Counter Intelligence Retail Ltd.: Russian PAX recovery continues apace….

September 2016 signalled the green shoots of recovery with passenger numbers recording an actual YoY growth for the first time since July 2014. Since then average monthly growth in international traffic has been at +17%, hitting a peak in April this year at +29%.

Following the dramatic slump in international passenger numbers at its airports post a number of geo-political incidents, this return to growth has been led by Russia's major international hub, Sheremetyevo (SVO). With growth of 19% YTD in 2017 the airport has seen not only passenger numbers grow to almost 8 million but also its share of international traffic in the country. Back in 2013, SVO and Domodedovo (DME) both shared equal status in terms of international traffic handled at 34% each. Fast forward to 2017 and the picture has changed dramatically with SVO now accountable for almost half (47%) of Russia's international traffic whilst DME has seen its share slip to 27%.

Russia is now the fastest growing European country for international traffic…

This dramatic return to growth means Russia is currently the fastest growing country in Europe's top 10 for international passenger traffic at 25% YTD May 2017. Of these, Portugal is the only other country to record double digit growth at +21%.

The turnaround in international traffic in Russia is clearly highlighted in the above chart. In 2016 Russia recorded a -9.7% decline versus a +5.5% rise across Europe but year to date 2017 Russia is growing at more than double the regional average (+25% v +10%).

Return of traffic to Turkey a welcome boost….

Traditionally a key Russian tourist destination, the downing of the Russian fighter jet in 2015 saw the Kremlin issue a blanket ban on all charter travel to Turkey. With relations now thawed, flights resumed operations in August 2016. Throughout this period scheduled flights continued to operate, albeit at a much reduced level. Following the repeal of this ban scheduled operators are also now looking to take advantage of demand with seat capacities set to double versus 2016 which would also exceed the previous highs seen in 2014.

Istanbul Ataturk will remain the key destination for traffic from Russia. However it is Antalya that looks set to be the main beneficiary with seat capacities in treble digit growth YoY in 2017. Dalaman & Gazipasa airports will also both see a return of traffic from Russia with neither airport seeing any scheduled flights arrive in 2016. Highlighting the impact that the ban had on Russian passenger numbers at Antalya, January 2017 was the first monthly YoY growth since March 2015.

This return of a key shopper market will also come as welcome relief for Retailers in the country, especially Nuance (Dufry), the retailer at Antalya, who saw Russian passenger numbers fall by 64% in 2016 which followed a -26% drop in 2015.

With traffic to a number of other countries, such as China, also driving the growth in international traffic, should average monthly growth in 2017 (+25%) continue throughout the year we could see passenger numbers reach levels not seen since 2013.

CiR President, Garry Stasiulevicuis comments, "It's fantastic to see this recovery, and has been long awaited in the industry. There's a renewed interest in the Russian passenger and we're looking forward to sharing fresh insight from our latest nationality research shortly, where we look in depth at the needs and expectations of the Russian Traveller and Shopper".

Refer to full documentation in the attachments box below.