By Jack Stubbs and Gleb Stolyarov
MOSCOW (Reuters) – Russia’s largest airline Aeroflot is using the weaker rouble to undercut foreign competitors and boost passenger numbers on its transfer routes between Europe and Asia in a bid to compensate for plunging domestic traffic.
Enticing foreign travellers to use Moscow as a springboard for long-haul flights is a rare opportunity for Aeroflot and other Russian carriers to pick up passenger numbers, after being broadsided at home by Russia’s economic crisis.
Advertisements have sprung up at airports across Europe touting Aeroflot flights via Moscow to countries including Thailand, China and Japan, and the Russian state-carrier’s transfer traffic has surged.
The selling point is price: Aeroflot’s costs have fallen along with the rouble, which lost almost 20 percent against the dollar last year, meaning it can now offer cheaper tickets than many of its rivals who operate in foreign currencies.
“Strategically it is a very good idea,” said BCS analyst Mitch Mitchell. “Aeroflot can offer very competitive fares because most of its costs are in roubles.”
An Aeroflot ticket in June from London to Beijing, connecting Europe’s busiest airport with Asia’s, now starts from $ 510 with a few hours of layover in Moscow.
Flights on the same route operated by a single carrier via Istanbul or Dubai cost around $ 600, and German flagship airline Lufthansa charges more than $ 1000.
Only Poland’s LOT national carrier is cheaper at $ 460, but that comes with a 30-hour layover in Warsaw.
IMPROVING REPUTATION
Aeroflot has fought hard to shake off its reputation as a creaking Soviet airline and win over service-conscious European and Asian travellers.
This year it finally earned its fourth star from independent ratings website Skytrax, placing its onboard experience in the same category as major European and Middle Eastern competitors such as British Airways, Lufthansa, Turkish Airlines and Emirates, and newly ahead of big U.S. carriers such as Delta and United.
A bright and modern new terminal at Moscow’s Sheremetyevo airport that opened in 2009 has rescued passengers from layovers in dark and grimy Brezhnev-era waiting rooms.
Passenger numbers on Aeroflot transfers through Moscow jumped 31 percent year-on-year in 2015 to 3.6 million while Sheremetyevo’s overall transfer traffic increased 37 percent to 4.6 million.
“The main transit direction is from Europe to Asia via Sheremetyevo,” an Aeroflot spokesman said. “Passenger numbers on these routes are growing significantly.”
The airline plans to add an additional 2.5 million passengers on its transfer routes between Europe, Asia and the Middle East in the next five years, according to company documents seen by Reuters.
That would offset some of the pain from an economic downturn caused by lower oil prices and Western sanctions over Moscow’s actions in Ukraine, which has hit airlines hard.
Overall passenger numbers for all Russian carriers fell 4 percent last year and are seen falling 5 percent in 2016 as consumers cut back on expensive travel abroad.
More than 20 airlines quit the market in 2015 and British budget flyer EasyJet, widely viewed as a bellwether for up-and-coming tourist markets, wound down its London-Moscow route as recently as March.
Aeroflot has been able to exploit the bankruptcy of Russia’s second-largest airline Transaero, however, inheriting more than 40 international routes and increasing its market share to 46 percent.
“It’s good that Aeroflot is looking to increase it’s transfer traffic,” said Boris Rybak, head of Russia’s Infomost aviation consultancy. “Passenger numbers in Russia are falling and unlikely to grow in the near future.”
(Writing by Jack Stubbs; Editing by Peter Graff)
