Russia Fears More Airlines to Go Bust on Plunging Demand

Russia sounded the alarm bells on Thursday over growing risks in its airline industry, saying more carriers could go bankrupt.

Last October, Russia's second-biggest carrier Transaero stopped flying due to financial problems.

"On the whole airlines are accumulating losses and we do not rule out the risk of airlines going bankrupt if demand does not pick up and traffic does not grow as a result," deputy transportation minister Valery Okulov told lawmakers.

In January, overall passenger traffic fell by more than 6 percent to 5.54 million people compared to the same month last year, Rosaviation, the Russian Federal Air Transport Agency, said on Thursday.

Of the total, international passenger traffic plunged by more than 26 percent to just over 2 million people, Russia's aviation watchdog said.

By contrast, the number of passengers on domestic routes rose by more than 11 percent to more than 3.5 people in January.

Demand for air travel and foreign holidays dramatically dropped in Russia amid an economic crisis exacerbated by falling oil prices, Moscow's confrontation with the West and sanctions over Ukraine.

Following the bombing of a Russian airliner flying from the resort city of Sharm el-Sheikh, which last fall killed all 224 people on board, authorities in Moscow suspended flights to Egypt, one of the Russians' most favorite holiday destinations.

The authorities also warned Russians against traveling to Turkey -- another affordable destination -- after Ankara shot down a Russian bomber at the Syrian border in November.