Airline continues to prune unprofitable routes (693 words)

Published: 11/2/2001

Aeroflot moved to its winter schedule on 28th October 2001 that will last through till 30th March 2002. The schedule, according to Valery Okulov, Aeroflot's General Director, reflects changes in the global market after 11th September, but also the need to improve transiting for passengers and the continuing process of eliminating loss making flights. Okulov, while accepting that the international situation has cost the airline some international traffic, said it had also offered additional sources of passengers, as the cancellation of flights to Moscow, such as Sabena's Brussels-Moscow route and reduced frequencies, has increased the carrier's market share. Even so, the airline has reduced its passenger forecasts for the year by 100,000 passengers and Okulov said he anticipated a top line impact of an $18m fall in revenues. He added that this would lead to losses in the last quarter of 2001 (October - December), although insisted that the airline is looking for an $8m profit for 2001. On the cost side, Okulov said that the airline has started aggressively to tackle the situation, with measures including a freeze on new non-operating expenses and the already announced withdrawal of fuel inefficient Russian aircraft to lower fuel costs. The company does not have any current plans to reduce headcount, but Okluov warned that these will be reviewed as market conditions dictate. Aeroflot is also talking to Lufthansa about possible co-operation on some routes that may result in a code-sharing agreement.

Aeroflot Flight Cancellations
Destination	Frequency(week)
Ankara	1
Bahrain	2
Bratislava	2
Dakar	1
Dhaka	3
Calcutta	7
Casablanca	1
Colombo	2
Canakry	1
Karachi	2
Kuala Lumpur	4
Lima	1
Lyons	1
Ljubljana	3
Mexico City	2
Montreal	2
Skopje	1
Chicago	3
Tripoli	1
Source: Aeroflot

The airline claims that the routes closed in the winter schedule were all unprofitable and reflect its ongoing strategy of withdrawal from a large numbers of routes maintained historically for political reasons, as well as an increasing focus on its own region and Europe. Western aircraft operated on some of the routes will be transferred to other routes, according to Okulov, with the Il-62 and Il-86s being withdrawn from scheduled service. Aeroflot will still continue to use the Il-86 and Il-62 on charter work and on the busy summer routes to Sochi and Larnaca during summer 2002, when load factors are so high that they make the aircraft profitable despite its economy. Aeroflot has also announced that it has decided to stop operating its dwindling Il-76 fleet, recently reduced from eight to four, on the basis of noise and reliability. In the winter schedule, the airline has increased flights to Southeast Asia, with frequencies to Hong Kong up from two to three a week, Bombay up to four, and Hanoi from two to three, with Moscow to Ho Chi Minh City made into a non-stop flight. Aeroflot also plans to increase frequencies on routes Moscow - Ulaan Baatar from one to two a week and increase flights Moscow - Bangkok - Singapore. Some European flight frequencies have also been increased with flights to Rome up from four to seven flights per week, with plans to introduce additional evening flights to London and Frankfurt: a decision that may have been prompted by the temporary suspension of Transaero's services until early December in the case of Frankfurt and the New Year for London. Frequencies to Athens have been raised from three to four a week, with a scheduled flight three times a week replacing a regular charter to Thessalonika. Oslo will get four flights a week instead of three. In North America, Aeroflot has increased flight frequencies to Toronto and Washington D.C, with flights to New York changed to allow evening arrival. In the past Moscow - New York departed at 11:05 am; now it will depart at 4:30pm. In Africa and Middle East, Aeroflot has increased frequencies on popular winter flights. These include plans to operate flights from Moscow-Larnaca five times per week (three times in winter schedule 2000/2001), Tunis, two times per week (one), Tehran three times (two), Istanbul seven (five) and Dubai, six. Aeroflot plans to operate regular flights to Antolya two times per week (in winter 2000/2001 it was only a regular charter flight). Domestically, frequencies and destinations remains unchanged, according to Okulov, although frequencies from Moscow to Ekaterinburg will rise from seven flights a week to 11.

Article ID: 2881