Aeroflot Update: Expansion Plans 2018

Transcript

Giorgio Callegari:We plan to have a capacity increase throughout the year, throughout 2017, of between 14% and 16%, and that's across the group. It's a combination of no growth for Pobieda in the first 8 months and then the addition of 4 aircraft in the last quarter of the year. It's the combination of an opposite trend for Rossiya, so significant increase in capacity in the first few months of 2017 in comparison to 2016, and a stable trend of growth for Aeroflot. Well, we look at more or less retaining the same growth trend, a bit more opportunities for Padiel because they will be adding fleet in line with the potential we see for the low-cost market in Russia. Aeroflot will be adding, as always, a good combination of narrowbodies and will go back to adding some widebodies because we have placed an order for 6 777s that will come in '18, '19, and '20. And Rossiya will be, on the other hand, more or less stable in terms of capacity. We pride ourselves in having developed a rather balanced approach to growth, and that has been a key reason for our success in the last few years when the market was changing so dramatically every season. So we will retain the same approach, which is Pobieda mostly focused on domestic but with some international expansion, Aeroflot balance of domestic and international, And Rossiya a bit more on the leisure side than for intervention. Well, technically we didn't absorb Transaero. What we did was we felt that there was an opportunity to serve a portion of the market, and in order to do that, we added some aircraft to Rossiya. In order to operate those aircraft, we added employees in terms of crews and technicians, and that's what we've done. That is a process that took place between the end of 2016 and— I'm sorry, 2015 and the first 6 months of 2016. And it can be considered as successfully completed. And therefore, Transaero is truly a thing of the past now. Market share is not part of the strategy per se. What we believe is important is to retain profitable growth. Certainly with the market that in the first 6 months has shown growth of 35% internationally, it's impossible to have that capacity available. And if you plan to have that capacity available, it means that you're also taking a huge risk, which we don't think is very healthy in the aviation industry. So a large part of that growth has been on the leisure segment, which is not really the focus of the Aeroflot focus of the Aeroflot strategy, and therefore we're fine with that. So we will continue with our balanced approach to growth: leisure, business, regional, low-cost. It's more or less stable in the sense that transfer traffic is for us important, but also not again the main focus of our development. Certainly Moscow has a very convenient geographic location which puts Moscow on the shortest trip between, for instance, India and the northeast coast of the US, between Asia and Northern Asia and Europe. So we can tap into that market, we can tap into the market because we have a very competitive cost structure, but we also see a lot of potential in the Russian market. So we try and balance those flows with the opportunities that the point-to-point traffic provides us with. Well, we are a member of SkyTeam, we've been a member of SkyTeam for For a number of years now, about 10 years, we have a number of codeshare agreements which we're very happy with, and we're looking at the possibilities of identifying partners with which to go a step beyond, i.e., joint ventures or joint business agreements, and we hope to be able to announce something in the nearest future. We're flying to Bangkok, we're flying to Phuket, scheduled flights. We're flying to both Ho Chi Minh City and Hanoi, and we are cooperating with carriers in the region, certainly with Bangkok Airways as far as the leisure traffic in Thailand is concerned, and with Vietnam Airlines, something that was going on even before we both joined SkyTeam. Certainly, we believe in the potential of Singapore as a market, but it has to happen when the economic conditions justify that opportunity. And we think that that's going to happen when the new wide-body airplanes will come into Aeroflot fleet, so possibly in a couple of years.

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