MOSCOW, May 2 - RAPSI. UTair has challenged the dismissal of its lawsuit against the Finance Ministry to recover $15 million in damages.

The Moscow Commercial Court held against the airline, which sought compensation for its losses in 2008, resulting from selling tickets for children under 12 at a 50 percent discount.

The plaintiff stated at the trial court that airlines are obliged to provide this discount, but there is no legislation entitling them to compensation from the state. UTair therefore has taken the matter to court, referring to the Constitutional Court's December resolution which recognized airlines' costs as losses. UTair stressed that although the court bound air carriers to grant such discounts, it also prohibited them from setting off the losses against air fare. Nevertheless, a balance of interest has to be observed and not only at the airlines' expense. Meanwhile, legislators have failed to offer a mechanism for the losses recovery.

The Finance Ministry argued that children under 12 are not a privileged class entitled to discounts by law. Thus, it said the carrier cannot hold the government accountable for the losses that it incurred by offering the discount.

The court noted in its judgment that "fare setting, including benefits for children from 2 to 12, is the air carriers right, but not [a result of] state regulation, so it does not impose any liabilities on the Russian Federation."

UTair is a leading Russian airline and the second largest domestic carrier. The UTair Group comprises UTair Aviation, UTair Express, UTair-Ukraine, UTair-Cargo, Nefteyugansk OAO, Helisur, UTair Europe s.r.o., and UTair South Africa (Pty) Ltd. UTairs fleet has 184 aircraft.