Jetrader - July/August 2011 - 11

hasn’t been successful yet in consolidating. The real marketing cooperation has increased just with one carrier—Rossiya, the main player serving the second biggest Russian city—Saint Petersburg. Analysts suggest that the consolidation is slow and difficult because of simple geography (the companies are based far from each other) and because the operators have different business models. For example, OrenAir is one of the biggest charter carriers, operating from Orenburg, and also from Moscow and other parts of the country. In 2010 this carrier became the third-biggest airline on international flights after Aerofl ot and Transaero. The outstanding success of OrenAir is explained by its cooperation with one of the biggest tour operators—Pegas Touristik. It is said that the travel company needed its own airline but, as it was hard to get an aircraft operator certificate (AOC) in Russia, Pegas Touristik purchased several Boeing 737 for an existing small airline—OrenAir. It has never been confirmed officially, but it also hasn`t been denied. Now this airline operates 16 Boeing 737 (10 NGs). It also has in its fleet some old Soviet aircraft and one new Russian Tu-204. OrenAir is not the only example of this sort of cooperation between a travel company and airline. UTair last year got two Boeing 757-200s, and it is reported that the deal was made with Anex Tour company, which purchased the planes. Also during the recent years, tour operators created their own carriers—Pegas Touristik finally launched its own airline called NordWind; another major operator, TEZ Tour, started an airline called IFly. All these companies bought a western-built fleet on the secondary market—mostly Boeing 737s or 757s. The number of charter tourists is growing significantly, and these companies are looking for the new regions in Russia to launch direct flights to different resorts. However, the situation in Egypt, which is one of the popular mass destinations, has shaken the carriers.

aircraft. Taxes and custom duties for the western-built planes were traditionally high because of the Russian aircraft industry lobby, which tried to protect local manufacturers. At the beginning of 2000, only Aeroflot and Transaero operated with a reasonable volume of western-built aircraft as they received custom duties privileges. But in the middle of 2000, with growing fuel prices, most of the carriers realized that it is more cost-effective to pay more upfront and to fly more fuel-efficient aircraft than not to pay taxes but operate Soviet planes requiring more fuel. During the last two or three years, several main carriers, including Aerofl ot, S7 Airlines and Rossiya, have taken Tupolev Tu-154s out of their fl eets and replaced them with Boeing or Airbus aircraft. UTair started their fleet renovation later but now their aircraft are mainly westernbuilt—not only Boeings but also regional ATRs. According to statistics in 2010, 83 percent of passengers in the Russian market were carried by western-built aircraft—it is 10 percent more than a year ago. And this figure will increase as last year the custom duties were canceled for aircraft with less than 50 seats, from 111 to 160 seats and more than 219 seats. The representatives of the company Airclaims, CIS say that Russian companies altogether ordered around 200 new aircraf t (including cargo fl eet). And we can be sure that several companies—like the new low-cost Avianova—are searching for the aircraft on the secondary market.

During the last two or three years, several main carriers, including Aeroflot, S7 Airlines and Rossiya, have taken Tupolev Tu-154s out of their fleets and replaced them with Boeing or Airbus aircraft.
Dnepropetrovsk, bought 14 Embraer-145s in the secondary market. Analysts said that with this additional volume, it will be possible to expand domestic routes and even to start some international services. As international flights are more profitable, the local carriers are fighting for the chance to develop them, while on routes to domestic destinations, the airlines compete not only with trains but also with buses. Kazakhstan needs a well-developed domestic network. But the situation is different from that in Ukraine: the number of passengers is nearly only half as large and one airline dominates the market. Air Astana, the main carrier and a joint venture of Kazakhstan government (51 percent) and BAe Systems (49 percent) has 85 percent of the market. It flies with A320 family, Boeing 757, 767 and this year it started to operate Embraer 190s. The other airlines are losing their positions against the well-resourced Air Astana. For example, SCAT Airlines, who had a significant share on domestic routes, has lost it to Air Astana. It is more complicated for smaller carriers to buy or lease a new fleet. Such companies fly old Soviet aircraft, which don`t attract new passengers. The number of passengers in all of the countries will grow if the economies continue their development. But any crisis could quickly have the opposite effect on passenger growth. As the previous years have shown, traffic in the region can grow faster than in Europe or the United States. However, where there have been falls, they have been steeper here. There are not many chances for new powerful airlines in Kazakhstan, as Air Astana dominates the market, but both in Ukraine and Russia the conditions are better for new startups, who would need additional aircraft. Jetrader 11

The CIS Influence
Most of the CIS airlines changed their fl eet earlier as other countries didn’t think about the protection of their airline industries. Since all of the republics are much smaller than Russia, the airline markets are smaller there also. Ukraine and Kazakhstan, thanks to their territory, have international and domestic flights, making these the most interesting republics. In 2010, 32 Ukranian airlines carried 6.1 million passengers (+19 percent from 2009). The biggest carriers are Ukraine International Airlines and AeroSvit, but smaller carriers also are trying to expand their infl uence. In 2010 the airline Dniproavia, which is based in

Aircraft Demand
This purchasing of western-built aircraft by charter companies continued the trend that was started by the biggest airlines, which have been replacing their old Soviet fleet with Boeing and Airbus



Jetrader - July/August 2011

Table of Contents for the Digital Edition of Jetrader - July/August 2011

Jetrader - July/August 2011
A Message from the President
Contents
Calendar/News
State of the Regions: Russia and CIS
Flights to the Finish
Power Play: Changing Engines with the Oil
AirLink Responds to Japan Earthquake
Strong Ties
Aircraft Appraisals
From the ISTAT Foundation
Aviation History
Advertiser.com/ Advertiser Index
Jetrader - July/August 2011 - Jetrader - July/August 2011
Jetrader - July/August 2011 - Cover2
Jetrader - July/August 2011 - 3
Jetrader - July/August 2011 - 4
Jetrader - July/August 2011 - A Message from the President
Jetrader - July/August 2011 - 6
Jetrader - July/August 2011 - Contents
Jetrader - July/August 2011 - 8
Jetrader - July/August 2011 - Calendar/News
Jetrader - July/August 2011 - State of the Regions: Russia and CIS
Jetrader - July/August 2011 - 11
Jetrader - July/August 2011 - Flights to the Finish
Jetrader - July/August 2011 - 13
Jetrader - July/August 2011 - 14
Jetrader - July/August 2011 - 15
Jetrader - July/August 2011 - Power Play: Changing Engines with the Oil
Jetrader - July/August 2011 - AirLink Responds to Japan Earthquake
Jetrader - July/August 2011 - 18
Jetrader - July/August 2011 - Strong Ties
Jetrader - July/August 2011 - 20
Jetrader - July/August 2011 - Aircraft Appraisals
Jetrader - July/August 2011 - 22
Jetrader - July/August 2011 - From the ISTAT Foundation
Jetrader - July/August 2011 - Aviation History
Jetrader - July/August 2011 - 25
Jetrader - July/August 2011 - Advertiser.com/ Advertiser Index
Jetrader - July/August 2011 - Cover3
Jetrader - July/August 2011 - Cover4
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