Russian prime minister Vladimir Putin has outlined plans to merge, renovate and privatise two major airports in the capital Moscow.

Under the proposals, put forward earlier, the Russian state will pay up to $1.7 billion for the 25 per cent of Vnukovo Airport it does not already own, eventually merging it with Sheremetyevo.

Vnukovo – the oldest airport in the city and third largest in terms of passenger numbers – would be purchased from Moscow city authorities.

Sheremetyevo is perceived to have has fallen behind privately-owned Domodedovo in terms of customer service standards, while it also attracts fewer passengers.

The location is, however, home to Russian flag-carrier Aeroflot.

Under the Putin proposals, Vnukovo and Sheremetyevo will be combined into a single state-owned entity, renovated and later privatised to boost their performance.

“We agreed with the mayor of Moscow, the transport minister and a representative of the finance ministry to combine into a single complex Sheremetyevo, 100-per cent owned by the government and Vnukovo airports,” Putin told ministers.

Moscow aims to raise as much as $7 billion in the next two years from asset sales, including Vnukovo, deputy mayor Andrei Sharonov said in February.