The bankruptcy of Avianova, Russia’s fastest-growing LCC, highlights the difficulties of emerging markets that lure investors and their LCC start-ups into complex but evolving sectors with promises of explosive growth. Avianova's bankruptcy follows financial difficulties after a dispute between its two shareholders, Russia’s A1 Investments and US-based LCC investor Indigo Partners, showcasing the risk of foreign-managed operations in markets that have only recently begun to open up. It is an experience Avianova CEO Andrew Pyne was exposed to at his previous start-up, low-cost long-haul carrier Viva Macau based in the captivating region of the Pearl River Delta. And in the other big growing market – China – LCCs are still trying to gain a foothold.

Avianova’s collapse is a major setback for the development of the low-cost sector in one of the world’s fastest-growing markets with low LCC market share. But the Russian market, despite its myriad regulatory, geographic and infrastructure challenges, remains a market brimming with potential for low-cost operators. LCC penetration remains very low, and demand for air travel, particularly in the short-haul space, continues to grow at breakneck speed. Further LCC start-ups are inevitable, but foreign-backed entrants are unlikely to be attracted.