Russian carrier Red Wings (100% owned by United Aircraft Corporation through its leasing subsidiary Ilyushin Finance Company) has embarked on its ambitious project, which would see it transform into a “role-model operator of Russian-made aircraft” as per master-plan approved personally by the Russian president Vladimir Putin in May this year. The airline, which currently operates a fleet of 16 Airbus A320/321 aircraft from its Moscow Domodedovo base has recently taken delivery of its first of the batch of 60 Superjet 100 regional airliners and announced launch of several domestic routes from Yekaterinburg. The airline’ general director Evgeniy Klyucharev revealed details of the grandiose plan to Vedomosti business daily.
The first SSJ100 now based at Yekaterinburg’s Koltsovo airport will be joined by further two units of the type before the end of the month. These three aircraft are under leasing contract with State Transport Leasing Corporation (GTLK). Deliveries of the remaining 57 aircraft – four in 2020, 23 within 2021 and 30 before the end of 2024 – will be arranged by state-controlled Promsvyazbank and its leasing arm PSB Leasing.
Surprisingly resembling earlier roadmaps for regional development of the nation’s flag carrier Aeroflot, Red Wings sees the market for its new fleet in unraveling hub operations from several of Russia’s busiest regional airports. Yekaterinburg was chosen for its appealing geographic position at the crossroads between Europe and Asia. The second on the list of preferences is Zhukovsky near Moscow, from where the airline is counting on launching international services. Within the next three to four years’ timeframe the airline is looking to base aircraft at Mineralnye Vody and Sochi (both popular year-round resorts), Saint Petersburg, Irkutsk (for its potential for service to China) and Russia’s European enclave Kaliningrad.
Until the end of 2020 Red Wings will offer nine routes from Yekaterinburg, and by 2023 the network will include 34 destinations served by a fleet of up to 20 SSJ100 and four or five Airbus A320 for the more popular and international flights.
BUOYED BY STATE SUPPORT
Red Wings’ financial risks in unraveling such large-scale operations are mitigated by hefty volumes of support from the government – from leasing graces to subsidized flights and direct support of SSJ100 operations.
The government allocates 140 million roubles for SSJ100 parts inventory and crew training, reveals Klyucharev. Further 199 million roubles will cover leasing payments for over a year. Almost all of the airline’s routes from Koltsovo are subsidized, so Red Wings is counting on reimbursement of between 200 and 300 million roubles already this year. Besides, being on the list of Russia’s ‘strategic enterprises’ the airline may count on loans covered by state guarantees.
NO RIVAL TO URAL AIRLINES
Thus, Red Wings is entering head-on competition with a privately-owned Ural Airlines, which has long been developing operations from Koltsovo and more recently from Zhukovsky with its Airbus A320 family fleet. At the same time, Red Wings is enjoying strong backing from the state. However, Klyucharev insists Ural Airlines is “no rival”. Red Wings’ business model will be radically different, he argues – “we are creating a transit regional hub, similar to Moscow airports” with one or two waves of connection flights.
HOPES ARE HIGH FOR SSJ100
According to Klyucharev, the delivery of six Airbus 320/321s planned initially for this year have been pushed off until spring of 2021 due to the pandemic-induced crisis. He is also warning the Russian industry that the excess capacities, which Russian airlines have redirected onto the domestic market whilst the international connections remain largely under ban, are only aggravation the situation. At the same time he refers to introducing seven SSJ100s before the end of this year as “a serious step in the airline’s development”. “It will help us take a more pronounced position on the market, enter the, so to say, elite league of Russian carriers. It will also help support the reputation of the Russian aerospace industry and will get us on track to being the launch customer of the Russian-made MC-21 narrowbody”, says Klyucharev.
In 2019 Red Wings with its fleet of 16 Airbus A320s carried 3.1 million passengers, ranking Russia’s ninth largest airline.
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