- CAPA Analysis
- Schedule Analysis
- Cargo Analysis
- Low Cost Carriers
- Economics & Trade
- Fast Fact Report
- IATA Code
- International Airlines serving this country (excluding codeshares)
The passenger air transportation sector in Russia can be characterised by significant competition. Aeroflot is majority owned by the Russian Government and is the flag carrier and largest airline of the Russian Federation. The three major airports serving Moscow are Sheremetyevo International Airport (SVO), Domodedovo International Airport (DME) and Vnukovo International Airport (VKO). Aeroflot dominates the domestic passenger market in Russia, however other airlines also provide frequent national and international services and they include S7 Airlines, Transaero, UTair Aviation as well as VIM Airlines and Nordavia. The Federal Agency for Air Transport of Russia is the government agency that is responsible for rendering governmental services and managing governmental property in the sphere of air transport (civil aviation) and the usage of air space over the Russian Federation.
Airports in Russian Federation
14,739 total articles
60 total articles
The price of a barrel of Brent Crude, the most popular method of tracking oil prices, is today around USD56 a barrel - and this follows a (brief?) rally. A year ago it was trading above USD100.
The falling oil price has already prompted the likes of BP, Shell, Chevron, ConocoPhillips, Russia’s Gazprom and China’s Cnooc to announce cuts in investment. It is occasioned, in the main, by steadily rising supply from non-OPEC countries, and especially from the US, and is, in theory at least, good news for air travellers, if and when airlines feel able to pass on any savings to their customers (assuming they are able to, they may be hedged at higher rates). Some airlines in Southeast Asia and China have already reduced their fuel price surcharge, at least.
But the other side of the industry coin is that some countries may feel the squeeze on their big ticket airport construction projects. Already, they are looking to trim them back. At the very least, smaller construction projects could be postponed or abandoned in many countries, either because the revenues to support them have been reduced or because of declining investment in neighbouring oil facilities and consequential effects on passenger traffic flows, as employees are laid off and executive travel cut back.
This could be the moment when the PPP, already gaining in popularity as a method of ensuring critical airport infrastructure is secured, makes a quantum leap - but the private sector must have confidence in its counterparts in the public arena.
The Aeroflot Group suffered a 31% drop in its operating profit and reported a net loss in 3Q2014, the seasonally strongest quarter. Although the net result was weighed down by foreign exchange movements and non-recurring items, the underlying profitability of the Group suffered due to RASK falling while CASK increased.
Demand on international routes has suffered as a result of the geopolitical backdrop, forcing Aeroflot to focus its growth in the domestic market.
Geopolitical events also led to the cessation of Aeroflot's fledgling LCC subsidiary Dobrolet in Aug-2014. However, the Group has acted rapidly in launching a new low cost venture, Pobeda, which started operating between Moscow Vnukovo and Volgograd this week.
VietJet Air is planning further expansion of its international network with Cambodia and Russia slated to become its fourth and fifth overseas markets. Vietnam’s leading low-cost carrier is also looking at launching a connection product which will enable it to compete in the broader Russia-Southeast Asia and North Asia-Southeast Asia markets.
Russia will initially be served using VietJet’s rapidly growing A320 fleet to access the Russian Far East city of Vladivostok. But VietJet has big ambitions for the Russian market using its anticipated future fleet of A330s.
The LCC sees huge potential in Russia as it is a large and fast growing source market for Vietnam’s emerging tourism industry. VietJet’s parent company also has Russian roots, which should make it easier from an access and local sales perspective.
The Aeroflot Group fell into loss in 1H2014, its first 1H loss since at least 2008. Although the result was affected by a significant level of non-recurring expenses, the underlying operating result was still significantly lower than last year. Aeroflot continues to grow faster than the Russian market and its focus on increased frequencies, rather than new routes, has helped the Group to grow its RASK (revenue per available seat kilometre). Unfortunately, this growth in RASK was outpaced by growth in CASK (cost per available seat kilometre).
The current geopolitical backdrop is clearly providing Aeroflot with some serious challenges. Demand for international flights has been weakened and EU sanctions forced the suspension of operations of Aeroflot's nascent LCC Dobrolet. Plans by the Russian government to reduce its stake in Aeroflot to 50% plus one share may now meet with delays as investors are likely to want to wait for the geopolitical situation to become more stable.
Air travel rises with a country's wealth. Law of nature, or can government policy make a difference?
CAPA's extensive country rankings database provides rich pickings for analysis of the relationship between the wealth of a country and the penetration of air travel in that country. Not surprisingly, our analysis confirms that the two are closely correlated. Countries with higher GDP per capita tend to have higher numbers of airline seats per capita.
Establishing a correlation does not indicate the direction of causality, which works in both directions. Economic wealth drives air travel, but air travel also helps to drive economic wealth. However, the correlation is not perfect and levels of penetration can be affected by geographical, political, fiscal and infrastructural factors. This leads to some countries having a significantly higher or lower number of airline seats per capita than might be expected simply from their level of GDP per capita.
Who are the out-performers, in terms of the penetration of air travel, and who are the under-performers? What are the characteristics of each group? How do the main regions of the world compare?
And what role can governments play? - in some cases, they can potentially make a significant difference.
Air Arabia and flydubai have hubs that are no more than 150 km apart and their networks overlap on better than 40 destinations, but the two fierce competitors have remarkably both been able to operate profitably. In 2013, combined, they handled traffic of almost 13 million passengers and earned an impressive combined profit of AED657.8 million (USD179 million).
Even rubbing shoulders as they do, the carriers' outlooks for profitability and growth in 2014 are positive. Both are maintaining the aggressive fleet and network expansion plans that have characterised their behaviour over the past few years.
flydubai is due to receive eight aircraft in 2014; Air Arabia is scheduled to take delivery of 10. As new aircraft are accepted into their fleets, the two will continue to build new connections within the Gulf and wider Middle East region. In addition, both are exploring new markets bordering the Middle East, particularly markets underserved by other Middle East-based airlines.