Aeroflot

Russian regional airline RusLine pursues expansion with new focus on Chelyabinsk

Russian regional airline RusLine is pursuing significant expansion in summer 2013, including the launch of five routes from Chelyabinsk Airport.

The fast-growing regional operator is Russia’s 16th largest domestic carrier with about 9,500 weekly domestic seats and about a 1% share of the Russian domestic market, according to CAPA and Innovata data. It is based at Moscow Domodedovo Airport, where it is currently the 10th largest domestic carrier.

But RusLine’s capacity will nearly double over the next couple of months as it launches several routes, including from Chelyabinsk and a new base at Voronezh, and adds capacity in several existing markets. The carrier plans to offer almost 20,000 weekly domestic seats in the Russian domestic market in Jul-2013, giving it almost a 2% share.

Aeroflot looks to expand its lucrative – yet challenging – sixth freedom market

The lure for an airline to grow beyond its home market by targeting sixth freedom traffic is as old as the jet age: bygone Icelandic carrier Loftleidir ruffled feathers in the 1950s by carrying far more passengers than its local population while KLM in 1957 listed on the New York Stock Exchange, partially to quell nationalist fears it was taking too many passengers from the US.

Efforts to focus on sixth freedom traffic come and go: KLM has remained (upwards of 80% of its passengers transit its Schiphol hub) while Emirates has sprung up (now as the third largest carrier in the world). And, as Chinese and other north Asian airlines expand their roles, now carriers like Aeroflot are making new pushes into sixth freedom traffic.

Aeroflot's Moscow hub has strikingly similar geography to Helsinki, where Finnair is betting its future on sixth freedom traffic, while claiming a network that can rival those in Europe and the Middle East.

Aeromexico faces formidable challenges in making new London Heathrow flights viable

Aeromexico’s planned inauguration of flights from Mexico City to London Heathrow in mid Dec-2012 marks the third destination in Europe served by the carrier. The choice is somewhat curious given that Heathrow is dominated by British Airways and the oneworld alliance, with Aeromexico’s SkyTeam partners offering connectivity to only a few global markets from the airport. The Mexico-UK market is also not a high origin and destination market as traffic to the UK represents about 1% of the international passenger traffic from Mexico.

The new service being offered by Aeromexico with Boeing 767-300ERs, scheduled to begin on 14-Dec-2012, will provide the airline’s passengers direct flights to London rather than connections through Madrid to London Gatwick (45km from the city versus 24km for Heathrow) operated by Aeromexico’s SkyTeam partner Air Europa and service from Paris to London Heathrow operated by SkyTeam anchor carrier Air France. Aeromexico’s flights to London Heathrow are complementing the carrier’s existing long-haul European service to Paris and Madrid, which is the main base for SkyTeam partner Air Europa. Air Europa is bolstering its service from Madrid as the weak Spanish economy is triggering other airlines to pare down their offerings from Barajas Airport.

Russia's Red Wings expands into the scheduled market with domestic base at Moscow Vnukovo

Russia’s Red Wings is embarking on an expansion of its new scheduled operation with the announcement of six new domestic routes from Moscow Vnukovo Airport. The new routes, announced over the last month, will join the airline’s initial scheduled route, Moscow Vnukovo-Kaliningrad, which was launched on 25-Jun-2012. Red Wings, which was founded in 1999, previously only operated leisure charter services on behalf of tour operators.

Red Wings is owned by Russian businessman Alexander Lebedev who also owns 15% of Russian state carrier Aeroflot. Mr Lebedev is reportedly attempting to sell his Aeroflot stake to the Russian Government to raise funds for fleet expansion at Red Wings.

Romania's TAROM remains confident of reversing its fortunes despite facing huge competitive hurdles

Management of Romania's TAROM believes it will not slip into a scenario like Hungary’s national carrier Malev, which ceased operations in Feb-2012, arguing that it has the “capability to adapt quickly”. But TAROM executives will find a hard time proving their case as the Romanian carrier has recorded losses for four consecutive years and is expected to remain in the red in 2012.

TAROM faces significant pressure from LCCs, namely from Wizz Air, which is absorbing an increasingly larger part of its market. In addition, the airline’s efforts to restructure and find a new business model are hindered by repeated delays of plans to sell 20% of the company. Eventually the Romanian carrier’s full ownership should end up in private hands.

But it is unlikely that a private investor will step forward to purchase a minority stake in state-owned TAROM in the current European financial environment. Europe’s economies are overall in bad shape, and there is an oversupply of small and medium airlines for sale whilst potential buyers are scarce.

TUI expanding reach into Russian market with launch of charter services

TUI is expanding its reach further into the Russian market with its new subsidiary TUI Russia, which recently launched services from Moscow Domodedovo in a joint-venture with Russian carrier Kolavia. The TUI-Kolavia partnership will see leisure services operated from Moscow to Turkey, Egypt, Bulgaria, Spain, Greece, Montenegro and Croatia using Airbus A321 aircraft supplied by Kolavia. TUI Russia says it is now the only tour operator in Russia offering flight and holiday packages, giving it a potential advantage in the Russian leisure market.