Flights abroad helped Aeroflot regain market share lost after the pandemic and the start of the SVO

In 2023, Aeroflot Group, thanks to an increase in flights abroad, occupied 45% of the Russian air transportation market, beginning to gradually restore its share, which had significantly decreased in recent years. S7, which did not increase traffic in 2023, reduced its share slightly to 15%. Experts note that Aeroflot has a competitive advantage: three quarters of its fleet can fly abroad. Prospects for further expansion will depend on whether the authorities continue to set Aeroflot the task of increasing traffic in the Russian Federation.

In 2023, Aeroflot Group was able to partially restore the passenger market share lost during the pandemic and after the outbreak of hostilities in Ukraine. In 2022, the group’s share fell to 42%, and the lowest was in 2021 – 41.2%. In 2023, the group transported 47.3 million people, occupying 45% of the market. But this is still less than in pre-crisis 2019 – 47% (60.7 million passengers out of 128 million). At the same time, the group’s fleet has remained virtually unchanged: at the end of 2019 it had 358 aircraft, now there are 349, including 171 at Aeroflot itself.

Within the group, the main increase came from the parent company, whose transportation grew by 22%, to 25 million. The key was the growth in passenger traffic on international routes (IR) – by 85% (4.2 million), within the Russian Federation the figure increased by 8.4% up to 18 million people. At Pobeda, transportation increased by 11.5%, to 13 million, mainly due to international flights, where they grew almost 4.5 times, to 1.3 million. Within the country, Pobeda increased passenger traffic by 2.6% , to 11.6 million. Only “Russia” worsened the performance of flights abroad – by 6.7%, to 1.1 million. Passenger traffic in the Russian Federation increased by 9.6%, to 7.9 million people, and the total – by 7.3%, up to 9 million

Aeroflot Group managed to regain its market share mainly due to the restoration of flights abroad. If in 2019 almost 45% of passengers (27.1 million) were on foreign flights, then in 2022 their share fell to 13% (5 million), and in 2023 it increased to 20% (9.5 million). This was facilitated by the cleansing of the aircraft fleet from double registration. According to Kommersant, there are 263 aircraft of the group on the Russian registry alone: ​​this is at least 185 Boeing and Airbus and 78 SSJ. As Kommersant wrote on December 25, 2023, the group converted 98 aircraft from foreign lessors into Russian ownership at the expense of the National Welfare Fund. The group currently flies to 93 foreign destinations.

S7 Airlines, which managed to squeeze out Aeroflot in previous years, reduced its market share to 15% in 2023 (more than 15.9 million passengers) versus 17% in 2022. In 2019, the carrier occupied 14% of the market (17.9 million people). In 2023, S7 increased transportation abroad by 1.5 times, to 1.5 million, the share of international airlines in passenger traffic was 9% against 28% in 2019. In 2024, the share of international airlines is likely to grow: in 2023, S7 transferred 45 aircraft into Russian ownership. There are a total of 100 passenger aircraft in the fleet, half are on the Russian registry, but some are down due to problems with the A320/321neo (see Kommersant on January 15).

Ural Airlines (52 aircraft in the fleet, 19 without double registration) maintained its market share of 8.9% (9.4 million people). In 2022, the company had 8.8% of the market (8.4 million), in 2019 – 7.5% (7.5 million). In 2019, half of the company’s passengers were international (4.8 million), in 2022 – about a third (less than 2.8 million), in 2023 their share fell to 27.5% (2.6 million).

According to the Federal Air Transport Agency, in 2023 the total passenger traffic on international routes increased by 27%, to 22.3 million. Statistics do not take into account foreign carriers flying to the Russian Federation. Passenger traffic within the country increased by 6.7%, to 82.7 million. In 2019, the share of foreign passengers was 43% (55 million), in 2022 – 18%, in 2023 – 21%.

The results of 2023 reflect two groups of factors: the growth of effective demand, as well as the serviceability and debermudization of the fleet, says the head of the Airport, Oleg Panteleev. Against this background, Aeroflot, with its leadership in the number of approvals for international flights and the ability to maintain airworthiness, will be able to continue to actively compete with both Russian and foreign carriers in 2024. Commenting on the prospects of other airlines, the expert noted that they are moving away from a direct battle for market shares. Carriers are trying to develop their own niches and avoid head-on price competition, he says, noting the successes of the S7 hub in Novosibirsk or Ural Airlines in Yekaterinburg. Another Kommersant interlocutor in the expert community is confident that Aeroflot will continue to increase its market share at least until the presidential elections or as long as the authorities maintain the group’s task of maintaining the affordability of transportation. If social obligations are softened, Aeroflot will be able to reduce traffic volumes in favor of their profitability.

Aigul Abdullina