At a conference to announce the winter schedule for Aeroflot, General Director
Valery Okulov was generally up beat about the airline's prospects ahead of the
issuing of Global Depositary Reciept (GDR) covering 20% of their stock to be
listed , according to Okulov, by the end of this year in London.
Okulov stated that the schedule, which is regarded as the best planned by Aeroflot,
will deliver substantial gains in the revenues during the first quarter of 2001,
with an expectation of additional revenues of $60m and a boost to operating
profits of $32m. The increases in revenue will come from a 19% increase in flights
over last winter's schedule, which was substantially increased on 1998. The
new schedule runs from 29th October 2000 to March 24th 2001 and will offer 535
flights a week. The increase of flights is aggressive and reflects the new confidence
within the airline that it is better organised and more capable of delivering
than it has been in the past. The schedule is therefore built around a number
of planning changes:
Ø A significantly more sophisticated approach to route planning reflecting
the basic economics of routes and focussing on profitability
Ø Better use of aircraft, particularly larger aircraft on international and
domestic long haul routes. The Il-96-300 and Boeing 767 will be used more extensively,
with the Il-62 replaced by the A-310s on the Moscow -Vladivostok route. Ø Increase
of frequencies generally and the addition of popular destinations particularly
in the US, which last season saw some cuts in frequencies. There has however,
been some consolidation of routes to the US in an effort to achieve higher load
factors using aircraft more appropriate to the traffic such as the A-310 in
place of the Boeing 767 on the Moscow-Toronto route, which will now includes
Montreal.
Ø Improved connecting flights and better coordination to reduce times in transit
and aircraft turnaround Ø Wider use of codes sharing and partnering to improve
the airline's coverage and allow the cancellation of routes such as flights
to Lisbon and San Paulo, which will then be handled by partners through Paris
and Madrid. The airline believes that the experience of cooperation with Air
France on routes to Africa has proved the cancellation of routes does not necessarily
mean the loss of passengers. The talks for the joining the Delta/Air France
partnership otherwise continue according to Okulov and should be completed by
2003 judging by the progress made at talks on the 13th October.
Ø Elimination of competition between scheduled and charter flights, while expanding
charter flights for the period from 234 in 1999 to 500-600 flights substantially
increasing the airline's charter revenue.
Ø Further enhancement of the domestic network and an upgrade of quality through
use of western aircraft, as witnessed by the recently announced plan to operate
Boeing 737 on the Moscow-Murmansk route early next year.
New
Schedule
According to Alexander Kanishchev Head of Aeroflot's Network Management, the
creation of the new winter schedule has been driven by more concern for profitability
than ever before and the level of connectivity for Aeroflot's customers had
also been a major area of concern, both with Aeroflot flights and those of the
airline's various partners. Transit times through the Shermetyevo particularly
have been addressed and the schedule has the goal of substantial reductions
in transit and in aircraft turnaround times. The long term goal in the latter
case being to reduce the time to international standards of 45 minutes, but
for the meantime Aeroflot say they will be happy with one hour. The airline
has largely left its domestic network unchanged, although with an increase in
frequencies to some destinations. This reflects the need of the management to
get the greater performance from their domestic routes and affiliates, some
of which, such as Nizhni Novgorod , are reported to be slow in meeting the expectations
of the airline's management. They also stated that there was a need to improve
working relationships with airports for greater performance.
Fleet
The airline said that it continues to have problems on the route to Delhi in
particular; because of the lack of availability of the Il-96-300 aircraft used
on the route due to the frequent poor weather conditions at Delhi and has suggested
that the aircraft may be replaced and the frequencies will be increase. More
generally the intention is to increase the 112 aircraft fleet's utilisation
with a target for use of 13 hours from the A-310 and Boeing 767, 9 hours a day
for rest of the Boeing fleet and the Il-96-300, 8 hours for the long haul Il-62M
and 6 and 5 hours respectively for the Tu-134 and Tu-154. During the winter
period the airline expects to operate 59-69 of the aircraft, suggesting that
the leased foreign aircraft will continue to increase their share of Aeroflot's
traffic.
Charters
The airline is reported to have already booked 500 charters for the winter
period and has a target of 600. The airline is focussing on the development
of "regular scheduled" flights within the CIS and also reports that its new
flights to Israel, which are reported top have little price differential over
the scheduled price, are currently flying with 100 passengers on the 132 seat
Tu-154M despite the current problems in the country and the airline plans to
increase the frequency to two flights a week. The flights to the CIS however,
will by no means be an easy market, with intense competition expected when it
opens flights from Tashkent to Moscow in several weeks, competing with a Boeing
737 operated by Uzbekistan Airways and an A-310 of Transaero. In some of the
other central Asian countries and elsewhere in the CIS however, Aeroflot is
frustrated by the complex bilateral agreements that will not allow it to expand
the frequency of its flights to Tiblisi, Yerevan and Kiev.Elsewhere Aeroflot
said that the winter season would see an increased number of vacation charters
in conjunction with a growing number of travel agencies, using mainly Il-86s
to coincide with the skiing season according to Evegeny Bachurin of Aeroflot.
Some destinations will however, require the use of western aircraft given the
reluctance of some airports to accept Russian aircraft such as the Il-62.
New terminal
According to Okulov the plans for the new terminal at Shermetyevo, considered
to be an essential pre requisite for the airline's entry into the Delta /Air
France partnership, continue to move forward and suggested that Air France may
be an investor although this remains unconfirmed by Air France. To date the
final choice of contractors is undecided for the project due to start in 2001.
Other reports have suggested however, that Swedish contractor Skanska currently
leads the field.
