Are Aeroflot and AirBridgeCargo Becoming the Only International Russian Carriers?

Last week’s news that Aeroflot had taken a 75.1% share in their largest rival, Transaero, did not come as a real shock to the market. Transaero has been fighting for the past couple of years to stay afloat and had come up with various plans to stay in business. All to no avail - the once proud second Russian passenger carrier bites the dust.

Will soon fly in Aeroflot colors – Boeing 777-200ER of Transaero  /  courtesy Transarero
Will soon fly in Aeroflot colors – Boeing 777-200ER of Transaero / courtesy Transarero

Decision not taken by Aeroflot
Sources inform us that the decision was not one which was readily endorsed by the Aeroflot management, but more of a political one geared towards trying to settle down the volatile Russian air transport market which has grown through numerous new carriers over the past twenty years or so.
The Russian commercial airline market grew at a fast pace since the so called iron curtain came down.
Almost on a par to that of the Chinese aviation scene which seems to have survived better and grown even faster.
The events and sanctions of the past 12 - 18 months have put heavy pressure on Russian carriers, especially those which survived mainly from passenger transport.

The two Transaero operated freighters TU-204-100C are very unlikely to be taken over by Aeroflot  /  courtesy UN
The two Transaero operated freighters TU-204-100C are very unlikely to be taken over by Aeroflot / courtesy UN

SU has no ambitions stepping into freighter ops again
Transaero was one of the leaders in that section, concentrating mainly on Russian holiday destinations with its fleet of more than 100 aircraft.
It had two Tupolev 204 freighters which were mainly used on Russian domestic routes. Information is that Aerflot won’t continue to utilise these aircraft as they opted out of full freighter operations some years ago and apparently have no ambitions to step back in.
It would have been another shameful trial for Mr Putin’s government if Transaero had to declare bankruptcy.
Hence - the order to Aeroflot to take control of Transaero for a nominal sum of one rouble.
They have not necessarily done themselves a favour with this move.
Transaero is rumoured to have debts amounting to almost Euro 900 million along with a fleet which has an average age of 16 years.
Not a nice inheritance!

Uncertain fate of UTAir
UTAir which was Russia’s third largest airline behind Aeroflot and Transaero has fared somewhat better until now. But for how long?
They were saved by the Russian government committing themselves to the amount of €320 million in guarantees. The main condition was that UTAir drastically reduce their fleet and route structure.
There are also other carriers in Russia who are hanging on by the skin of their teeth and who are also expected to fall by the wayside.

AirBridge Cargo moves ahead at a fast pace
Whereas Aeroflot concentrates mainly on the passenger business with cargo playing the second fiddle, AirBridge Cargo (ABC) has fast become the rising star in the full freighter airline world.

Even traditional freighter airlines such as Lufthansa Cargo and Nippon Cargo Airlines now sit up and take notice of ABC’s worldwide network which grows month by month.
The latest destination announced by the Volga-Dnepr daughter company is Singapore which is served twice weekly from Moscow.
The ABC network which started in 2004 with regular flights connecting Moscow with Frankfurt and Amsterdam, quickly grew with destinations being added in the Far East, among them at that time, Hong Kong, Shanghai and Beijing.
These have been expanded even further during the past few years.

The original Moscow Sheremetyevo hub was expanded also to Moscow’s second major airport, Domodedevo and also to St. Petersburg.

AirBridge Cargo’s freighter fleet is constantly growing. Here Boeing 747-400ERF pictured at Moscow Sheremetievo Airport  /  courtesy ABC
AirBridge Cargo’s freighter fleet is constantly growing. Here Boeing 747-400ERF pictured at Moscow Sheremetievo Airport / courtesy ABC

Constant fleet expansion
Volga-Dnepr and ABC’s top managers are fully committed to the freighter concept and have shown this during the past years with a steady aircraft order book with Boeing.
The present fleet of six Boeing 747-8Fs and eight Boeing 747-400Fs is meant to be increased with a further twenty 747-8Fs which the Russian carrier has placed on option with the American manufacturer.

ABC can boast around thirty destinations in fourteen countries which are served on a regular basis through their main hubs in Moscow, Frankfurt and Amsterdam.
Los Angeles was added recently, thereby adding a third USA destination after Dallas and Chicago.
In Europe, Malmoe, Helsinki and Munich join the list and it seems others will follow.

There’s no going back now for ABC
Cargo transport is the commitment and the 2015 first half year figures seem to prove this.
Seventeen percent more tonnage moved than in the same period 2014 with a load factor of 67 percent.
Nippon Cargo Airlines recent decision to cancel firm orders for four Boeing 747-8Fs will come as a further warning signal to the market regarding the future of all freighter operations.
Some of the world’s largest carriers have moved out of all freighter routes and some still stay in.
ABC it seems is following its own path which so far has proven to be a good one for the only Russian all-cargo carrier.

The rumors of a possible Volga-Dnepr interest in Martinair or its cargo routes cropped up again in the Dutch press earlier this week.
The story goes that considering ABC’s reliance on the Chinese market and the fact that it has dropped considerably; that Volga-Dnepr is again looking at ways of opening a new discussion on possible participation on MP’s lucrative South America and African routes.
Let’s wait and see!

Two carriers - two different concepts.
Whereas Aeroflot will be burdened with old Transaero debt, they‘ll still remain a strong passenger airline with worldwide connections.
The cargo side it seems will definitely be left to ABC who have shown that with a lot of hard work and market presence, one can join the club of top, if not the top, freight carriers.

John Mc Donagh

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