Improvements largely offset declines (1,044 words)

Published: 6/11/2001

Krasnoyarsk Airlines (KrasAir) has revealed that, in 2000, its share of the total Russian airline market was 5%, with an 8.2% share of the domestic market. It also reported that its aircraft spent 10% less time in the air over the period, flying 35,894 hours. The airline attributed the decrease to its ceasing to operate fuel inefficient An-26s and Yak-40s, while reducing the flight time of Tu-154Bs during the year. According to Svetlana Volodina, spokeperson for KrasAir , while the An-26s were scrapped, owing to the expiration of airworthiness certificates, the airline has retained the Yak-40s, using them as backup aircraft on short haul routes, but it is unlikely to modernise in the future. Excluding the scrapped aircraft, Krasair saw a decline in overall aircraft utilization of only 6%, although the changing mix of aircraft used improved revenues per hour by 44% in dollar terms, with use of Il-86s rising by 6%, while the use of the Il-76s fell by 23%. This boosted revenues, given the relatively higher revenue passenger traffic over general cargo. Cargo volumes improved by 3.4% over 1999, to 20,000 tonnes, despite the falls in the utilisation of the Il-76s, with more cargo carried over shorter distances. The airline adds that passenger utilisation has been improved, even if the passenger load factor is not high. The airline's use of its Tu-154Bs also fell by 39% over the period, to 6,823 hours, as part of its policy to reduce use of the aircraft in favour of Tu-154M, given that the costs of operating the aircraft at the 1999 level would have cost Rb 32.6m and additional jet fuel costs could not have been adequately reflected in ticket prices. During the year, the company therefore focussed on the Tu-154M and leased one Tu-134. The Tu-134 has been used to replace the Tu-154Bs, with savings of Rb8m in fuel costs. Its introduction also allowed the company to open new routes and generate additional revenues of Rb 90m. Tu-154M utilisation increased to 15,479 hours in 2000: an increase of 7.4% over 1999. The airline's Tu-204 flew for only 97 hours, reflecting its entry into service in December 2000. Krasair carried 726,516 passengers in 2000, 4.8% less than in 1999, reflecting a 11.9% fall in domestic traffic, that represents 82% of the airline's total traffic. International traffic grew by 53.1% to 127,664 passengers, so contributing to an increase in revenue passenger kilometres (RPK) of 23.9%. The large increases in international traffic came from the airline's charter activities from Moscow to Turkey, Egypt and Greece, with its Il-86 flights increasing by 200%. The company attributes the fall in domestic activity to a very quiet summer, owing to higher tickets prices reflecting increasing fuel costs. KrasAir's fuel costs, as a proportion of total costs, rose from 30% in 1998 to 58-60% at the end of 2000, forcing it to make its decisions about aircraft early in the year. Another factor in the decline in domestic traffic was decreased volumes of military traffic,as the Ministry of Defence reduced volume, particularly on the Far Eastern routes. The company was also impacted by the changes in the civil aviation authorities, as the FSVT became the GSGA under the control of the Ministry of Transport, so leading to extensive administrative problems over four months, relating to licensing, certification and other issues. Despite this, seat load factor for the period was 65%: 2.8% higher than in 1999. Commercial load factor at 69.4% rose by 9.1% and ran at a rate 11.4% higher than average commercial load factor for the industry, according to the airline. It also claims that punctuality improved by 6% in 2000, with 66% of flights on time. During 2000, the company increased scheduled destinations to 51 destinations: an increase of 24% on 1999. It opened several new scheduled routes to St. Petersburg - Krasnoyarsk - Seoul that it calculates brought in Rb34m of revenues: 18% of scheduled international traffic Domestically, the company started serving Kuzbass, i.e. Moscow-Kemerovo and Moscow-Novokuznetsk, so generating Rb24m of revenues in 2000 and leaving the government expecting to generate Rb120m in 2001. In 2000 KrasAir opened the following scheduled routes: · Petropavlovsk Kamchatsky-Irkutsk-Samara-Rostov · Sochi - Ekaterinburg-Irkutsk-Khabarovsk · St. Petersburg - Krasnoyarsk - Blagoveshchensk - Yuzhno-Sakhalinsk · St. Petersburg -. Krasnoyarsk-Seoul · Moscow (Sheremetyvo-1 Airport) - Kemerovo · Moscow (Sheremetyvo-1 Airport) - Novokuznetsk- Blagoveshchensk · Norilsk - Ekaterinburg -Belgorod · Sochi - Samara-Murmansk Using the leased Tu-134: · Krasnoyarsk - Samara - Sochi · Krasnoyarsk - Magnitogorsk - Mineral Waters · Moscow (Domodedovo Airport) - Rostov Through its close relations with Norilsk Nickel, the airline has increased its share of the Norilsk-Moscow route from 65% to 80%, reflecting Norilsk Nickel's subsidised deals offered to employees and their families. The introduction of Tu-204 in December 2000 has allowed the airline to improve the number of charter destinations offered during the winter season of 2000. The company increased the number of flights by 150%, with revenues increasing by 180% over 1999. Flights have been offered to Thailand, Finland, Indonesia, Egypt, Spain, Italy, and Philippines, with the Tu-204 carrying 35% of the 127,664 passengers carried in the 2000 season: an increase of 53.1% on 1999. The share of revenues from international flights increased from 20% in 1999 to 30% in 2000, contributing to sales of Rb2530 m ($90m): up from $71.5m in 1999. According to Volodina, the company has 52 aircraft but only 44 are currently in flightworthy condition and are supplemented by leased aircraft in the peak season. During 2000, Krasair bought in some aircraft, increasing its Tu-154Ms from seven to nine and Il-86 from one to three and boosting the airline's capacity by 28% over 1999. The company says that it is happy with the Tu-204, commenting that the introduction of two Tu-204s at the end of 2000 has made it more competitive. Direct operating costs are lower than the Tu-154, with greater range considerably improving operating costs. KrasAir plans to utilise each of the aircraft for 250 hours a month, on scheduled flights to Kuzbass (Kemerovo, Novokuznetsk), charter flights from Moscow to Spain and Egypt and flights to Germany (from Krasnoyarsk, Omsk, Barnaul to Hanover and Frankfurt).

Article ID: 2577