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Russian LCC Market - Non-existent?  
User currently offlineFCAFLYBOY From United Kingdom, joined Nov 2006, 600 posts, RR: 0
Posted (2 years 11 months 1 week 6 days 16 hours ago) and read 5281 times:

Ok, so I'm planning a trip to Russia next May with some friends for my Birthday.

Looking at the London-Moscow routes, the fares are pretty high as to be expected.
I've also noticed a whole load of Russian local carriers popping up domestically, many I've never heard too much about
and also quite expensive for relatively short flights, often no more than an hour.

Is there room for LCC expansion from the UK and indeed Europe to Russia, and how about domestic flights too?

Are there airlines already considered LCC's by Russians, or has this just not started yet?

There's no doubt the size of the country is vast, however that only explains the necessity of quite a lot of airlines for one country, not the lack of opportunity for an LCC model to thrive.

I'd be interested to hear from our fellow Russian a.netters especially!

Thanks

44 replies: All unread, showing first 25:
 
User currently offlineLOWS From Austria, joined Oct 2011, 1162 posts, RR: 1
Reply 1, posted (2 years 11 months 1 week 6 days 16 hours ago) and read 5226 times:

Without much knowledge of the aviation situation in Russia, but some knowledge of the political/economic situation, I would have to say that it is probably too febrile for significant LCC expansion from Europe. The Putin regime is famous for seizing the assets of those who cross them, which certainly stifles the business climate. So, I can't imagine FR setting up shop in SVO any time soon.

4U flies CGN-VKO, if I am not mistaken.


User currently offlineju068 From Vanuatu, joined Aug 2009, 2650 posts, RR: 6
Reply 2, posted (2 years 11 months 1 week 6 days 15 hours ago) and read 5150 times:
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There is also airBaltic that flies to both SVO and DME, they are not really a lowcost but not really a legacy carrier.

User currently offlineFCAFLYBOY From United Kingdom, joined Nov 2006, 600 posts, RR: 0
Reply 3, posted (2 years 11 months 1 week 6 days 15 hours ago) and read 5027 times:

That's what I don't understand though. The population and area is huge, and could easily
Support domestic and European routes. It's seems relatively easy to start an airline in Russia, provided you have the ££££'s but there's still no service.

What European LCC's fly to
Moscow or elsewhere in Russia?


User currently offlinedazeflight From Germany, joined Jun 1999, 580 posts, RR: 2
Reply 4, posted (2 years 11 months 1 week 6 days 15 hours ago) and read 5020 times:

Well, regarding flights to Russia, there are a few cheap(er) options like 4U and AB to several german cities or Vueling to Spain, but together with Air Baltic that's about it. That is not going to change before changes in the Visa regime are implemented.

Aeroflot however has regular promotions with good prices - dunno if that is true for the UK, though. Other option: you might want to look at a connection via Berlin, Berlin seems to have some of the cheapest fares in Western Europe from Moscow, as it's served by almost ten daily flights with 6 different airlines, 2 of them being LCCs (if you count AB into that).

Regarding LCC's in Russia, Avianova was a pretty good one with thrue LCC prices, but was dismantled only about a month ago (not just because of commercial reasons), while Skyexpress continues to have a pretty limited network. Again, SU, S7 and UT tend to have regular promotions (flew SU SVO-GOJ for around 50$ in August). High prices are usually charged to destinations that are only served by a single, local carrier, i.e. where competition is absent.

[Edited 2011-10-23 13:50:03]

User currently offlinePe@rson From United Kingdom, joined Jan 2001, 19233 posts, RR: 52
Reply 5, posted (2 years 11 months 1 week 6 days 15 hours ago) and read 4992 times:

Quoting FCAFLYBOY (Thread starter):
Are there airlines already considered LCC's by Russians, or has this just not started yet?

Avianova was the country's only 'real' LCC (I don't count SkyExpress, which still exists), but that unfortunately went backrupt recently. Russia is very much a red-tape country, yet it does, in theory at least, hold considerable potential for budget travel. Alas, not yet - but undoubtedly at some point. I recommend searching www.centreforaviation.com and www.anna.aero for information, and Google for Andrew Pyne, the carrier's then-CEO. Plentiful material.



"Everyone writing for the Telegraph knows that the way to grab eyeballs is with Ryanair and/or sex."
User currently offlineairbazar From United States of America, joined Sep 2003, 8412 posts, RR: 10
Reply 6, posted (2 years 11 months 1 week 6 days 14 hours ago) and read 4940 times:

Quoting LOWS (Reply 1):
Without much knowledge of the aviation situation in Russia, but some knowledge of the political/economic situation, I would have to say that it is probably too febrile for significant LCC expansion from Europe. The Putin regime is famous for seizing the assets of those who cross them, which certainly stifles the business climate. So, I can't imagine FR setting up shop in SVO any time soon.

  
You pretty much nailed it on the head. Not necessarily the seizing of assets but Russia is not exactly a free market economy and anyone who offers competition against the local carriers will have a tough time. Remember the banning of LH flyover rights? Or just last Summer when they withdrew TP's rights to fly additional frequencies to Moscow.


User currently offlineFCAFLYBOY From United Kingdom, joined Nov 2006, 600 posts, RR: 0
Reply 7, posted (2 years 11 months 1 week 6 days 14 hours ago) and read 4892 times:

So the Russian government is unrealistically over-protective of their local carriers, but if a Russian company were to start an LCC it would work in theory.

I'm sure there is more than enough demand, and what is
To be gained by restricting international route growth?


User currently offlinerutankrd From United Kingdom, joined Sep 2003, 3010 posts, RR: 7
Reply 8, posted (2 years 11 months 1 week 6 days 14 hours ago) and read 4887 times:
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Quoting FCAFLYBOY (Reply 3):

That's what I don't understand though. The population and area is huge, and could easily
Support domestic and European routes. It's seems relatively easy to start an airline in Russia, provided you have the ££££'s but there's still no service.

What European LCC's fly to
Moscow or elsewhere in Russia?

Need to get to Russia cheaply think about transiting Germany as there are several operators from there.

The UK has a political spat with Russia over a murder/killing and that is currently holding up many commercial dealings as well.

As for LCC please please stop the usual confusion of what a LCC is.

S7 is very much an LCC (In business model as are Transareo) but that does NOT MEAN or directly lead to cheap fares period.

Further the fares to from Russia remain regulated as its not an EU or affiliate nation and from the UK remains subject to inter government treaties.


User currently offlineFCAFLYBOY From United Kingdom, joined Nov 2006, 600 posts, RR: 0
Reply 9, posted (2 years 11 months 1 week 6 days 14 hours ago) and read 4877 times:

Quoting rutankrd (Reply 8):
Further the fares to from Russia remain regulated as its not an EU or affiliate nation and from the UK remains subject to inter government treaties.

In this case, who regulates them, as the UK is EU. does Russia demand a certain fare level?


User currently offlinerutankrd From United Kingdom, joined Sep 2003, 3010 posts, RR: 7
Reply 10, posted (2 years 11 months 1 week 6 days 14 hours ago) and read 4868 times:
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Quoting FCAFLYBOY (Reply 9):
In this case, who regulates them, as the UK is EU. does Russia demand a certain fare level?

IATA


User currently offlineLOWS From Austria, joined Oct 2011, 1162 posts, RR: 1
Reply 11, posted (2 years 11 months 1 week 6 days 14 hours ago) and read 4853 times:

Quoting FCAFLYBOY (Reply 7):

what is to be gained by restricting international route growth?

In theory, nothing. But in practice, they are protecting their national carriers (which may support them, as many businesses do, with cash) in much the same way as India does with AI. Why let someone fly FR when SU can do the same and give you a small kickback?


User currently offlinedazeflight From Germany, joined Jun 1999, 580 posts, RR: 2
Reply 12, posted (2 years 11 months 1 week 6 days 13 hours ago) and read 4698 times:

Quoting FCAFLYBOY (Reply 7):
So the Russian government is unrealistically over-protective of their local carriers, but if a Russian company were to start an LCC it would work in theory.

You can only start an airline in Russia if the majority is in russian hands. Avianova for instance was owned 51% by russian Alfa Group. The problem looks to be a bit more on the state vs. private side, like being seen on several occasions at DME, which is run by a private company vs. SVO (state-owned) and VKO (city owned).


User currently offlineViscount724 From Switzerland, joined Oct 2006, 25459 posts, RR: 22
Reply 13, posted (2 years 11 months 1 week 6 days 12 hours ago) and read 4672 times:

Quoting rutankrd (Reply 10):
Quoting FCAFLYBOY (Reply 9):
In this case, who regulates them, as the UK is EU. does Russia demand a certain fare level?

IATA

IATA has virtually no involvement with fares now. You're referring to the old days. And IATA never "regulated" fares. The airlines negotiated fares as part of an IATA agreement which then had to be submitted to the governments at both ends of the route for approval.


User currently offlineairbazar From United States of America, joined Sep 2003, 8412 posts, RR: 10
Reply 14, posted (2 years 11 months 1 week 6 days 12 hours ago) and read 4614 times:

Quoting FCAFLYBOY (Reply 7):
So the Russian government is unrealistically over-protective of their local carriers, but if a Russian company were to start an LCC it would work in theory.

That depends on who's to gain from it. As long as Putin's pockets and those of his associates get rewarded, sure it could happen. Otherwise, not a chance.


User currently offlineBasilFawlty From Netherlands, joined Jun 2009, 1328 posts, RR: 1
Reply 15, posted (2 years 11 months 1 week 6 days 11 hours ago) and read 4579 times:

Quoting FCAFLYBOY (Thread starter):
Is there room for LCC expansion from the UK and indeed Europe to Russia,

The room (and I guess the demand as well) is there, but unfortunately there's no open skies agreement between Europe and Russia... I'm quite sure that if some sort of open skies agreement will be reached and visa requirements will be less strict, the number of LCC flights between Europe and Russia will grow very quickly.

Quoting dazeflight (Reply 4):
Well, regarding flights to Russia, there are a few cheap(er) options like 4U and AB to several german cities or Vueling to Spain, but together with Air Baltic that's about it.

Also Niki, Windjet and Norwegian (to St. Petersburg only) are flying to Russia.



'Every year donkeys and mules kill more people than plane crashes'
User currently offlineju068 From Vanuatu, joined Aug 2009, 2650 posts, RR: 6
Reply 16, posted (2 years 11 months 1 week 6 days 5 hours ago) and read 4416 times:
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Jeez people use every opportunity to bash Putin. So what if he is protecting Russian carriers? After decades of Communism they were simply not ready to compete with the Western carriers, not just in terms of quality but in the overall experience when travelling.

I am sure that someone would prefere Lufthansa's A320 over Aeroflot's Tu-154 or even Tu-134! (this does not apply to aviation fans), then we are talking about Soviet-mentality cabincrew....
In simply words Russian aviation needed to be brought to an acceptable standard at which it could compete with Western airlines.

I am sorry but Russia is doing the same thing Europe is doing to the Gulf carriers! Why doesn't Germany allow more flights to Emirates? Same applies to the Netherlands.

When the Russian market is ready to deal with an invasion of lowcosts it will.


User currently offlinelows From Austria, joined Oct 2011, 1162 posts, RR: 1
Reply 17, posted (2 years 11 months 1 week 6 days 4 hours ago) and read 4346 times:

Quoting ju068 (Reply 16):
In simply words Russian aviation needed to be brought to an acceptable standard at which it could compete with Western airlines.

If SU and S7 aren't up to „acceptable standards“ why are they in SkyTeam and OneWorld?


User currently offlineju068 From Vanuatu, joined Aug 2009, 2650 posts, RR: 6
Reply 18, posted (2 years 11 months 1 week 6 days 4 hours ago) and read 4314 times:
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Quoting lows (Reply 17):
If SU and S7 aren't up to „acceptable standards“ why are they in SkyTeam and OneWorld?

Yes, because all members of alliances are top-notch carriers? They take them because they know that in the long-run they will become useful.

Aeroflot has become a good carrier, they have transformed over night. However the Russian government had forced them to merge with several other carriers. Now, what they need to do is organize themselves in opening up decent services out of those places.
That is a lot of work, and until that is done we can't expect the opening up of the Russian market.

Plus, why should the Russians allow free access to Western carriers when their own people can not travel freely there?

In 2006 or so, Jat Airways had a deal with Emirates to feed their Hamburg-New York flights. The route was a success with Jat having a lf of about 60%. Jat was forced to cancel the agreement because of Lufthansa. Fair? No.


User currently offlineRubberJungle From , joined Dec 1969, posts, RR:
Reply 19, posted (2 years 11 months 1 week 6 days 3 hours ago) and read 4245 times:

There's a fundamental difficulty with setting up a low-cost carrier in Russia, and it's nothing to do with Putin or any of the other bunk.

The fact is that you can't set up an airline unless people want to travel, and in Russia that's not a given. Forty-five million passengers a year isn't much of a pie to carve up. There is a low population mobility, which means low load factors - and you can't run budget airlines on low loads.

Add to that the lack of credit-card penetration, the absence of secondary airports, and the large number of passengers who choose to travel by rail, and it's not a natural low-cost market, not yet at least.


User currently offlineBMI727 From United States of America, joined Feb 2009, 15749 posts, RR: 27
Reply 20, posted (2 years 11 months 1 week 6 days 3 hours ago) and read 4215 times:

Quoting RubberJungle (Reply 19):
and the large number of passengers who choose to travel by rail, and it's not a natural low-cost market, not yet at least.

There are hurdles to low cost airlines in Russia, but this isn't one of them. If you look at LCCs of India in particular, they aren't getting their passengers from other airlines, they are drawing people who used to take the train and never had flying as a viable option before. The current air travel market in Russia may not be huge, but if they can get even a fraction of rail passengers to fly instead, an airline could be quite successful. And in a country as large as Russia that should be a pretty easy sell, if the price is right of course.



Why do Aerospace Engineering students have to turn things in on time?
User currently offlinedazeflight From Germany, joined Jun 1999, 580 posts, RR: 2
Reply 21, posted (2 years 11 months 1 week 6 days 2 hours ago) and read 4166 times:

Quoting ju068 (Reply 16):
I am sure that someone would prefere Lufthansa's A320 over Aeroflot's Tu-154 or even Tu-134! (this does not apply to aviation fans), then we are talking about Soviet-mentality cabincrew....

Welcome to 2011. SU does not have any Tupolevs anymore and the last time I actually had an SU crew with a soviet mentality was in the 90s. Food (including special variants that cna be ordered when booking), prices and a 'real' Business Class even on short flights are better than on many former western flag-carriers.

Quoting RubberJungle (Reply 19):
he fact is that you can't set up an airline unless people want to travel, and in Russia that's not a given. Forty-five million passengers a year isn't much of a pie to carve up. There is a low population mobility, which means low load factors - and you can't run budget airlines on low loads.

If you remember soviet times, low population mobility certainly is no mentality thing but caused by the high prices compared to the average income. My prime example again: up until 3 years ago, Nizhnekamsk/Naberevnye Chelny was able to sustain 3 daily flights to Moscow with Tatarstan Airlines for 300$ return on average with no big changes in passenger numbers since the early nineties. Now, it's up to 6 daily flights with 4 airlines averaging 150$ return and the flights are packed. So, with the right offers, Russians will travel. The growth of the middle class will only support that.

Quoting RubberJungle (Reply 19):
Add to that the lack of credit-card penetration, the absence of secondary airports, and the large number of passengers who choose to travel by rail, and it's not a natural low-cost market, not yet at least.

There are a lot of secondary airports with shitty terminals, but that was not a problem for Avianova at least. Instead of Credit Card payment, paying on terminals is pretty wide-spread in Russia and most Airlines offer this payment method.


User currently offlineHansHubers From Netherlands, joined Feb 2006, 89 posts, RR: 0
Reply 22, posted (2 years 11 months 1 week 6 days 2 hours ago) and read 4145 times:

Air Arabia introduces services to Moscow and Yekaterinburg today: http://www.albawaba.com/business/pr/...ia-takes-russia-397938#node-397938


100, 319, 320, 321, 332, 333, 343, 733, 734, 735, 737, 738, 763, AT7, AR1, AR8, CR7, DH8, F70, M82
User currently offlineTCASAlert From , joined Dec 1969, posts, RR:
Reply 23, posted (2 years 11 months 1 week 6 days 2 hours ago) and read 4134 times:

Read the October edition of Airliner World. A very good article describing the process and difficulties associated with starting an LCC in Russia. There are lots of restrictions placed on airlines, they are not allowed to sell tickets below a certain price, and in addition to this they face some of the highest fees in the world.

It is almost impossible to start an LCC as they are protecting their national carriers, even when they do they can never charge particularly low prices.


User currently offlinedazeflight From Germany, joined Jun 1999, 580 posts, RR: 2
Reply 24, posted (2 years 11 months 1 week 6 days 2 hours ago) and read 4128 times:

Quoting TCASAlert (Reply 23):
It is almost impossible to start an LCC as they are protecting their national carriers, even when they do they can never charge particularly low prices.

Any details on this? I flew on a 1000 RUR (~ 32$) return last winter on Avianova.


25 TCASAlert : The article was about Avianova, will try and dig it out tonight.
26 airbazar : The low loads are due to the fact that a) there is limited competition, and b) fares are regulated. When TP wanted to increase the frequencies betwee
27 Post contains images HELFAN : FR is already serving St. Petersburg by flying to LPP which is the closest AP on EU side. It's only 200 km from St.Petersburg and 20 km from Russian b
28 FCAFLYBOY : I would have thought that at the right price, air travel over a large distance Domestically in Russi would be much preferred over rail! Interesting th
29 MOW : It is actually a good thing that the likes of Avianova or Sky Express are dead. And it seems to be natural, too. They were bad at doing business which
30 MOW : Wasn't it because of the limits the existing bilateral stipulates? Russia has no open skies with Portugal and apparently TP cannot put as many additi
31 MOW : Travel to / from Russia around May holidays (May Day / Victory Day) could be very costly! These are peak travel dates for Russians and cheap seats ar
32 LondonCity : The UK-Russia air services agreement (ASA) is restrictive, rather like what ASAs were like the pre-liberalisation days. Not only are the number of fli
33 Severnaya : Any proof for this related to aviation? 45 million people flew between JAN and AUG (so that would be at least 67.5 million this year) Yeah, but many
34 dazeflight : I can agree with that regarding Skyexpress (which still exists, though) and I know that Avianova had operational issues, but my 5 flights with them t
35 MOW : That's the point! People are not used to it. You don't play these tricky games if you want to gain their confidence. You must show them that the air
36 captainMeeerkat : As a frequent flyer to Russia and as someone whose future wife is a Russian citizen, for sure the system is a pain from both sides. That is a good po
37 dazeflight : People also weren't used to these things in Western Europe before Ryanair and Easyjet started with that. Now, most people know these things and use t
38 captainMeeerkat : But surely that is not a Russian only characteristic? That applies to many countries across the world where the capital is the focal point. That is f
39 luckyone : Think of it like "die Mauer im Kopf." Minds don't do 180 degree turns quickly individually, and culturally it will be many generations before the "ol
40 Severnaya : The middle class is not relatively small. The Russian middle class is very concentrated in only a few large cities. Flights between MOW, LED, SVX and
41 captainMeeerkat : Absolutely not in the metropoles. But given the vastness of the population and the demographic layout of the whole of Russia, it is small. As you say
42 dazeflight : Can't agree with that. Those who go with Platzkart can't afford a plane at all (and it's economically impossible to regulary beat platzkart prices wi
43 captainMeeerkat : That is what I said, what are you disagreeing with? It is almost impossible at this present time for the Russian market to sustain an LCC because the
44 dazeflight : ^ I was disagreeing with the assumption that someone who is going with Kupe is a potential Business Class customer. Economy class very often equals Ku
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