new one.

At a meeting earlier this month that Levitin did not attend, Aeroflot
directors approved a plan to attract a $150 million syndicated loan to help
fund the $430 million Sheremetyevo-3 project.

The Federal Air Transportation Agency is part of the Transportation
Ministry, and Levitin said Shipil should have represented its position. He
said "an understanding" had been reached prior to the meeting that a
decision on the terminal could only be made jointly by the airport and the
airline. "This means that on the given issue a decision could not be taken,
therefore these decisions can be disputed in a court," Kommersant quoted the
letter as saying.

An aide to Levitin, Svetlana Kryshtanovskaya, confirmed the report but
declined to comment, saying it was "an internal letter." Shipil was not
available for comment and his deputy, Gennady Chernov, said he only learned
about the letter from Kommersant.

Aeroflot first announced its intention to build the new terminal in 2000 and
originally planned to have it completed by the end of last year. But
infighting between the airport, the airline and various government bodies
and officials halted the project after a groundbreaking ceremony in February
2001.

The new terminal is crucial to Aeroflot's development. With a capacity to
service 8 million passengers per year, it would significantly ease
congestion at the two existing terminals while making Moscow a more
attractive hub for transit flights between Asia and Europe.

But adding to the delays has been uncertainty over management of the airport
itself, which has been in constant flux.

Billionaire Mikhail Fridman's Alfa Group won a tender early this year to
manage the complex with a promise to help finance its development, but
Aeroflot's opposition prevented the company from receiving the contract.

Meanwhile, the airport's board agreed last month to hire a new management
team and spend $70 million reconstructing Sheremetyevo-2.

The airport's new deputy general director in charge of development, Sergei
Nedoroslev, said previous disagreements should be put aside. "We are closely
working with Aeroflot," he said.

Koshlyakov said the carrier had offered the airport a chance to buy a stake
in the planned terminal but has yet to receive a reply.


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