ILA 2008: Russian airlines' bright start counters rising fuel costs

Russia’s air transport industry has got off to a strong start this year despite constraints stemming from higher fuel prices, airport fees and fares.

Interim reports by the Transport Clearing Chamber (TCC), monitoring the sector, and many airlines testify to a strong traffic growth in the first four months.

Year-on-year increases in overall passenger numbers for particular top-tier operators were as follows: Aeroflot - 16%; S7 Airlines – 38%; Transaero – 46%; Rossiya – 15%; UTAir – 27%; AirUnion alliance – 28%.

Notably, at Aeroflot domestic growth dwarfed international expansion (33% and 2.7% respectively) while the second-largest Russian carrier, S7 Airlines, expanded in the cross-border segment by 25% - by far larger than domestically.

A string of second-tier and regional operators have also grown at a healthy rate and are confident of sustaining it. Highlights include:

• KD Avia claims to have increased traffic 163% after switching to all scheduled services under its hub-and-spoke business model.
• Kuban Airlines saw a 19% increase in passenger numbers and is aiming to maintain this growth rate during the rest of the year.
• Atlant-Souyz is planning to transport 2.1 million travellers, up from 1,8 million last year, on the back of strong demand and its fleet renewal and network expansion. 

According to TCC, the aggregate passenger traffic rose more than a fifth during the first four months to 13 million. Cabin loads averaged 69.5% during the period. Cargo traffic volume grew by almost a third.

The boom has defied soaring fuel prices, which nationwide climbed 30% in the first quarter, and heftier user fees charged by airports.

“To cope with higher operating costs, we’ll have to introduce surcharges and increase fares,” says SkyExpress director manager Marina Bukalova with many of her colleagues taking a similar path.

Still, industry figures believe the country’s economic growth, benefiting the population at large, bodes well for air travel and fare hikes will not put a brake on further growth in airline business.

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Source: Flight Daily News