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Aeroflot is the national airline of Russia with its main base at Moscow Sheremetyevo International Airport. Formerly wholly-state owned, the airline has been partially privatised and continues to be the dominant carrier in the country, accounting for about 20% of the Russian passenger market. The Russian Government continues to hold 51.17% of the airline's equity. Legal entities and individuals own the rest. Aeroflot operates an extensive network of domestic services within Russia, as well as international services to Europe, Asia, the Middle East and North America. Aeroflot is Russia’s largest air carrier; it accounts for over 42% of international scheduled and 13.7% of domestic traffic in Russia (with its subsidiaries, around 20%). Aeroflot is a member of SkyTeam.
Aeroflot has been a leading voice behind consolidation in the Russian airline industry, and has supported the Government's plan to address the fragmentation of the airline industry that has been a central feature since the fall of the Soviet Union. Aeroflot has taken over management control of four Russian airlines including Rossiya, Orenair, Vladivostok Avia and SAT Airlines.
Location of Aeroflot main hub (Moscow Sheremetyevo Airport)
Aeroflot share price
1,551 total articles
53 total articles
This end-of-year wrap reviews 15 of the most read reports from CAPA analysts in 2013. The most popular report from CAPA’s analysts this year looked at the impending impact of the big three Middle East airlines on the US market, Emirates, Etihad and Qatar Airways, once they establish there more widely. In particular it looked at the direction of Emirates, shortly after commencing a remarkable joint venture agreement with Qantas which commenced on 1-Apr-2013.
In Asia, much of the attention is towards the rise and rise of LCCs and their various international joint venture operations, all accelerating the process of change away from the old bilateral restrictions. For Europe too, most of the action has derived from the main LCCs, as the established airlines struggle to reduce costs and find new models to help them adapt to the new environment – including partnerships with the former enemies from the Gulf.
Latin America too has seen several key cross border mergers, including the LATAM consolidation to create the largest airline group in the region. Africa, with one or two exceptions, sadly still struggles to overcome inefficiencies and government meddling, while gradually opening up to private, more efficient models. And Russia looks forward to a new 2014 with renewed vigour.
Is the LCC label still valid? Are they only about point-to-point markets? What are the prospects for LCCs created by full service carriers? Is there a unit cost threshold that defines a low-cost carrier? Peter van Fenema, Adjunct Professor at McGill University, led a panel discussion at the CAPA World Aviation Summit in Amsterdam in Nov-2013, in which executives shared their experiences of being involved in LCCs.
The panel included representatives of a European LCC owned by a legacy group, a legacy group planning a new LCC subsidiary, a start-up LCC in Africa, China’s only pure LCC and an investor in LCCs.
In our fourth in a series of reports on the panel discussions at the Summit, we summarise recent LCC experiences and developments.
Have the global airline alliances been effective at generating cost efficiencies, or is their value limited to revenue benefits? Can bilateral partnerships be as effective as a branded global alliance? Do the immunised joint ventures within the alliances have a destabilising impact on those alliance members that are not also JV members? Should the alliances attract LCCs to join their ranks?
At CAPA’s World Aviation Summit in Amsterdam on 26-27-Nov-2013, Professor Rigas Doganis led a discussion on these and other questions examining the state of the world’s three global airline alliances. Panellists included the CEOs of two of the alliances and executives from an airline that is an alliance member, but not in a joint venture, and from a hybrid LCC that is outside the alliance system.
Aeroflot: strong profit growth in 9M2013. LCC subsidiary Dobrolet complements the team in early 2014
Aeroflot Group enjoyed strong growth in traffic, revenues and profits over the first three quarters of 2013, succeeding both in growing RASK and lowering CASK and bringing the prospect of improving its FY2013 operating margin, after two years of falling profitability. It has led the consolidation of the Russian airline sector, integrating and reshaping newly acquired subsidiaries, and now appears to be reaping the benefits of this government-backed process.
The next phase in the group’s progress will be the planned launch in northern spring 2014 of its LCC subsidiary Dobrolet. LCCs have not previously been a feature of the Russian market, but this is changing on international routes. easyJet is now well established from London and Manchester to Moscow; Wizz Air flies from Budapest to Moscow; and Ryanair has obtained permission to fly from Dublin to Moscow and St Petersburg from Mar-2014.
Legislation allowing elements of the LCC business model in the domestic market is expected to be passed by the end of this year and Aeroflot is investing USD100 million in Dobrolet to take advantage of this.
Aeroflot is seeking to downplay reports from earlier in 2013 that it was considering leaving its SkyTeam alliance, to which it has belonged since 2006. But its relations with the alliance have become strained. Air France-KLM and Delta blocked Aeroflot's request to join their trans-Atlantic joint-venture, Aeroflot Deputy Director for Strategy and Alliances Giorgio Callegari told CAPA at its World Aviation Summit in Amsterdam on 26/27-Nov-2013. Mr Callegari declined to say why Aeroflot was not permitted to join, but said SkyTeam is "basically run by Air France-KLM and Delta" and Aeroflot "belongs in name only".
Mr Callegari's views on certain airlines dominating an alliance are not unique to Aeroflot or SkyTeam. The question for Aeroflot is "where do we go from here?" Mr Callegari said. His answer is to establish bilateral relationships, and namely joint-ventures, in Aeroflot's three key markets, in order of importance: Europe, Asia and North America. Mr Callegari reported "good" relations with SkyTeam's Asian partners, potentially meaning they could be part of a JV. But Aeroflot will likely have to turn to non-SkyTeam members if it is to establish a JV of significant weight in Europe and North America. Such numerous and strong JVs outside of an alliance would be unprecedented, and fuel more speculation about Aeroflot's future in SkyTeam.
Etihad's announcement that it was buying 33.3% of Switzerland-based Darwin Airline was made on the first day of the Dubai Airshow and was easily lost in the fury of orders announced that day.
Darwin only flies aircraft with 50 seats, less than the number of premium seats that will be on many of the 350-plus widebody aircraft Gulf carriers ordered at the airshow. But the announcement is significant, and three reasons stand out.
First, for Etihad the carrier will "connect the dots" in Europe for itself and partners, linking hubs but also tertiary cities, which have largely been passed over by Gulf carriers. Many of these cities are served by the Lufthansa Group. This gives rise to the second significant impact: on Europe's legacy carriers. Gulf carriers changed their long-haul business while European LCCs decimated short-haul. Regional traffic was always typically a burden, and will come under further pressure following Etihad's announcement. Third is that Darwin Airline will re-brand as "Etihad Regional", and Etihad openly states Darwin is only the first carrier to use this new brand. As the industry still digests Etihad's partnership and equity strategy, Etihad promises to change another component of aviation – and raise the stakes in the liberalisation of the industry, especially by stamping its name on a European carrier.
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