Aeroflot also benefits from the cheaper ruble,
as other airlines pay fees for Siberian overflights
in foreign currency. On the other hand, aircraft
leasing fees and handling, air traffic control and
other costs due abroad get more expensive.
Overall, Aeroflot made RUB 15.6 billion in 2016
in net foreign exchange gains.
A contributing factor to this is a relatively
high share of international traffic. Since most
foreign passengers buy tickets in their home
countries, they pay in their local currency,
which when converted into Russian currency
means more ruble-denominated revenue
for Aeroflot. In 2016, 42% of the airline’s
passengers were foreigners.
Well-positioned hub
The popularity of Aeroflot among foreigners
is a result of a combination of factors, the
main one being the positioning of its hub and
attractive prices offered by Aeroflot in both
economy and business classes.
The proportion of passengers transferring in
Aeroflot’s main hub at Moscow-Sheremetyevo
Airport stood at around 42% in 2016,
comprising 17% transferring between two
domestic connections, 13% connecting
between two international flights and 12%
flying from Russia via Moscow to another
country.
In 2016, nearly one in five of Aeroflot’s
passengers flew to or from Asia.
Aeroflot told AIR International: “Thanks to
good slots at the Asian airports and [a] well-
optimised schedule, we offer connections
between Europe and Asia that are around two
hours shorter than at other hubs. We fly to 13
destinations in Asia as of now.”
The carrier has also been named as the
best foreign air carrier in China, one of its
key markets. Last year, the number of flights
operated by Aeroflot Group to Asia increased
by more than 20% and this number is poised
for further growth.
Aeroflot enjoys the favourable location of
its main hub, which is closer to Far East Asia
than other hubs, such as Istanbul or those
in the Gulf States. The airline also has an
advantage over its rivals as it neither needs
permissions nor has to pay fees for Siberian
overflights. While the permits are issued by
the Russian government rather than Aeroflot
itself, the revenues from charges are passed
to the airline.In the medium-haul market, Aeroflot
benefits from the re-emergence of Turkey
and Egypt as travel destinations. Both key
leisure markets were in steep decline due to
a combination of political and security issues,
but it seems these issues are now gone and
Aeroflot will be able to further increase its
leisure traffic to those destinations, which are
popular among Russian tourists.
While the Ukrainian market remains closed
to the airline, the loss of traffic is compensated
by growing traffic to other countries. The
ongoing tensions with Ukraine remain an
operational challenge, as Aeroflot’s aircraft
have to fly around Ukraine, which on some
routes means significant detours.
The Aeroflot Group’s market share in terms
of international traffic to and from Russia grew
by more than ten percentage points to 39.4%
in 2016.Reputation
One of the biggest challenges for Aeroflot in
foreign markets remains its reputation.
The airline’s press office said: “Brand
Finance has named Aeroflot as the strongest
aviation brand in the world, while Trip AdvisorA mostly Western fleet is one reason why Aeroflot Russian Airlines has
been able to improve its reputation. Airbus A330-343 VQ-BMY (msn
1301), pictured approaching London Heathrow, is one of 22 A330s in
service with the carrier. Daan van der Heijden/AirTeamImages
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