Aeroflot plans to carry half of all passengers in the country

According to the new strategy, due to the growth of the fleet and traffic in the regions, the share of Aeroflot in 2030 should reach 50%. But the carrier's competitors point out:

The passenger traffic of Russia's largest air carrier, the Aeroflot Group, should grow by 58.5% in 2030 compared to 2022, to about 65 million people. As a result, the group's share in the Russian market (including foreign airlines) should reach 50% against the current 38%. Such plans were announced by the HEAD of the group, Sergei Aleksandrovsky, as part of the presentation of its new strategy, RBC correspondent reports.

The Aeroflot group (73.77% of the shares are owned by the state), in addition to the airline of the same name, includes the low-cost airline Pobeda and Rossiya.

Aeroflot's new strategy was approved by the company's board of directors at the end of December 2022. The previous version of the document, prepared at the height of the covid-19 pandemic in the summer of 2020, assumed the transportation of 130 million people by 2028. At the same time, the main stake in it was placed on Pobeda, which was supposed to become the largest airline in RUSSIA. But now, according to Aleksandrovsky, not one low-cost airline, but the group as a whole is becoming a driver for the development of all Russian civil aviation.

How Aeroflot wants to increase its market share

The market share of the group will grow by increasing the fleet, creating additional regional bases, entering new international markets, Alexandrovsky explained. Until 2030, Aeroflot plans to increase passenger traffic almost three times faster than the average market rate (2.2%) - by 6%, follows from the presentation materials. In 2023, the group should transfer up to 43.5 million people, a top manager predicts. This is almost 7% more than last year (40.7 million).

At the end of 2022, Aeroflot Group had 349 foreign and Russian-made aircraft in its fleet. By 2030, it plans to put into operation 339 new Russian aircraft: 210 MS-21s, 89 Superjet New and 40 Tu-214s. According to a conservative forecast, by the end of 2030 the fleet will grow to about 500 aircraft (of which about 30% are imported versus 78% now), Aleksandrovsky said. That is, the fleet will grow by 43%. This forecast may be revised towards more optimistic if the company manages to keep more Western machines in operation. In this case, the share of the group may be even higher, notes its CEO. Aeroflot Group now has three regional bases (in Sochi, Krasnoyarsk and in the Far East - Vladivostok and Khabarovsk), not counting St. Petersburg (development will continue in Pulkovo). Minvody may be added to the southern cluster. In 2025-2026, the fourth cluster "Volga region and Urals" will be created. Among the airports considered there are Kazan, Ufa and Yekaterinburg. The total passenger traffic of regional bases by 2030 will be up to 7 million people per year (11% of the total passenger traffic), excluding flights to Moscow and St. Petersburg. Read on RBC Pro A child swears: how to react to parents "Gallery of failures": 8 worst products from APPLE, Nike,

What share of passenger traffic in 2030 will be on international flights, the top manager did not disclose. “International transportation for us, of course, is significantly more profitable than domestic, two or three times,” he said. In 2021, international flights accounted for 18.5%, in 2022 - only 13.1%.

Why the company needed a new strategy

The Board of Directors of Aeroflot instructed to update the group's strategy in March 2022, after the start of a special military operation in Ukraine. Then international sanctions were imposed against the Russian aviation industry , including a ban on the supply of aircraft and spare parts for them, requirements for the return of aircraft, a ban on flights to the European Union and other countries.

Aeroflot canceled all flights to Europe Politics

“The current version of the strategy, taking into account significant changes in the aviation market, is, of course, difficult to implement and has undergone many changes,” Aleksandrovsky admitted in an interview with RBC in December last year.

Aeroflot was forced to adjust its development model before 2022. Due to the COVID-19 pandemic and lockdowns in different regions of the world, the group began to pay more attention to flights within Russia. The focus on domestic flights helped it significantly reduce losses: from 123.2 billion rubles. in 2020 to 34.5 billion rubles. in 2021 (IFRS reporting data). But the total debt of the group at the end of 2021 increased by 6.2%, to 798.3 billion rubles. “The debt burden [at the end of 2023] will not increase relative to the end of 2022. In 2022, it has already been reduced. At the end of 2022, we feel absolutely confident in terms of servicing our obligations and free cash flow,” the head of the group said, without disclosing details. The amount of investment required to implement the new strategy is also not disclosed.

What are the risks

Aeroflot expects the first Russian aircraft out of 339 aircraft ordered last fall at the end of 2023. The investment project of preferential leasing for a batch of 63 liners for the group was approved by Prime Minister Mikhail Mishustin on January 11. “Domestic aircraft from the first deliveries will be distributed between Aeroflot and Rossiya,” Aleksandrovsky said. The company has not yet decided whether Russian aircraft will be in Pobeda, which flies exclusively on American Boeings (there are 41 aircraft in the fleet).

The authorities revealed the price of new Superjet and MS-21 aircraft for Aeroflot Business

But there are also weaknesses in the supply of new Russian aircraft to Aeroflot, the government decree pointed out. Among them:

high operating costs of Russian aircraft; insufficiently high design resource of this aircraft in comparison with foreign analogues; a limited number of qualified personnel to build, operate and maintain aircraft.

The threats to the implementation of the project, the authorities also include long periods of production of liners, restrictions on the supply of foreign components, delays in the certification of aircraft. To operate the new Superjet New, MS-21 and Tu-214 aircraft, the group will need about eight full flight simulators. “There are no deadlines for the delivery of simulators yet. We wait. Usually, the simulator appears after the aircraft, six to eight months after delivery,” Aleksandrovsky commented. In addition, Aeroflot needs Tu-214 aircraft with a flight crew of two, and not three, as is now provided for by their design, he said earlier.

At the same time, there is a question about the principles for distributing new aircraft among Russian carriers, Tatyana Fileva, a shareholder of S7 Airlines, the second largest player in the Russian aviation market, noted in early January. “If we start from the current market shares of the top 5 airlines, then the current production rates of new medium-haul domestic aircraft will not be able to fully cover the needs of even one Aeroflot by 2030,” Fileva believes. The S7 company expresses a private point of view, and the point of view of the state is reflected in the relevant industry programs that are now being actively implemented, the representative of Rostec notes.

At the end of 2022, the share of S7 in the market (excluding foreign companies) increased to 17%, and in some months of last year it reached 20%, its representative told RBC. He does not comment on how the company intends to maintain or increase the stake. At the same time, the idea of ​​\u200b\u200bmonopolizing the market for Aeroflot looks "boring", Aleksandrovsky himself said. “When there is competition in the market, it still stimulates, makes you pay attention to what is happening around you, and develop more dynamically and respond to external challenges from competitors,” the top manager explained.

RBC sent inquiries to the press services of other major airlines - Ural Airlines and Utair, as well as to the United Aircraft Corporation.