Russian Airline Development
1991-2000 - Fragmentation & Decline
The USSR's existence officially came to an end on December 26th 1991 at which time the 12 republics of the Soviet Union created the Commonwealth of Independent States. The Russian Federation was the largest of the remaining parts and Aeroflot remained its national airline. The new Russia had 89 federal areas ranging from provinces (oblasts) to nominally independent republics to federal cities. The period from 1990-95 saw massive upheaval within Russia and a 50% decline of GDP and industrial output.
Aeroflot and the Russian aviation industry suffered accordingly, with the once huge Soviet airline loosing the majority of its domestic operations as new airlines (nicknamed babyflots) sprung up all over Russia from old Aeroflot regional directorates. Many of these airlines were under-resourced and unviable creating safety issues which were excacerbated by the perilous state of airport infrastructure and operations. In 1993 there were 11 crashes and in 1994 18! Aeroflot became Aeroflot Russian International Airlines and concentrated on its international network assisted by leased Airbus A310s. A rare ray of light in the early 1990s was the private airline Transaero which operated a few 737s as well as Russian types, but in general the new airlines had to make do with a fleet of Antonovs, Ilyushins and Tupolevs of variable quality.
The 1998 Ruble crisis which saw devaluation of the currency and a debt default was the nadir of Russia's post-Soviet troubles, however after this a marked improvement in the economy (caused by a rise in oil prices, increases in domestic consumption and Russia's disconnection from a banking economy) saw a return to stability which benefitted the aviation sector.
The USSR's existence officially came to an end on December 26th 1991 at which time the 12 republics of the Soviet Union created the Commonwealth of Independent States. The Russian Federation was the largest of the remaining parts and Aeroflot remained its national airline. The new Russia had 89 federal areas ranging from provinces (oblasts) to nominally independent republics to federal cities. The period from 1990-95 saw massive upheaval within Russia and a 50% decline of GDP and industrial output.
Aeroflot and the Russian aviation industry suffered accordingly, with the once huge Soviet airline loosing the majority of its domestic operations as new airlines (nicknamed babyflots) sprung up all over Russia from old Aeroflot regional directorates. Many of these airlines were under-resourced and unviable creating safety issues which were excacerbated by the perilous state of airport infrastructure and operations. In 1993 there were 11 crashes and in 1994 18! Aeroflot became Aeroflot Russian International Airlines and concentrated on its international network assisted by leased Airbus A310s. A rare ray of light in the early 1990s was the private airline Transaero which operated a few 737s as well as Russian types, but in general the new airlines had to make do with a fleet of Antonovs, Ilyushins and Tupolevs of variable quality.
The 1998 Ruble crisis which saw devaluation of the currency and a debt default was the nadir of Russia's post-Soviet troubles, however after this a marked improvement in the economy (caused by a rise in oil prices, increases in domestic consumption and Russia's disconnection from a banking economy) saw a return to stability which benefitted the aviation sector.
2000-2004 - Growth Begins
In 2000 there were still some 300 carriers which flew 21.76 million passengers representing the first increase, year on year, after a 10 year decline. Aeroflot began to expand domestically again and dropped the 'international' from its name. At this time the largest 15 airlines in Russia by passenger numbers were:
Despite its lowly 12th position Transaero was the country's second largest international airline. The top 27 airlines carried 77.9% of the total passenger load. Consolidation was inevitable and began that year when Novosibirsk based Sibair tookover Moscow based Vnukovo.
Despite the inability of Russian manufacturers to make suitable aircraft in the required numbers, import taxes on foreign types were over 40% leaving them out of the reach of all the airlines except for Aeroflot and Transaero which had tax exemptions. Industry growth was therefore still utilising unsatisfactory types like the IL-86, TU-134 and especially the TU-154.
In 2002 Aeroflot retained its number 1 position (and soon after gained a new branding) but Sibir's passenger numbers grew by a staggering 85% (50% of which came from the Vnukovo takeover). Its traffic continued to grow by a further 26% in 2003. The number three airline, Pulkovo's, passenger numbers grew by 10% but it was informed by its owners, the Russian state, that it would be merged with the smaller Rossiya State Transport airline and its identity would disappear. Kras Air and UTAir (formerly Tymenaviatrans) also reported double digit growth.
In 2000 there were still some 300 carriers which flew 21.76 million passengers representing the first increase, year on year, after a 10 year decline. Aeroflot began to expand domestically again and dropped the 'international' from its name. At this time the largest 15 airlines in Russia by passenger numbers were:
- Aeroflot
- Pulkovo
- Vnukovo
- Sibair
- Kras Air
- Tyumenaviatrans
- AJT Air International
- Ural Airlines
- Kogalymavia
- Samara Airways
- Kuban
- Transaero
- Domodedovo
- KMV
- Dalavia
Despite its lowly 12th position Transaero was the country's second largest international airline. The top 27 airlines carried 77.9% of the total passenger load. Consolidation was inevitable and began that year when Novosibirsk based Sibair tookover Moscow based Vnukovo.
Despite the inability of Russian manufacturers to make suitable aircraft in the required numbers, import taxes on foreign types were over 40% leaving them out of the reach of all the airlines except for Aeroflot and Transaero which had tax exemptions. Industry growth was therefore still utilising unsatisfactory types like the IL-86, TU-134 and especially the TU-154.
In 2002 Aeroflot retained its number 1 position (and soon after gained a new branding) but Sibir's passenger numbers grew by a staggering 85% (50% of which came from the Vnukovo takeover). Its traffic continued to grow by a further 26% in 2003. The number three airline, Pulkovo's, passenger numbers grew by 10% but it was informed by its owners, the Russian state, that it would be merged with the smaller Rossiya State Transport airline and its identity would disappear. Kras Air and UTAir (formerly Tymenaviatrans) also reported double digit growth.
Aeroflot Group Genealogy
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Sibir & AirUnion Genealogy
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Other Russian Airlines Genealogy 1
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Other Russian Airlines Genealogy 2
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2004-2014 - Consolidation & Further Growth
In 2004 Kras Air and Domodedovo setup a joint management company and the next year they took ownership of Samara Airways, Omskavia and Sibaviatrans, with the aim of merging all five together under the AirUnion branding to create a third force in the Russian market. All seemed to be going to plan until 2008 when dramatic fuel price rises saw the group lose over $100 million in the first 9 months of the year and the entire operation ceased flying. Dalavia ceased flying around the same time, but the effect of the fuel crisis on Russian traffic was short-lived. Domestic capacity was up by 24% in mid 2010 over the same time a year earlier. Still, no single airline held over 20% of the domestic market, with the top three airlines (S7, Aeroflot and UTAir) holding about 47% in total and 29 other airlines holding the rest. The top 12 Russian domestic airlines were:
UTAir's capacity had alone grown by 64.1% in 2010. That year foreign aircraft in the A320 and 737 family range were exempted from import taxes finally allowing fleet renewal on a large-scale outside of Aeroflot and Transaero.
Another wave of consolidation occurred in late 2011 when all the regional airlines owned by the Russian Government were merged under Aeroflot ownership. Rossiya and Orenair have kept their identities, but SAT and Vladivostok Avia have been merged into the new carrier Aurora, whilst KMV has ceased operations. By the end of 2013 this meant that within Russia the airline groupings, listed by % share of total seats, looked like:
One area that has been weak in the Russian market is low cost carriers with both existing airlines, Avianova and SkyExpress, going out of business in 2011. This is something that will change with the Russian government keen to see LCC's start up though Aeroflot's first attempt, Dobrolet, was killed by EU sanctions a second effort is underway. Growth in the Russian market is also still strong with passenger numbers increasing from 61.5 million in 2008 to 103.7 million in 2013, though domestic passengers admittedly only made up 26.2 and 39.2 million of those passenger totals respectively.
Comparitive Airline Fleet Sizes in 2014:
150 - Aeroflot: A319/20/21, A330-200/300, 737-800, 777-300ER, SSJ-100
123 - UTAir: A321, ATR-42/72, 737-400/500/800, 757, 767-200, CRJ-200, SSJ-100
103 - Transaero: 737-300/400/700/800, 747-400, 767-200/300, 777-200/300, TU214
58 - S7 Airlines: A319/20/21, 737-800, 767-300
39 - Yakutia: AN-140, 737-700/800, 757, DHC-8, SSJ-100
35 - Ural Airlines: A319/20/21
29 - Rossiya: A319/20, 767-300
28 - Orenair: B737-400/800, 777-200
In 2004 Kras Air and Domodedovo setup a joint management company and the next year they took ownership of Samara Airways, Omskavia and Sibaviatrans, with the aim of merging all five together under the AirUnion branding to create a third force in the Russian market. All seemed to be going to plan until 2008 when dramatic fuel price rises saw the group lose over $100 million in the first 9 months of the year and the entire operation ceased flying. Dalavia ceased flying around the same time, but the effect of the fuel crisis on Russian traffic was short-lived. Domestic capacity was up by 24% in mid 2010 over the same time a year earlier. Still, no single airline held over 20% of the domestic market, with the top three airlines (S7, Aeroflot and UTAir) holding about 47% in total and 29 other airlines holding the rest. The top 12 Russian domestic airlines were:
- S7
- UTAir
- Aeroflot
- Rossiya
- Nordavia
- Transaero
- Vladivostok Air
- Ural Airlines
- Donavia
- Skyexpress
- KMV
- Kuban Airlines
UTAir's capacity had alone grown by 64.1% in 2010. That year foreign aircraft in the A320 and 737 family range were exempted from import taxes finally allowing fleet renewal on a large-scale outside of Aeroflot and Transaero.
Another wave of consolidation occurred in late 2011 when all the regional airlines owned by the Russian Government were merged under Aeroflot ownership. Rossiya and Orenair have kept their identities, but SAT and Vladivostok Avia have been merged into the new carrier Aurora, whilst KMV has ceased operations. By the end of 2013 this meant that within Russia the airline groupings, listed by % share of total seats, looked like:
- Aeroflot Group (Aeroflot, Rossiya, Orenair, Vladivostok Avia, SAT, Donavia) 34%
- S7 Airlines 10%
- Transaero 10%
- UTAir 8%
- Ural Airlines 4%
- Yakutia 2%
- Yamal Airlines 2%
One area that has been weak in the Russian market is low cost carriers with both existing airlines, Avianova and SkyExpress, going out of business in 2011. This is something that will change with the Russian government keen to see LCC's start up though Aeroflot's first attempt, Dobrolet, was killed by EU sanctions a second effort is underway. Growth in the Russian market is also still strong with passenger numbers increasing from 61.5 million in 2008 to 103.7 million in 2013, though domestic passengers admittedly only made up 26.2 and 39.2 million of those passenger totals respectively.
Comparitive Airline Fleet Sizes in 2014:
150 - Aeroflot: A319/20/21, A330-200/300, 737-800, 777-300ER, SSJ-100
123 - UTAir: A321, ATR-42/72, 737-400/500/800, 757, 767-200, CRJ-200, SSJ-100
103 - Transaero: 737-300/400/700/800, 747-400, 767-200/300, 777-200/300, TU214
58 - S7 Airlines: A319/20/21, 737-800, 767-300
39 - Yakutia: AN-140, 737-700/800, 757, DHC-8, SSJ-100
35 - Ural Airlines: A319/20/21
29 - Rossiya: A319/20, 767-300
28 - Orenair: B737-400/800, 777-200
REFERENCES
Anna Aero; 2009. Russian airline traffic down 15% in December; new state-run airline Rosavia yet to launch
Anna Aero; 2010. Demand for air travel in Russia growing at more than 20%; UTair now #1 domestic carrier; Egypt and Turkey popular
Anna Aero; 2012. Russia’s Transaero continues rapid growth; EU capacity grows 85% as bilaterals liberalise
Aviation Strategy Aero. Russian/CIS airlines: what's happening — January 2004.
Burgess, G; Kartashkin, A; Karamyslov, D. 2014. Russian customs exemptions for foreign aircraft are back
Centre for Aviation (CAPA); 2013. Aeroflot Group: LCCs in Russia have been notable for their absence. Aeroflot will start one
Centre for Aviation (CAPA); 2014. Aeroflot SWOT analysis. Russia's national champion is well positioned to confront new challenges
Erlanger, S. 1994. TRAVEL ADVISORY: CORRESPONDENT'S REPORT; With 400 Pieces, Aeroflot Is a Passenger Puzzle. New York Times
FlightGlobal; 2001. Russia's big airlines expand - but second tier loses out
Anna Aero; 2009. Russian airline traffic down 15% in December; new state-run airline Rosavia yet to launch
Anna Aero; 2010. Demand for air travel in Russia growing at more than 20%; UTair now #1 domestic carrier; Egypt and Turkey popular
Anna Aero; 2012. Russia’s Transaero continues rapid growth; EU capacity grows 85% as bilaterals liberalise
Aviation Strategy Aero. Russian/CIS airlines: what's happening — January 2004.
Burgess, G; Kartashkin, A; Karamyslov, D. 2014. Russian customs exemptions for foreign aircraft are back
Centre for Aviation (CAPA); 2013. Aeroflot Group: LCCs in Russia have been notable for their absence. Aeroflot will start one
Centre for Aviation (CAPA); 2014. Aeroflot SWOT analysis. Russia's national champion is well positioned to confront new challenges
Erlanger, S. 1994. TRAVEL ADVISORY: CORRESPONDENT'S REPORT; With 400 Pieces, Aeroflot Is a Passenger Puzzle. New York Times
FlightGlobal; 2001. Russia's big airlines expand - but second tier loses out