Aeroflot's new strategic plan targets the top end of the market

Russian carrier Aeroflot is implementing a strategy that should ensure its long-term survival as a premium carrier by separating domestic and regional activities from long-haul operations.
Aeroflot
Aeroflot's new strategic plan should lead to annual traffic of 130 million passengers by 2023.

According to the Russian press, the Prime Minister of Russia Mikhail Mishustin received the 14 July last Vitaly SavelievCEO ofAeroflotto hear about the airline group's new strategic plan, which runs until 2023. This is a very ambitious plan, since it envisages that by 2023 the Aeroflot group should have annual traffic of 130 million passengersThis is 30 million more than the previous strategic plan, which forecast 100 million passengers. This would represent growth in passenger traffic of 115%, with Group traffic reaching 60.7 million passengers in 2019.

To achieve this feat, the airline's management has completely restructured its business model. Under the new strategy, the parent company Aeroflot will concentrate on exclusively on long-haul operations and the most profitable European routes - particularly those with high levels of business traffic such as Paris-Moscow while the domestic network will in future be left to the two subsidiaries Pobeda and Rossiya.

The strategy is in fact a compromise with the demands of the Russian government, which wants affordable air fares for domestic routesThis has had a negative impact on the profitability of the parent company Aeroflot. The concentration of activity on long-haul routes and European routes offering high unit revenues will also enable Aeroflot to position itself on a more competitive market. high-end niche and to aim for the coveted title of company five stars awarded by Skytrax.

The two subsidiaries, Pobeda and Rossiya, will therefore take over the domestic routes, Pobeda to become Russia's largest airline and within the group. It is envisaged that Pobeda could transport over 60 million passengers by the end of the decade. Rossiya, for its part, will be specialising in routes with the European Union.Far East and would be used in particular for links with Siberia and the Kaliningrad enclave.

At the same time, Aeroflot Russian Airlines is expected to be handling between 35 and 40 million passengers. Aeroflot plans to transfer its entire fleet of Boeing 737-800s to Pobeda from 2021, i.e. 47 aircraft that will be reconfigured into a single 189-seat class. The parent company will retain Boeing 777s and Airbus A350s on long-haul routes, with the carrier planning to retire its ageing A330s over the decade. On the European network, the airline is keeping its Airbus A320s and A321s, but is considering replacing them with A320neo. However, due to the COVID crisis, the company has delayed the delivery of any new aircraft. " This strategy will lead to a significant increase in service and prestige for both the airline and our country. "Vitaly Saveliev told the Prime Minister.

In the meantime, Aeroflot is working on a slow normalisation of its international traffic, a normalisation which has been delayed due to the intensification of the pandemic in Russia. For the month of July, the carrier is offering one or two weekly routes to 12 European cities - including two weekly flights to Paris CDG and one flight a week on Nice - as well as to New YorkShanghai and Tel Aviv. Russia remains closed to international visitors, with a few exceptions.