Some Russian airline news
The first (and so far, pretty much, only) attempt to establish domestic low cost airlines in Russia failed last year when Avianova and Sky Express went bankrupt. What you possibly didn't know is that the latter was folded into Kuban Airlines (despite Russia's and, previously, Soviet Union's historical links with the Caribbean island, the airline's name has nothing to do with Cuba, it refers to the Kuban region of Southern Russia instead!)...well, Kuban airlines now ceases operations too. Not that it was a major player, but with a fleet of only seven aircraft it fell short of new regulatory requirements that put minimum fleet size at eight aircraft.
Regulation is actually one of the factors that has been hampering the development of a low cost airline industry in Russia (for a more detailed analysis see this article about the Russian low cost airline industry, it's nearly two years old, but still valid).
Among the airline regulations that are somehow unique to Russia is the requirement that all airline tickets must be refundable. Although there is currently a project to make this requirement more flexible, it is estimated that Russian airlines lose 8% of income due to last minute cancellations, something that other travelers end up paying for in higher fares (an estimation outs this "surcharge" at 22.7B. rubles per year, or in excess of $730M.).
This is something that Easyjet has had to comply with as it prepares to start flights to Russia (after winning a pitched battle against Virgin Atlantic for the right to operate this route following BMI's, the only British operator flying to Russia, acquisition by British Airways). Russia will be the only country in its network where the low cost carrier will sell refundable tickets.
Regulatory and operational complexity is not something low cost carriers like (even if Easyjet or Air Berlin are ready to comply in order to get access to a large non-saturated market), however I am trying to figure out, for a second, Ryanair negotiating exemptions with the Russian regulator and I have got the feeling that a truly developed low cost air travel market is still some way off in Russia...!