Aeroflot expects to establish a low cost carrier by 2014 which will offer customer fares 20% to 40% cheaper than traditional carriers, according to a Kommersant report. The airline will be based at either Moscow Sheremetyevo or Moscow Vnukovo. The airline’s core product will be very different from Aeroflot’s and it will operate as a separate entity. The airline will first develop the most profitable routes across Europe and then later develop local and regional networks.
Aeroflot expects to establish low cost carrier by 2014: report
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Aeroflot Group's transformation: driven by strategic refocus, guided by the hand of Russian State
In recent years, the Aeroflot Group has undergone a significant transformation. From 2009 to 2016 the group's passenger numbers increased fourfold, its load factor improved by 11.3ppts and its revenue grew almost five times.
During this time the group's structure has moved from one of non integrated subsidiary airlines to a clearly focused multi brand approach targeting different market segments. The Aeroflot Group has also refocused its fleet strategy, reducing the number of aircraft types from 18 in 2011 to seven in 2016.
Some measure of the success of Aeroflot's transformation, beyond the obvious growth in scale, can be seen from its improved financial results. In 2016 it reported record profits, in spite of a second successive year of a shrinking economy in Russia. These results were helped by lower fuel prices and by currency movements, but Aeroflot Group's operating margin of 12.8% was better than those of other major European legacy airline groups.
Aeroflot's achievements also owe much to the government directed consolidation of the Russian market in recent years. Indeed, the Russian government's influence has long been a guiding force in Aeroflot's development.