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Russian billionaire Fridman's Alfa may start airline

Russian billionaire Mikhail Fridman's Alfa Group may buy or start a low-cost airline to tap Russia's surging travel market, the company said, denying a report that it bought a stake in Budapest-based Wizz Air.

„We haven't bought anything, but we are studying the low- cost market and we have a certain interest that hasn't yet materialized,” said Igor Baranovsky, managing director of Alfa's investment arm, A 1, via phone in Moscow, declining to elaborate. RBC Daily reported earlier on Friday that A 1 bought an unspecified stake in Wizz Air Ltd. from US-based Indigo Partners, citing an unidentified person familiar with the deal.

The Russian newspaper said A 1 is hiring workers for a new Moscow-based airline called Phoenix that will be modeled on Wizz Air. „This is totally groundless,” Wizz Air spokeswoman Natasa Kazmer said in a telephone interview. „This is monstrous silliness.” Billionaire Alexander Lebedev is among Russian businessmen planning to establish a low-cost carrier in the country to benefit from surging demand. Russian airlines flew 14.8 million passengers in the first half of this year, 9.2% more than in the same period last year. Lebedev's National Reserve Corp. plans to roll out its new carrier, National Wings, next year.

Lebedev is the largest shareholder of OAO Aeroflot, the country's biggest carrier, after the government. National Reserve's Alpstream subsidiary, a Zurich-based investment company, this year acquired 48% in Blue Wings AG, a German low-cost carrier. Boris Abramovich, co-owner of Russia's fifth-largest airline KrasAir, plans to create a low-cost carrier in Russia with the help of the European Bank for Reconstruction and Development, Vedomosti newspaper reported in September.

Abramovich is also competing for Hungary's unprofitable national airline Malév Zrt as he looks to enter the European Union and connect the Hungarian carrier to his Air Union alliance serving Russia and Asia. „This market has low penetration, only 3% of the population fly,” Alfa's Baranovsky said. „This is not because people are afraid of flying, but because tickets are expensive. If we create such a company, then through the volume of operations we may get interesting financial results.”(Bloomberg)