FCAFLYBOY
Topic Author
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Russian LCC Market - Non-existent?

Sun Oct 23, 2011 7:28 pm

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
 
LOWS
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RE: Russian LCC Market - Non-existent?

Sun Oct 23, 2011 7:46 pm

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.
 
JU068
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RE: Russian LCC Market - Non-existent?

Sun Oct 23, 2011 8:09 pm

There is also airBaltic that flies to both SVO and DME, they are not really a lowcost but not really a legacy carrier.
 
FCAFLYBOY
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RE: Russian LCC Market - Non-existent?

Sun Oct 23, 2011 8:44 pm

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?
 
dazeflight
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RE: Russian LCC Market - Non-existent?

Sun Oct 23, 2011 8:46 pm

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]
 
Pe@rson
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RE: Russian LCC Market - Non-existent?

Sun Oct 23, 2011 8:48 pm

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."
 
airbazar
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RE: Russian LCC Market - Non-existent?

Sun Oct 23, 2011 9:02 pm

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.
 
FCAFLYBOY
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RE: Russian LCC Market - Non-existent?

Sun Oct 23, 2011 9:13 pm

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?
 
rutankrd
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RE: Russian LCC Market - Non-existent?

Sun Oct 23, 2011 9:15 pm

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.
 
FCAFLYBOY
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RE: Russian LCC Market - Non-existent?

Sun Oct 23, 2011 9:18 pm

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?
 
rutankrd
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RE: Russian LCC Market - Non-existent?

Sun Oct 23, 2011 9:20 pm

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

IATA
 
LOWS
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RE: Russian LCC Market - Non-existent?

Sun Oct 23, 2011 9:22 pm

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?
 
dazeflight
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RE: Russian LCC Market - Non-existent?

Sun Oct 23, 2011 10:57 pm

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).
 
Viscount724
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RE: Russian LCC Market - Non-existent?

Sun Oct 23, 2011 11:17 pm

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.
 
airbazar
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RE: Russian LCC Market - Non-existent?

Sun Oct 23, 2011 11:50 pm

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.
 
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BasilFawlty
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RE: Russian LCC Market - Non-existent?

Mon Oct 24, 2011 12:16 am

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'
 
JU068
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RE: Russian LCC Market - Non-existent?

Mon Oct 24, 2011 6:14 am

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.
 
LOWS
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RE: Russian LCC Market - Non-existent?

Mon Oct 24, 2011 6:59 am

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?
 
JU068
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RE: Russian LCC Market - Non-existent?

Mon Oct 24, 2011 7:25 am

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.
 
RubberJungle
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RE: Russian LCC Market - Non-existent?

Mon Oct 24, 2011 8:30 am

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.
 
BMI727
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RE: Russian LCC Market - Non-existent?

Mon Oct 24, 2011 8:49 am

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?
 
dazeflight
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RE: Russian LCC Market - Non-existent?

Mon Oct 24, 2011 9:18 am

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.
 
HansHubers
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RE: Russian LCC Market - Non-existent?

Mon Oct 24, 2011 9:24 am

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, 77W, AT7, AR1, AR8, CR7, DH8, F70, M82
 
tcasalert
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RE: Russian LCC Market - Non-existent?

Mon Oct 24, 2011 9:29 am

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.
Next flight: Feb 2012 - BHX-CPH-BHX - SK MD87 / CRJ900
 
dazeflight
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RE: Russian LCC Market - Non-existent?

Mon Oct 24, 2011 9:31 am

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.
 
tcasalert
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RE: Russian LCC Market - Non-existent?

Mon Oct 24, 2011 9:39 am

Quoting dazeflight (Reply 24):
Any details on this? I flew on a 1000 RUR (~ 32$) return last winter on Avianova.

The article was about Avianova, will try and dig it out tonight.
Next flight: Feb 2012 - BHX-CPH-BHX - SK MD87 / CRJ900
 
airbazar
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RE: Russian LCC Market - Non-existent?

Mon Oct 24, 2011 12:51 pm

Quoting RubberJungle (Reply 19):
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.

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 between Moscow and LIS due to increasing demand, Russia put the cabash on it claiming that TP was stealing customers from Russian carriers even though not a single Russian carrier flies to Portugal or has shown in terest in doing so. I'm not making this up, that was the reason they gave for blocking the extra flights. At least they're blunt about it. This was after they had granted the extra frequencies and TP had already sold the ticket and filled the planes with hundreds of Russians wanting to spend their Summer vacations in Portugal.
 
HELFAN
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RE: Russian LCC Market - Non-existent?

Mon Oct 24, 2011 5:02 pm

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 border. LPP itself is a very small town which would never justify direct flights to Brussels or Milan but a metropole with 5 million people just a few hours away makes it a totally different story. According to Finnish press a significant part of the passengers are Russian. I don't know if the folks from Western Europe have discovered this option. Maybe FR will start calling LPP as St. Petersburg (West)  
 
FCAFLYBOY
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RE: Russian LCC Market - Non-existent?

Mon Oct 24, 2011 5:56 pm

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 that FR flys to 'Russia' as I'm sure they would love
To Market it, but even for FR, 200km is just to far away.
 
MOW
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RE: Russian LCC Market - Non-existent?

Mon Oct 24, 2011 6:00 pm

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 was supposed to be (Russian) client-centric and therefore they failed miserably.

They were totally unreliable and non-transparent. Frequent schedule changes, cancellations, flight mergers (to get to the decent LF), delays were well-documented in official statistics as well as by loud and blunt Russian internet, full of horrible Avianova stories. They practiced obscure pricing and marketing techniques by advertising net fares which were nowhere close to ones people eventually had to pay. They complicated changes and refunds - it was hard to get your own cash back even if the flight was cancelled - in-store credit with limited validity was customarily offered instead.

You do not treat your passengers this way, you do not create more headache for the clients you target. These people still believe that a trip from A to B is an inter-Galactic journey no less.

Russian Railways, no matter how archaic they may look, provides familiar no-nonsense service which is as reliable as your old Samovar. Clear all-in pricing - and fares may get very attractive if don't mind saving a bit on comfort. Good on-time performance (a half-an-hour delay is still far better than Avianova arriving 14 hours late at 3 a.m. Convenience of departing and arriving at centrally-located stations (and you save on to / from airport transportation, too!)
So yes, Russian Railways will remain an LCC of choice for many in Russia, unless the airline industry yields something truly reliable and competitively priced.
 
MOW
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RE: Russian LCC Market - Non-existent?

Mon Oct 24, 2011 6:09 pm

Quoting airbazar (Reply 26):
When TP wanted to increase the frequencies between Moscow and LIS due to increasing demand,

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 additional frequencies as they want unilaterally.
 
MOW
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RE: Russian LCC Market - Non-existent?

Mon Oct 24, 2011 6:31 pm

Quoting FCAFLYBOY (Thread starter):
Ok, so I'm planning a trip to Russia next May with some friends for my Birthday.

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 are filled well in advance!

[Edited 2011-10-24 11:41:43]
 
LondonCity
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RE: Russian LCC Market - Non-existent?

Mon Oct 24, 2011 6:49 pm

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 flights/airlines strictly controlled but there are no services from any airport other than LHR.

There is a huge demand for tourism but visa restrictions (both the expense and the rigmarole of obtaining a visa) means that the travel market from the UK remains limited. Also bear in mind that when you reach Moscow, the accommodation costs can be expensive as most hotels are in the top class bracket.
 
Severnaya
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RE: Russian LCC Market - Non-existent?

Mon Oct 24, 2011 8:28 pm

Quoting LOWS (Reply 1):
The Putin regime is famous for seizing the assets of those who cross them, which certainly stifles the business climate.

Any proof for this related to aviation?

Quoting RubberJungle (Reply 19):
Forty-five million passengers a year isn't much of a pie to carve up.

45 million people flew between JAN and AUG (so that would be at least 67.5 million this year)

Quoting HELFAN (Reply 27):
According to Finnish press a significant part of the passengers are Russian. I don't know if the folks from Western Europe have discovered this option. Maybe FR will start calling LPP as St. Petersburg (West)  

Yeah, but many people that took these flights (including some friends of mine) said that actually it isn't worth the money savement as you loose this on the border and the tickets are not thát cheap.

Quoting LondonCity (Reply 32):
Not only are the number of flights/airlines strictly controlled but there are no services from any airport other than LHR.

Rossiya flies to LGW.

Quoting LondonCity (Reply 32):
There is a huge demand for tourism but visa restrictions (both the expense and the rigmarole of obtaining a visa) means that the travel market from the UK remains limited. Also bear in mind that when you reach Moscow, the accommodation costs can be expensive as most hotels are in the top class bracket.

The same can be said exactly from the Russian point of view, it is a nightmare to get a UK visa. Schengen visa are much more easy to obtain.
Всяк глядит, да не всяк видит.
 
dazeflight
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RE: Russian LCC Market - Non-existent?

Tue Oct 25, 2011 11:22 am

Quoting MOW (Reply 29):
They were totally unreliable and non-transparent. Frequent schedule changes, cancellations, flight mergers (to get to the decent LF), delays were well-documented in official statistics as well as by loud and blunt Russian internet, full of horrible Avianova stories. They practiced obscure pricing and marketing techniques by advertising net fares which were nowhere close to ones people eventually had to pay. They complicated changes and refunds - it was hard to get your own cash back even if the flight was cancelled - in-store credit with limited validity was customarily offered instead.

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 took place in time, even in harsh winter weather. The obscure pricing is not worse than what is practiced by the likes of Ryanair or Easyjet - if people are not used to this, they will complain.
 
MOW
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RE: Russian LCC Market - Non-existent?

Tue Oct 25, 2011 11:49 am

Quoting dazeflight (Reply 34):
if people are not used to this, they will complain

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 travel can be as simple and reliable as rail travel.

I have a bunch of friends who'd gladly share their own Avianova horrible stories.

SkyExpress is dead as an independent carrier. It has merged into Avialinii Kubani. The SkyExpress AOC will be withdrawn.
 
captainmeeerkat
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RE: Russian LCC Market - Non-existent?

Tue Oct 25, 2011 12:40 pm

Quoting Severnaya (Reply 33):
The same can be said exactly from the Russian point of view, it is a nightmare to get a UK visa. Schengen visa are much more easy to obtain.

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.

Quoting dazeflight (Reply 21):
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.

That is a good point but remember that most state employees (a large % of the workforce) make around $150 per month in salary. It will take a long time before the middle class rises to sustain mass air travel. Approx 5,000RUB return airfare ('web promo' on S7) from Moscow - Kazan vs. approx 2,000RUB return on train is an easy choice when the former is your monthly wage.

Quoting FCAFLYBOY (Reply 7):
S7 is very much an LCC (In business model as are Transareo) but that does NOT MEAN or directly lead to cheap fares period

S7 are one of the best airlines I have ever flown, both domestically and internationally. For sure, they weren't the ultra LCC we see with FR but rather a hybrid LCC with frills.
my luggage is better travelled than me!
 
dazeflight
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RE: Russian LCC Market - Non-existent?

Tue Oct 25, 2011 3:16 pm

Quoting MOW (Reply 35):
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 travel can be as simple and reliable as rail travel.

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 the split-up air fares to their advantage. Especially in times when even traditional carriers start to charge for food and checked in baggage, it should be clear that ultra-low fares come with a drawback. I also don't remember the Avianova ticket-booking process as being particulary tricky: I never had to uncheck some rental car, hotel, travel insurance or else. It was always an option that I had to choose actively. Last booking has been in April though, so I don't know if anything had changed in the last months of Avianova's existence.

Quoting captainMeeerkat (Reply 36):
That is a good point but remember that most state employees (a large % of the workforce) make around $150 per month in salary. It will take a long time before the middle class rises to sustain mass air travel. Approx 5,000RUB return airfare ('web promo' on S7) from Moscow - Kazan vs. approx 2,000RUB return on train is an easy choice when the former is your monthly wage.

That's why most air travel in Russia is concentrated in Moscow where wages of people (in the private sector) are pretty comparable to western standards. Plus, the train is not always the better option: when I went to Barnaul in June on short notice, my Aeroflot return flight taking 4 hours each leg was around 15.500 RUR, the train which takes 2 and half a day would have cost 15.000 for a substandard Kupe. Easy choice. On a sidenote, return fares to Kazan can go up to 5.000 in a Kupe depending on the train.

Regarding the smaller cities: you didn't see regular flights to Egypt or UAE from those airports up until a few years ago. For me that's a clear sign that more and more people are able to afford these flights, even though their number is still pretty small compared to western countries.
 
captainmeeerkat
Posts: 348
Joined: Sun Aug 15, 2010 7:13 am

RE: Russian LCC Market - Non-existent?

Tue Oct 25, 2011 3:52 pm

Quoting dazeflight (Reply 37):
That's why most air travel in Russia is concentrated in Moscow where wages of people (in the private sector) are pretty comparable to western standards.

But surely that is not a Russian only characteristic? That applies to many countries across the world where the capital is the focal point.

Quoting dazeflight (Reply 37):
Plus, the train is not always the better option: when I went to Barnaul in June on short notice, my Aeroflot return flight taking 4 hours each leg was around 15.500 RUR, the train which takes 2 and half a day would have cost 15.000 for a substandard Kupe. Easy choice. On a sidenote, return fares to Kazan can go up to 5.000 in a Kupe depending on the train.

That is for a Kupe, and not Platzkart (the LCC of trains in effect) Those that can afford 15,000RUB for a Kupe can well afford to fly Business Class on Aeroflot etc. I have never paid more than 1850RUB for a return train to Moscow in Platzkart, and never less than 4,300RUB by air. And the train is rarely the better option, 13hrs in a 4 bed berth with three gents from Irkutsk or 90mins in the air? Price is king though in Russia and lowest price will usually win.

But we digress. I still think the middle class is relatively small to support a LCC vis-a-vis Europe, but it will happen in the future. The money is just not there among the masses, and the mentality to spend as little as possible regardless of the inconvenience will take many generations after the collapse of the Soviet Union to eradicate.
my luggage is better travelled than me!
 
luckyone
Posts: 2280
Joined: Thu Aug 21, 2008 1:50 pm

RE: Russian LCC Market - Non-existent?

Tue Oct 25, 2011 4:10 pm

Quoting FCAFLYBOY (Reply 28):
I would have thought that at the right price, air travel over a large distance
Domestically in Russi would be much preferred over rail!

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 "old" way of doing things leaves the cultural fabric of Russia. I've spent time in the former USSR and the generation gap is enormous, and see below...

Quoting MOW (Reply 29):
Russian Railways, no matter how archaic they may look, provides familiar no-nonsense service which is as reliable as your old Samovar.

...People hate change.

Quoting Severnaya (Reply 33):
The same can be said exactly from the Russian point of view, it is a nightmare to get a UK visa. Schengen visa are much more easy to obtain.
Quoting captainMeeerkat (Reply 36):
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.

It is much easier for me, an American, to get a tourist visa to Russia than the other way around. Get my invite. Fill out the paperwork and three weeks later I have a Visa for a "nominal" fee.

Quoting captainMeeerkat (Reply 38):
The money is just not there among the masses, and the mentality to spend as little as possible regardless of the inconvenience will take many generations after the collapse of the Soviet Union to eradicate.

Agreed. They are still learning how a market economy works. Money, supply, demand, management, and things like inflation and job security were non issues prior to 1991. People don't learn those in a day, and until Putin tightened some screws the economy was a mess. Has anyone read "Moscow Days"? It provides those of us who were fortunate enough not to have to live through it a picture of how bleak things were in the 90's.
 
Severnaya
Posts: 646
Joined: Fri Jan 09, 2009 5:03 pm

RE: Russian LCC Market - Non-existent?

Tue Oct 25, 2011 5:21 pm

Quoting captainMeeerkat (Reply 38):
But we digress. I still think the middle class is relatively small to support a LCC vis-a-vis Europe, but it will happen in the future. The money is just not there among the masses, and the mentality to spend as little as possible regardless of the inconvenience will take many generations after the collapse of the Soviet Union to eradicate.

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 KRR/AER will always be popular, and there is room for expansion, however LCC need economies of scale, and exactly that is difficult in Russia, with it's vast distances.
Всяк глядит, да не всяк видит.
 
captainmeeerkat
Posts: 348
Joined: Sun Aug 15, 2010 7:13 am

RE: Russian LCC Market - Non-existent?

Tue Oct 25, 2011 6:08 pm

Quoting Severnaya (Reply 40):
The middle class is not relatively small.

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,

Quoting Severnaya (Reply 40):
LCC need economies of scale, and exactly that is difficult in Russia, with it's vast distances.

Studies in the social sciences place the middle class at between 20-30% of the population, and rapidly growing. This is why I think an LCC will be possible in the future.
my luggage is better travelled than me!
 
dazeflight
Posts: 481
Joined: Tue Jun 22, 1999 1:32 am

RE: Russian LCC Market - Non-existent?

Tue Oct 25, 2011 6:18 pm

Quoting captainMeeerkat (Reply 38):
That is for a Kupe, and not Platzkart (the LCC of trains in effect) Those that can afford 15,000RUB for a Kupe can well afford to fly Business Class on Aeroflot etc.

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 with a plane - only with a strict no-frills approach like Avianova did), Kupe-users could afford Economy and Lux-users Business class seats.
 
captainmeeerkat
Posts: 348
Joined: Sun Aug 15, 2010 7:13 am

RE: Russian LCC Market - Non-existent?

Tue Oct 25, 2011 6:34 pm

Quoting dazeflight (Reply 42):
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 with a plane - only with a strict no-frills approach like Avianova did), Kupe-users could afford Economy and Lux-users Business class seats.

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 there doesn't exist a level of wealth among the mass of the population to support it, nor a company able to survive the revenue intake needed to make a flight profitable. The poorest travel in the trains (third class), while those that can afford it are in the air (economy or business). The LCC doesn't exist yet.
my luggage is better travelled than me!
 
dazeflight
Posts: 481
Joined: Tue Jun 22, 1999 1:32 am

RE: Russian LCC Market - Non-existent?

Tue Oct 25, 2011 7:08 pm

^ I was disagreeing with the assumption that someone who is going with Kupe is a potential Business Class customer. Economy class very often equals Kupe prices and neither RZD nor the Airlines seem to have trouble filling it. Trying to match platzkart prices makes no sense to me.

[Edited 2011-10-25 12:34:11]