Does SU Make Money On Its North American Routes?

miaintl · Sat May 24, 2014 10:29 pm

Does anyone know if SU's routes to JFK, YYZ, IAD, MIA and LAX are profitable? Is there room for expansion in the Russia-US market? I know that the only destination is to JFK. What is keeping the North America-Russia market from reaching its full potential?

TWA772LR · Sat May 24, 2014 10:52 pm

They must be if they are staying in the NA market. Keep in mind Moscow is a very high yield city and government center so those destinations you listed make sense. Outside of Moscow, the only other Russian city that has a shot at NA service is LED. And NA-Eastern Europe is notoriously low yield.

One place I would like to see them in is IAH.

miaintl · Sat May 24, 2014 11:36 pm

I doubt Moscow is very high-yielding from America. Russia is not a big tourist or business destination from the United States. None of their flights are daily (exception of JFK). MIA is only 2x weekly, IAD 1x weekly, YYZ 3x weekly. I think the visa problem is an issue for US travelers and is keeping the market from growing. Also there is no open-skies treaty between Russia and the United States, unlike Western Europe.

MAH4546 · Sat May 24, 2014 11:40 pm

The average one way fare between Miami and Moscow is over $1,000. It is a very strong yielding markets, as is Houston from Moscow.

thomasphoto60 · Sat May 24, 2014 11:48 pm

Quoting TWA772LR (Reply 1):
ne place I would like to see them in is IAH.

Quoting Mah4546 (Reply 3):
The average one way fare between Miami and Moscow is over $1,000. It is a very strong yielding markets, as is Houston from Moscow

The question is, is their room for another flight to Moscow (DME or SVO) from IAH, especially in light of increasingly dismal relations and possibly stronger sanctions levied against Russia?

JetBlue1058 · Sun May 25, 2014 12:40 am

IAD is 3X weekly, not 1X still though, with a 767-300 on the route it's not incredibly impressive.

miaintl · Sun May 25, 2014 2:28 am

Quoting Mah4546 (Reply 3):

I doubt costing 1000 dollars means a flight is high-yielding. Why would Miami-Moscow be high-yielding? What buinses ties does Miami have with Moscow? SU flies only 2x weekly to Miami though, so not very impressive. Compare that to LX, LH, AF, BA, AZ, IB who all fly daily to MIA.

FlyingSicilian · Sun May 25, 2014 2:51 am

Quoting Mah4546 (Reply 3):
The average one way fare between Miami and Moscow is over $1,000. It is a very strong yielding markets, as is Houston from Moscow.

exactly.

Though SU will not come to IAH with SQ already flying there daily, and UA sure is hell will not try it.

It would not surprise me if someone started SFO-Moscow at some point in the near future at least 2-3x per week. I don't know that it will happen but I'd not be surprised if it does.

ORDJOE · Sun May 25, 2014 3:11 am

A big problem is just the difficulty of getting visas for either citizen to go visit the other country. I just do not see them making that much money in the us. As for LED i never see that happening succesfully.

timpdx · Sun May 25, 2014 3:22 am

At least the Russians allow you to transit w/o visa, a big step up from US policy on the issue. There are good fares out of LAX that connect to the Caucasus (tons of Armenians in LA and I know some and, yes, they take SU because its quite cheap, although TK has stepped up their game recently. I used TK to TBS in December). And there are good SU fares connecting to other points, and some of those have oil/gas business. SU offers very good connections to the relevant Stans for oil and gas, for example.

unityofsaints · Sun May 25, 2014 3:33 am

Quoting ORDJOE (Reply 8):
A big problem is just the difficulty of getting visas for either citizen to go visit the other country. I just do not see them making that much money in the us. As for LED i never see that happening succesfully.

I can't comment on Russians coming to the U.S., but Americans applying for Russian visas is as straightforward as can be, at least in my experience.

miaintl · Sun May 25, 2014 3:37 am

Does anyone see SU going daily to MIA? Or is there too much competition from UN. What type of Russians visit Miami?

FlyingSicilian · Sun May 25, 2014 3:42 am

Quoting miaintl (Reply 11):
What type of Russians visit Miami?

The wealthy kind.

modesto2 · Sun May 25, 2014 3:55 am

Quoting unityofsaints (Reply 10):
I can't comment on Russians coming to the U.S., but Americans applying for Russian visas is as straightforward as can be, at least in my experience.

I heard the policy for Americans has eased in the past year. However, Russian visas for Americans were notoriously laborious processes that require "sponsorship" from a hotel and applied only to specific dates. While your experience may have been seamless, the process has traditionally been anything but straight forward.

timpdx · Sun May 25, 2014 5:35 am

Was not so easy in 2010. Really have to your ducks in a row. Another time I wanted to transit SVO and was denied a transit visa...just wanted to have a day or two in Moscow before going onward to Ukraine. Did get my multiple visa in 2010 though. I was better prepared that time.

rutankrd · Sun May 25, 2014 5:48 am

Quoting miaintl (Reply 6):

I doubt costing 1000 dollars means a flight is high-yielding. Why would Miami-Moscow be high-yielding? What buinses ties does Miami have with Moscow? SU flies only 2x weekly to Miami though, so not very impressive. Compare that to LX, LH, AF, BA, AZ, IB who all fly daily to MIA.

I think you misunderstand the concept of yield as a measurement.

Some of the highest yield routes on the planet are low/restricted frequency routes where pressure on fares is in the airlines own hands such that they can levy very high fares !

Several African points fall in the category such as Luanda and Lagos.

As for Aeroflot I think you are also misinformed about the level of B2B traffic and numbers of rather wealthy Russians that travel upfront and pay big bucks - Culturally Russians can be very showy with their cash !

Add the increasing levels of Oil and Gas related traffic and associated finance industries and you should clearly see real yield potential.

Aeroflot route traffic beyond Moscow to the Trans Caucuses and the service level is a magnitude better than thirty years ago.

The Russian middle classes are travelling in huge numbers and paying well for it - Hence the likes of Oranair and Tranaero are operating 777 and 744s all over the place.

BTW Saint Petersburg is no low pay Eastern European city and has exceptional tourist potential.

jsnww81 · Sun May 25, 2014 6:04 am

Quoting modesto2 (Reply 13):
I heard the policy for Americans has eased in the past year. However, Russian visas for Americans were notoriously laborious processes that require "sponsorship" from a hotel and applied only to specific dates.

I'm at LHR right now returning from a trip to Russia. The visa process is still quite complicated when compared to other countries - you have to have your trip essentially all planned out, with hotels (who provide invitation letters) and airline tickets purchased (showing intent to leave the country on the designated date), before you apply. Then you just hope your visa is granted. I worked through a sponsoring agency because allegedly consultates in the US weren't accepting individual applications anymore - that added an extra $85 to the cost of the visa.

Nonetheless, Russia is a fascinating if not slightly challenging country for tourists, and I'm very glad I went. The scale of Aeroflot's operations at SVO was surprising - it's a much larger hub operation than I was expecting. The onboard service wasn't phenomenal, but it was friendly, and the hard product is nicer than any of the US carriers, with complimentary catering even on 45-minute legs like SVO to Nizhny Novgorod.

As far as North America, the only destination that could potentially be argued is missing is Chicago. Aeroflot served ORD prior to 9/11, so there's a precedent - but it would likely be another 2-3x per week route, like IAD and MIA.

Quoting rutankrd (Reply 15):
The Russian middle classes are travelling in huge numbers and paying well for it - Hence the likes of Oranair and Tranaero are operating 777 and 744s all over the place.

Very true. I couldn't believe how many Transaero widebodies were tooling around the three Moscow airports. Russians have really developed a taste for travel in the last two decades. Package holidays to Turkey and Cyprus were advertised everywhere I went there.

MOW · Sun May 25, 2014 7:12 am

Might not be a good indicator of overall yields, but every year for quite a significant length of time (NOV - APR), fares on MOW-NYC are kept at absolute minimum by all carriers, including direct ones - SU, UN and DL. Seriously, if I have to fly from Moscow to New York in winter, I'd never have to pay more than EUR 350-400 all-inclusive for a round trip. It is cheaper than flying to Paris. LAX is widely available for EUR 450-500. YTO - same.
This year, late spring - summer incoming tourist traffic from North America is hit hard by political situation - groups are canceling massively. I guess this would make even bigger pressure on yields as carriers need to replace last minute the traffic they've lost.

A333MSPtoAMS · Sun May 25, 2014 1:01 pm

Quoting jsnww81 (Reply 16):
I'm at LHR right now returning from a trip to Russia. The visa process is still quite complicated when compared to other countries - you have to have your trip essentially all planned out, with hotels (who provide invitation letters) and airline tickets purchased (showing intent to leave the country on the designated date), before you apply. Then you just hope your visa is granted. I worked through a sponsoring agency because allegedly consultates in the US weren't accepting individual applications anymore - that added an extra $85 to the cost of the visa.

Not to mention that you have to send your passport to a 3rd party agency who presents it to the embassy or consulate for you (if you can't do it yourself). I remember in 2009 when I went to Russia, I paid close to US$300 for the visa. You get a letter of invitation (which most hotels in Russia will do, for a nominal fare). I don't remember having to have my entire trip planned out, but it's been several years.

I also remember the visa application. There was a question on there that asks, if you have any knowledge about Nuclear Sciences..... how does a nuclear medicine technologist respond to this question

The process: http://globe-trekking.com/en/blog/20.../05/16/the-woes-of-a-russian-visa/
Invitation: http://globe-trekking.com/en/blog/20.../06/20/the-road-to-a-russian-visa/

i do remember, however, that I had purchased a ticket from LED to SVO to return back to the US. When I checked in with Aeroflot I noticed that they had changed the aircraft from a A320 to an A330.... so I requested an upgrade into J. It was spectacular... we were served caviar on little pieces of toast and champagne.

alphaomega · Sun May 25, 2014 1:10 pm

Quoting JetBlue1058 (Reply 5):

IAD is 3X weekly, not 1X still though, with a 767-300 on the route it's not incredibly impressive.

The embassy traffic alone could support this flight, and usually does.

Quoting FlyingSicilian (Reply 12):

Quoting miaintl (Reply 11):
What type of Russians visit Miami?

The wealthy kind.

Exactly - a full aircraft where everyone pays $100 is not as good as half the aircraft where everyone pays $2,000.

rfields5421 · Sun May 25, 2014 1:28 pm

Quoting rutankrd (Reply 15):
As for Aeroflot I think you are also misinformed about the level of B2B traffic

Quoting miaintl (Reply 2):
Russia is not a big tourist or business destination from the United States.

I can't speak for exact numbers but some observations.

1) When the company I worked for 1997-2009 setup operations in Russia - our CEO commented that it takes about 10 business trips to Moscow to accomplish what takes on trip to Paris, Dubai or Singapore. Russia has been profitable for the company, but it requires frequent trips to maintain the B2B relationships and comply with extensive regulations. Matters that a routinely handled by e-mail in China, India, South Africa, Brazil or the UK take a personal trip, often three, by a senior vice president level executive, and a couple assistants. The execs have to take assistants to Russia to have the necessary 'status'. They can't travel alone. From talking to people still with the company- there are still more than a dozen people a month making round trips to Russia via Moscow.

2) My nephew and his wife adopted two children as infants from Russia. That took nine trips to Moscow to accomplish. The children were adopted from an orphanage in the eastern Black Sea area. All trips required traveling to / from Moscow. Approvals from officials there, then permission to travel to the city where the children were located. My nephew who is still in contact with the adoption agency in the US who coordinated the process - there are still several dozen couples traveling to Russia every month working on adoptions.

MOW · Sun May 25, 2014 1:56 pm

Quoting rfields5421 (Reply 20):

Adoption of Russian children by US citizens has been legally forbidden since last year.

flymia · Sun May 25, 2014 3:02 pm

Starting a thread to see how Miami-Moscow is doing once again. Most airlines don't fly routes for years if they are not making money on the route. So I am sure they are doing just fine or very close to fine.

Quoting miaintl (Reply 11):

Does anyone see SU going daily to MIA? Or is there too much competition from UN. What type of Russians visit Miami?

Go to Sunny Isles Beach and see for yourself. They are the ones buying the multi-million dollar condos.

JFKL1011 · Sun May 25, 2014 4:03 pm

I remember comparing fares from JFK to CDG a few years ago and the absolute cheapest option by nearly $300 difference was SU JFK-DME-CDG...I was tempted but hitching a ride on the AF A380 was a greater priority than getting stranded in Russia!

EricR · Sun May 25, 2014 4:09 pm

Quoting Mah4546 (Reply 3):

The average one way fare between Miami and Moscow is over $1,000. It is a very strong yielding markets, as is Houston from Moscow.

I think there are three important things to point out here. First of all, the small number of weekly flights indicates the demand is very limited and focused on a niche. It is much easier to drive fares up with very tightly controlled capacity. Limited weekly flights does not indicate resounding success in my mind. That said, I am sure it has the ability to attract a fair amount of premium traffic at certain times of the year.

Secondly, fares on all flights, not just those to Moscow, are high these days. Therefore, to say the average fare is $1,000 means nothing without putting it in context. Lastly, it is good to use annual average fares, and not just those in peak season.

Quoting flymia (Reply 22):

Starting a thread to see how Miami-Moscow is doing once again.

Well, technically he started out the thread by discussing North American routes in general, but it inevitably transitioned to Miami. Besides, it has been at least one month since this topic was last discussed.

[Edited 2014-05-25 09:12:23]

MAH4546 · Sun May 25, 2014 7:27 pm

Quoting EricR (Reply 24):
Secondly, fares on all flights, not just those to Moscow, are high these days. Therefore, to say the average fare is $1,000 means nothing without putting it in context. Lastly, it is good to use annual average fares, and not just those in peak season.

I am talking annual. For context, average U.S.-Europe one way is around $650-700 annualized.

Very few large trans-Atlantic markets that don't involve London have average one-way fares over $1,000. Most are from Houston. Two - Moscow and Zurich - are from Miami.

miaintl · Sun May 25, 2014 10:21 pm

But Miami-Zurich is very high-yielding. I doubt the same can be said of Moscow. There must be a reason LX flies 2x daily to MIA in the winter whilst SU is only 2x weekly year-round. People need to keep in mind that SU also operates many vacation routes like PJU, CUN and HAV.

EricR · Sun May 25, 2014 10:41 pm

Quoting miaintl (Reply 26):

There must be a reason LX flies 2x daily to MIA in the winter whilst SU is only 2x weekly year-round.

LX serves a broader clientele base. On the other hand, the Oligarch Express serves a much smaller niche.

MAH4546 · Mon May 26, 2014 12:23 am

Quoting miaintl (Reply 26):

But Miami-Zurich is very high-yielding. I doubt the same can be said of Moscow. There must be a reason LX flies 2x daily to MIA in the winter whilst SU is only 2x weekly year-round. People need to keep in mind that SU also operates many vacation routes like PJU, CUN and HAV.

You have absolutely no idea whatsoever about what you are talking about.

Miami-Moscow average fare and Miami-Zurich average fare are very close to each other.

Aeroflot serves the market thrice weekly in the winter.

Miami-Zurich is approximately double the size local market and Swiss offers significant beyond Zurich connection flows. Aeroflot fills the Miami flights largely with local traffic as it isn't able to offer much beyond connections outside of Russia itself and India.

Miami-Moscow is a high-yielding, high average fare local market.

Viscount724 · Mon May 26, 2014 12:27 am

Quoting Mah4546 (Reply 28):
Miami-Moscow average fare and Miami-Zurich average fare are very close to each other.

But MIA-SVO is 17% further than MIA-ZRH, meaning lower yield if average fares are equal.

flymia · Mon May 26, 2014 1:46 am

Quoting Viscount724 (Reply 29):
But MIA-SVO is 17% further than MIA-ZRH, meaning lower yield if average fares are equal.

Have to take operating cost and the amount of seats SU offers compared to Swiss into account also.

harim · Mon May 26, 2014 3:53 am

JFK is extremely high yields; LAX is surprisingly doing well considering the economics of operating a longer flight.

Anyone know of the numbers on traffic from LAX to the Caucasus, via SU?

Aeroflot777 · Mon May 26, 2014 6:21 am

Quoting FlyingSicilian (Reply 7):
It would not surprise me if someone started SFO-Moscow at some point in the near future at least 2-3x per week. I don't know that it will happen but I'd not be surprised if it does.

The flight will most likely make a return once the correct aircraft join the fleet. Along with other destinations that were dropped due to aircraft logistics.

MOW · Mon May 26, 2014 6:23 am

On a yearly basis 75% of point-to-point MOW-MIA SU economy-class traffic is sold in low-yielding (below EUR 1000 all-in RT) fare segment. Around 40% is sold in economy promotional and economy entry level. Class mix in business looks better still - with more than half of the passengers buying the highest-yielding J and C classes. Loads are a different issue as outside peak travel periods the cabin is seldom full.
Let's not forget that SU is not the only carrier serving the market directly - UN flies VKO-MIA twice a week (mix of 777/747) and I can easily find EUR 800 all-in RT economy class and EUR 3500 business class (current non-promotional entry public levels) tickets for departure this week.
I doubt that MIA can be a huge money-maker for both carriers.

cws818 · Mon May 26, 2014 9:43 am

Quoting miaintl (Thread starter):

Does anyone know if SU's routes to JFK, YYZ, IAD, MIA and LAX are profitable?

Yes. There are people who know this information. You have asked this before about KLM, TAP, etc. The answer is the same: there are people who know this information, but they are not going to provide it to you on this website. You can keep asking, over and over and over again (it seems to be your hobby), but the answer remains the same.

Quoting miaintl (Reply 11):

Does anyone see SU going daily to MIA?

No.

Quoting miaintl (Reply 26):
But Miami-Zurich is very high-yielding. I doubt the same can be said of Moscow.

How do you know?

Quoting miaintl (Reply 26):
There must be a reason LX flies 2x daily to MIA in the winter whilst SU is only 2x weekly year-round.

No doubt, Sherlock.

sovietjet · Tue May 27, 2014 9:11 pm

Quoting modesto2 (Reply 13):
I heard the policy for Americans has eased in the past year. However, Russian visas for Americans were notoriously laborious processes that require "sponsorship" from a hotel and applied only to specific dates. While your experience may have been seamless, the process has traditionally been anything but straight forward.

It's not nearly as scary or impossible as this thread makes it seem. I don't know where these reports are coming from but I have gone three times (2007, 2011, 2012) and used my USA passport and it was easy, fast and no difficulties were encountered. You do need an invitation but that is pretty much a bureaucratic matter and they do it mainly for the fee that you pay for that. Any place that handles visas will get you one. Nobody told me I need "status", or an escort, or that I can only go to certain cities. Once in Russia you are free to go anywhere you want except the "closed cities" which are really small towns in obscure locations which handle sensitive industrial production (like nuclear materials).

Gemuser · Wed May 28, 2014 2:10 am

Quoting sovietjet (Reply 35):
Once in Russia you are free to go anywhere you want except the "closed cities

Unless its changed since 2010 or its different for Australian passport holders (which I doubt), while you can go anywhere as you say, it has to be planned & paid for in advance, travel, hotel etc and you have specific dates to arrive in & depart from Russia. So not quite as simple as say, Europe (Shengn?spelling?) where you arrive at a port of entry, they swipe your passport, wish you a pleasant visit, and off you go for up to the 90 days you are allowed.

Gemuser

Prost · Wed May 28, 2014 2:39 am

How about LGBTQ travellers? Are they welcomed?

MOW · Wed May 28, 2014 4:58 am

Quoting Prost (Reply 37):

Unless you absolutely have to show to everybody that you are an LGBT, you are welcomed. Otherwise proceed at your own risk - majority of Russians will not show support or tolerate. Besides, there is a law which forbids 'gay propaganda' among minors.

jumpjets · Wed May 28, 2014 10:40 am

Quoting miaintl (Reply 2):
Also there is no open-skies treaty between Russia and the United States, unlike Western Europe.

Nor is there in Europe - or if there is it is negotiated country by country. For example here in the UK there is a limit of 2 airlines from each of the Russian Federation and the United Kingdom to fly between London and Moscow - there was a 'competition' last year following BDs takeover by BA who were the incumbent operators. BA retained their rights and Easyjet became the second nominated carrier, beating off competition from VS. From the Russian side we have Aeroflot and Transaero.

I think there are different rules for starting services between other cities in the two countries, but am not sure what they are.

enilria · Wed May 28, 2014 1:32 pm

Quoting miaintl (Thread starter):

Does anyone know if SU's routes to JFK, YYZ, IAD, MIA and LAX are profitable? Is there room for expansion in the Russia-US market? I know that the only destination is to JFK. What is keeping the North America-Russia market from reaching its full potential?

Quoting Mah4546 (Reply 3):

The average one way fare between Miami and Moscow is over $1,000.

I don't get the impression they make any money on the USA. First, the fares I see for sale seem very low and much lower than DL. Second, they are completely uninterested in expanding to the USA and they have publicly said that any new widebodies will be used for domestic long-haul. Third, the relationship with DL is pretty much in tatters and the evidence is in the newspapers so that does not help either.

sovietjet · Wed May 28, 2014 3:57 pm

Quoting gemuser (Reply 36):
Unless its changed since 2010 or its different for Australian passport holders (which I doubt), while you can go anywhere as you say, it has to be planned & paid for in advance, travel, hotel etc and you have specific dates to arrive in & depart from Russia.

It's still not like that. For all 3 of my trips, while I had to have one hotel reservation (to make the invitation letter) the rest was just as you say about Europe. I went to several cities and found some hotels to stay at. When I arrived in Moscow, they looked at my passport and visa as at any other airport, stamped it and sent me on my way. No questions, no proof of hotel or payment, nothing. Hell, I have been questioned more in the past when returning to the USA (with my American passport).

miaintl · Wed May 28, 2014 7:54 pm

I wonder if the Miami-Moscow market can grow if the visa requirement is abolished. Does anyone have the annual pdew numbers for Miami-Moscow or Miami-Russia?

N1120A · Wed May 28, 2014 8:10 pm

Quoting miaintl (Reply 6):

I doubt costing 1000 dollars means a flight is high-yielding.

$2000 for a round trip? You can fly business class from the US to Europe for that at times. That is very high yield.

Quoting miaintl (Reply 6):
Why would Miami-Moscow be high-yielding? What buinses ties does Miami have with Moscow?

Rich Russians.

Quoting miaintl (Reply 6):
Compare that to LX, LH, AF, BA, AZ, IB who all fly daily to MIA.

Completely different markets and forces.

Quoting timpdx (Reply 9):
tons of Armenians in LA and I know some and, yes, they take SU because its quite cheap, although TK has stepped up their game recently. I used TK to TBS in Decembe

TK brought its A Game to LAX, and has basically shut down EK's dream of running multiple A380s a day. I took a close friend who was flying to TBZ with TK from LAX this weekend and the agent said at least half the flight each day is going to Iran.

Quoting mow (Reply 38):

Unless you absolutely have to show to everybody that you are an LGBT, you are welcomed.

Quoting mow (Reply 38):
Besides, there is a law which forbids 'gay propaganda' among minors.

Which means not welcome. Russia's issues with bigotry was well known, and well supported by the Putin Dictatorship.

Quoting enilria (Reply 40):
First, the fares I see for sale seem very low and much lower than DL.

You are assuming that traffic only flows one way.

Quoting enilria (Reply 40):
Second, they are completely uninterested in expanding to the USA and they have publicly said that any new widebodies will be used for domestic long-haul

Right. Why would they expand beyond where they fly now? Other than IAH, which is already covered and subject to some tenuous political issues, why do they need to fly anywhere else? They fly to the 2 largest cities in the US, the largest in Canada, the US capital and a ridiculously in-demand destination for moneyed Russians.

flymia · Thu May 29, 2014 12:12 am

Quoting mow (Reply 33):
I doubt that MIA can be a huge money-maker for both carriers.

Quoting enilria (Reply 40):
I don't get the impression they make any money on the USA. First, the fares I see for sale seem very low and much lower than DL.

Because SU and DL have the same exact cost structure? The same taxes? The same fuel prices? The same crew salaries? and on and on. It is hard enough to compare to U.S. airlines, a U.S airline and Russian airline, almost impossible.

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