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The airline will be based at Yermolino Airport in the Kaluga region, 80 km west of Moscow.
According to the Russian media, UTair plans to build a new terminal at the airport with the ability to serve 8 million passengers a year.
This will allow other airlines to operate at Yermolino Airport.
The use of this airport will also help to relieve pressure on busy Moscow airports.
The idea of creating a low-cost carrier in Russia is not new.
In October, 2012 the country’s largest commercial airline Aeroflot promised to create a national low-cost carrier within a year.
At the meeting with General Director of Aeroflot Vitaly Savelyev , Russia’s President Vladimir Putin raised the issue of low-cost carriers and stressed it was an important part of the company’s development strategy.
“It would be right to establish a carrier of this type, because many passengers would be interested in using its services, which would be more affordable, more within the reach of all those who do not earn so much”, he said.
Low-cost airlines are an integral element of global aviation, actively operating across Europe, Asia-Pacific and the United States.
However, in Russia this segment is not as developed – the only two budget carriers SkyExpress and Avianova stopped operations in 2011.
Irish low-cost airline Ryanair recently applied to the Russian Transportation Ministry, asking for permission to operate flights between the two countries.
And the British budget airline EasyJet will start operations to Russia with flights between London and Moscow from early 2013.