Russian Cargo Charters in the Doldrums

Less loads and flights – Volga-Dnepr’s An-124 fleet is underutilized  /  source: hs
Less loads and flights – Volga-Dnepr’s An-124 fleet is underutilized / source: hs

In Q1 air freight tonnage and air mail transported within Russia and to places abroad went down by 2 percent year-on-year. Hardest hit is An-124 operator Volga-Dnepr Airlines that now has announced introducing a three-day working week as reaction to a sharp declining transport demand.

 

Bad news for thousands of employees of capacity provider Volga-Dnepr Airlines: the management decided to sharply cut labor expenses by reducing the normal five-day working week to only three days. This cost saving program will become effective 1 June and is expected to last for the coming five months. It affects a great number of the company’s employees that will have to accept sharp reductions of their salaries. The malaise began at the beginning of this year with V-D reporting a decline of 44.5 percent in sales during January and February. Although, since then the situation has slightly improved, the operational and financial figures are still well below last year’s results. The withdrawal of NATO and other armed forces from Afghanistan reduced the demand for transporting heavy and oversized shipments. Lately, the Crimea and Ukraine crisis and first results of sanctions imposed by the U.S. administration and most EU members to stop Moscow from annexing foreign territory impacted Volga-Dnepr’s business negatively. Consequently, some of the fifteen freighter aircraft in the fleet (ten An-124-100s and five Ilyushin 76TD-90WDs) are partially out of work already since weeks.

Volga-Dnepr, ranked among the top ten capacity providers worldwide, is an indicator for the sharp reduction of trade particularly between Russia and the neighboring CIS countries which declined by 10 percent in Q1.


The company’s only chink of light in the gloomy economic environment is its fully owned subsidiary, line-haul carrier AirBridge Cargo. According to latest data ABC’s tonnage leapt thirteen percent during the first months of 2014 in comparison to a year earlier.
The main deck capacity provider seem to be the only positive exception among Russian airlines that transport air freight in the lower decks of their aircraft, proven by a 2 percent contraction of freight and mail volumes in Q1, 2014.


Russian aviation experts believe this negative trend will also lead to reduced passenger numbers beginning this summer or latest in Q3. This mainly because of the sharp decline of the ruble that makes spending vacations in Turkey, Egypt, Cyprus and at most places preferred by Russian travelers more expensive and at the same time ups the fuel bills to be paid by Aeroflot, Transaero, S7, and other international operating Russian carriers.


Tourists account for almost 40 percent of all Russian passengers purchasing a flight ticket. Hence, typical leisure routes to the Red Sea, the Turkish Riviera, Crete or Cyprus are among the most requested, confirm domestic airlines. Given the current unfavorable political and economic circumstances the amount of leisure traffic will supposedly further decrease. A rather gloomy prospect particularly for most of the domestic airlines. 

 

Heiner Siegmund