Service with a smile stuns people in Russia


MOSCOW -- The first faint strains of competition are emerging here, exerting a profound effect on the lives they touch.

Perhaps the most dramatic changes have occurred in the air, where on a recent flight to the frozen Arctic city of Norilsk, startled passengers on an old plane gray with dirt were handed surveys that asked their opinions of the service.

The reason? A new private airline was flying the same route, offering sparkling clean airplanes, smiling stewardesses serving wine and cognac with dinner and an in-flight movie. Not only was the service warm, it cost the same as the cattle-car-style treatment on the government airline.

Competition also has begun to affect life on the ground. A year ago, only a handful of firms sold foreign cars in Moscow and the prices were twice as high as in the West. Now car lots are sprinkled across the city, and some prices have tumbled by half. A Chrysler minivan that cost $40,000 last year can be found for $20,000 this year.

The gray, monotonous street scenes of Moscow are growing brighter each day as newly privatized stores try to figure out how to lure customers. A bread store stands out with a sprightly red and white awning; a milk store polishes its windows so they gleam and beckons buyers with pictures of cheerful cows cavorting across the plate glass.

This is a drastic change in a nation where Bread Store No. 10 looked just like Bread Store No. 21 -- with identical surly clerks, puddles of water on the cracking floors and faceless windows, translucent with grime.

Not everyone, of course, is happy with the idea of competition. Under the Soviet system, it was sort of a dirty word. Lenin once called it "the incredibly brutal suppression of the enterprise, energy and bold initiative of the mass of the population."

So under the Communist Party, competition was replaced by socialist emulation, in which groups worked together to exceed the goals of plans and achieve the other amazing results of Soviet labor.

Now competition is coming back, nurtured by economic reform. Privatization, especially, has encouraged it, giving citizens a reason to work harder and better.

Bewildered consumers

Still, many people find themselves slightly bewildered by some of the trappings of competition -- like market research and the customer service survey. Russians had been told what to think, not asked what would please them.

The nation's long-suffering air passengers, for example, were used to little more than abuse from the government airline, Aeroflot.

"When they land and leave the plane safely, they don't complain about anything," said Valery N. Kasyanenko, deputy director of air travel for the Russian Ministry of Transport. "They're glad to be alive."

Last year, the private Transaero airline began offering stiff competition on several routes to the former Aeroflot, which has been broken up into 250 competing firms.

Passengers who once could get a ticket only by standing in line for hours found they could make a Transaero reservation by telephone.

And Transaero passengers actually got seats on the plane. In the Aeroflot-only days, tickets were always oversold. No one ever heard of compensation for bumping. The only recourse was to wait for the next flight. Waits were so long -- days even -- that passengers ran out of clothes and had to do their laundry and hang it out to dry.

Service consisted of a glass of rusty-looking water served in a dingy, beat-up plastic cup. On one flight, an envious stewardess spied a passenger's jar of instant coffee and asked if the passenger would mind giving her a cup of coffee.

A recent Transaero flight from Norilsk to Moscow revealed a whole new idea of air travel. Stewardesses appeared with a cart filled with Sprite, Coca-Cola and Fanta. One family of three asked for one of each, and gravely exchanged sips as if sampling rare wines.

The 10-year-old son finished off his Coke, and was astonished to be offered a second . . . and a third . . . and a fourth, all the while watching a Gene Hackman U.S. film dubbed into Russian.

"Is this ours?" one incredulous man asked. "It's not a foreign airline?"

When passengers disembarked, stewardesses said, "Thank you. Please fly with us again."

Elderly women took the courtesies quite literally, and paused for thoughtful discussions at the top of the steps. "I'm not sure when I'll be flying here again, maybe in a week or two. . . ."

In the years to come, said Mr. Kasyanenko, competition will shape the market even more drastically. The now-excessive number of small companies will find they have to consolidate to compete, and within five years about 10 large airlines will emerge.

"Eventually, competition will improve the quality of transportation for everyone," he said. "Some of these companies have already begun to offer business class and other services."

Room to improve

Some economists maintain true competition is a long way off.

"You're daydreaming when you talk about competition here," said Albert Rivkin, an economist and president of the Institute for Development in Moscow.

He said creation of so many airlines, for example, only illustrated the destruction of a solidly built structure rather than meaningful competition.

On the other hand, he conceded that the vast array of imports now being sold in Russia has forced local producers to work at improving their quality so they can compete.

"And fruits and vegetables look much more beautiful now," he said, "even in small towns."

In 1991, only two stores existed that were well-stocked with food imported from Europe. Now the stores are too numerous to count, and the competition has lowered prices.

Some prices increase

At the same time, Russian food distribution is still largely controlled by a few monopolies. While the cost of the foreign food is falling, the cost of local food is rising, showing the effects of little competition. Until now, imported food was two or three times more costly than Russian food.

Last week, an expensive Finnish food store was selling cucumbers for $1.77 a pound. In the local Russian markets, they cost $2.30.

A privatized store on Leningradsky Prospect sells bread for 20 rubles more than in government stores, but customers there have good reason to pay more. When Alexander A. Malinin and his staff privatized the store last year, they put up snappy red-and-white awnings and an attractive window display.

"We wanted it to look beautiful and attract customers," he said. He also negotiated a contract for bread and pastries with a factory near Moscow, which guaranteed fresh deliveries and agreed to make his own recipe for brown bread.

"I make sure our bread is always fresh," Mr. Malinin said, "and our brown bread is special."

Even the market-sensitive Mr. Malinin is a bit uneasy at the word "competition."

"I didn't think about competition when I was trying to make my store beautiful," he said. "My main idea was to please customers. I don't know how to compete with other bread stores. Everyone has to buy bread, you know."

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