Ever Fewer Passengers

Russian airlines lost nearly 20% of their passengers in the first six months of 2009. None of the Top Five carriers succeeded in improving their 2008 results. This is unlikely to happen in the second half of the year as the summer period with increased air traffic is usually followed by decrease in demand in autumn. Taking into account the instability of the Russian economy and the strong expectations of the second wave of the financial crisis, this autumn could be worse for the local airlines than a year ago. The market has fallen back to where it was in 2007. So too have passenger load factors, indicating that as they have acquired new (mostly Western) aircraft, Russian airlines have optimized capacity by retiring obsolete Soviet-era airliners.
The five largest airlines continue to account for over 50% of all passengers flown by Russian carriers. In the first six month, Aeroflot has come out on top again despite a drop in passenger numbers from 4.4 million for the first six months of 2008 to 3.9 million. S7 Airlines, which had occupied the No. 2 slot for several years in a row, was overtaken by Transaero both in terms of passengers carried (1.88 million compared to Transaero’s 1.95 million) and passenger kilometers flown (4.33 million to Transaero’s 7.58 million).
Additionally, S7 lost its title as the largest carrier on domestic routes to Aeroflot. Overall, the airline saw a 30% decline in passengers. One reason for this was its recent fleet optimization effort, which saw S7 parted with all Soviet-built airliners. Another factor worth noting was the establishment by S7’s owners of a separate charter operation named Globus in 2008, which drew off a sizeable portion of the previous S7 customer base. In 2009 Globus more than quadrupled the number of passengers carried compared to 2008 while on domestic flight the number of its passengers skyrocketed by 31 times.
Rossiya Airlines moved to No. 5 ranking in terms of passengers carried, with a fall of about 20%. UTair that took the fourth place, turned out to be the only Top Five airline to not only end the first six months with nearly identical results to the same period in 2008 (losing just 5% of passengers and 0.1% of passenger kilometers), but to boost its passenger load factor by 4.5%.
Despite the general drop in demand, some individual carriers still managed to grow. Besides Globus, Orenair also strengthened its positions acquiring better share on the charter market. Former large players in this segment are losing clients for a number of reasons. The operation results of VIM-Avia airline were decreasing faster than the market in general while another carrier, Atlant-Soyuz that grew significantly in the last few years, lost almost half of its passengers in the first six month of this year. One of the reasons for such slump may be unclear situation with the launch of Rosavia airline established by Russian Technologies Corporation on the remains of the bankrupted AirUnion airlines alliance. It looks like while Atlant-Soyuz that is expected to joint Rosavia, was busy taking the route network of the former AirUnion, tourist operators find other carriers for charter flights this summer.
Nevertheless the demand decline rate slows down what became more evident in July. According to the official statistics, in this month the decrease in passengers carried by the Russian airlines amounted only to 10.7% compared to the same period of 2008. In June the decline rate was 13.4% while in January-May it was 20%. Such results correspond with the global air transport market that also showed the lowest decline rate in July, according to the International Air Transport Association (IATA) statistics.