Russian flag carrier Aeroflot Russian Airlines has looked to its past to support its future growth and selected the name Dobrolet for its new low-cost division which is expected to launch operations in June 2014 after securing its Air Operators Certificate (AOC) this week. The brand was the name of the joint-stock company first established in the Soviet Union in 1923 and the predecessor to today’s modern day operation.
The new business has been established with an estimated investment of $100 million over its first two years of operation, will operate from the Moscow region from next month and in its initial stage will fly on busy links within the European part of Russia, most likely launching on the Moscow – St Petersburg route. Other destinations among its initial network of routes are likely to include Perm, Samara, Ufa and Yekaterinburg.
Although Dobrolet will initially focus on the domestic market it does plan to expand into international skies. In an exclusive interview with The HUB at last year’s World Routes, Giorgio Callegari, deputy general director for strategy and alliances, Aeroflot Russian Airlines revealed that international growth was under consideration and could occur at a later stage as additional aircraft are acquired.
Dobrolet will operate a fleet of Next-Generation Boeing 737-800s in a single-class, all-Economy 189-seat arrangement, initially growing to eight aircraft at the end of its first year of service and growing at a rate of eight aircraft per year thereafter to 40 aircraft by 2018. In a statement confirming the AOC award, Dobrolet said it will initially launch with two 737-800s and a single Sukhoi SuperJet, the latter being transferred from the Aeroflot fleet.
The low-cost airline model has failed to take-off in Russia as restrictive bilaterals and hard legislation have made it difficult for carriers to succeed despite the massive potential. A number of foreign carriers have now commenced flights into Russia, most notably easyJet, Vueling and Wizz Air and others, including Ryanair, have expressed interest in flying domestically within the country.
The launch of Dobrolet is Aeroflot’s way of combating this possible competition as well as to reverse a decline in domestic market share as local rivals S7 Airlines, Transaero Airlines and UTair have strengthened their grip on the local market.
According to Aeroflot, Dobrolet will offer fares around 10 to 20 per cent cheaper than existing Economy tickets thanks to its more densely configured aircraft, using only direct ticket sales and by offering chargeable ancillaries for a more comfortable seat, checked baggage, priority boarding, and meals on board.
In our analysis, below, we look in greater detail at the Russian domestic market and Aeroflot’s own capacity over the past ten years. During this period (2004 – 2013) available seats have doubled from 24.7 million to 49.9 million. Between 2004 and 2012 Aeroflot’s share of capacity rose a modest 5.9 percentage points from 13.4 per cent in 2004 to 19.3 per cent in 2012, but then jumped to 23.9 per cent in 2013 and is forecasted to rise to 36.1 per cent this year after the full integration of the networks of regional partners into its mainline business.
Related Content
