INSIGHT: Sky arithmetic for Russian airports

Air space liberalization for Russian airports 2) Five years after the Asia-Pacific Summit, the new terminal at Vladivostok is employing only half of its designed capacity (Photo by Leonid Faerberg /

Thus far, three Russian airports have implemented international Open Skies regimes, but their results have not been immediately impressive. Other airports are also considering the option – although the Russian authorities are urging operators to make thorough calculations first.

Vladivostok was the pioneer airport in instituting an Open Skies regime in Russia. Having been constructed five years ago, timed to coincide with the 2012 Asia-Pacific Economic Cooperation Summit, the new gateway was designed to process 1,360 passengers per hour, or 3.5 million a year. Bearing in mind the fact that Russia’s Far-Eastern Federal District is the home for less than five per cent of the country’s overall population, a more efficient mechanism was needed to stimulate a faster return on investment and Open Skies was seen as the solution to fill the comprehensively redesigned Vladivostok airport with passengers. The Russian Ministry of Transportation thus made an unprecedented decision in 2011: to allow foreign airlines to operate international flights to the city, including fifth-freedom services. “From now on, when flying between two destinations in third countries, an airline can make a full stop in our city to pick up passengers or cargoes. This is the first step towards the Open Skies project and, on the whole, is an immense and time-consuming challenge”, said then-general director of Vladivostok Airport Maksim Chetverikov (resigned in fall 2013).

The Far East experience

Now, when reflecting on official statements and press releases issued in 2011-2012 on the continuous open skies regime at Vladivostok, two obvious things come to mind. On the one hand, the airport’s administration and industry experts had a clear understanding that the Ministry’s decision was merely a first step towards what was considered to be a far distant goal. And, on the other hand, all the spokesmen tended to be over ambitious when projecting forecasts of near and robust traffic growth. Initially, the federal Ministry of Transportation was eager to clear any foreign airline for flights to and from Vladivostok, i.e. within the established third- and fourth-freedoms of the air. “The fifth-freedom issue will still require significant efforts from the administration of Vladivostok airport and aviation administrations of the involved countries. The Ministry suggests the air carriers encourage their respective aviation authorities to formally address it. So then the introduction of air services between Vladivostok and third-county destinations will be discussed further at the agency-to-agency level. Other countries are also expected to provide the same kind of [reciprocal] liberalization for Russian air companies. We suppose the parties will either amend their ongoing air services accords or sign new bilateral ‘open skies’ agreements”, said Chetverikov.

The airport administration had anticipated that, in the event of a successful implementation of all stages of the Open Skies project (including issues related to Customs and immigration clearances), that passenger traffic at the hub would almost double. The airport projected that foreign airlines would launch new destinations to Taiwan, the Philippines, Indonesia, Malaysia, India, Australia, the USA and Canada, as well as increase numbers of frequencies and extend the geography of flights to China, Japan, South Korea, Singapore, Vietnam and Thailand.

Open Skies is a concept which is not just about gaining easy advantages. It also requires intensive and continuous consistency and perseverance to make it work.

But the plan failed. Compared to 2011, when Vladivostok airport registered 1.46 million passengers, in 2016 the hub served a modest 1.85 million, just 30% more. Unsurprisingly, in early 2014, Igor Lukishin, the new general director of the airport, sounded less enthusiastic about the role and place of Open Skies in the hub’s life. “Many people anticipated a surge in the airport’s performances related to the Open Skies project, but I prefer to be more realistic about these things. The gateway is closely connected with the area. Passengers travel to the Primorsky Krai (Russia’s Far East region – ed.) rather than to just the airport, be that for business or recreational purposes. What is important is that we see growth – and that it is steady,” said Lukishin at that time.

“The introduction in 2011 of the Open Skies regime at Vladivostok was a consistent decision in line with the federal Far East development strategy. The concept should create grounds for an intensive growth of the route network, promote competition on the global market of air transport services, force down airfares on international flights from Vladivostok and increase the number of international travel options for the local population, thus generating greater direct and transfer passenger flows. The project has already provided the elimination of commercial restrictions for foreign airlines. However, apart from South Korea, Russian airlines have not been granted the same kind of privileges. To change the situation, new air service agreements will be required as the existing ones limit the number of frequencies, slots, carriers, regular capacities and parties of charter flight operations. Apart from that, Russian air carriers are subject to domestic restrictions in terms of being cleared for international flights. So, at this moment, the current status of the Open Skies program does not allow for the full extent of its potential and makes the entire project less attractive for airlines,” he added.

“What we need is institutional rather than financial investment. This could include, for example, easing the procedures for gaining access to international operations or revising the existing air service agreements. As we see it, this would help create a truly competitive environment in the air services market between the Far East and the Asia-Pacific region and could generate a noticeable economic impact.”

South Korea takes the lead

Three years after those comments were made, it is only South Korea with which Vladivostok has retained an Open Skies regime (active since May 2012) and the Russian airport emphasizes that the Korean relationship has great potential. Now that demand is recovering after the 2014-2015 crisis and is now demonstrating rapid growth, the gateway is hoping for a 50% increase in tourism traffic from South Korea in 2017. On top of that, the restriction-free format provides operators with an opportunity to increase their capacity at any time if needed.

During the active period of the Open Skies regime between Russia and South Korea in 2012-2016, airlines performed 5,500 regular flights from Vladivostok to Seoul, Pusan (the country’s second largest city) and Yangyang, transporting almost 1.1 million passengers. According to Vladivostok Airport, year-round services to South Korea are carried out by Korean Air, Aurora and S7 Airlines, plus Yakutia flies to the destinations seasonally. S7 Airlines took over from Asiana Airlines, which ceased these flights in 2016. The Russian companies, S7 Airlines and Aurora, restored the frequencies and even exceeded the numbers after Asiana left the niche.

The airport also reveals that Chinese Sichuan Airlines (a new carrier for Vladivostok) is gearing up to launch new international flights from Harbin in 2017, whilst S7 Airlines is planning to serve Osaka (Japan), Shanghai (China), and Bangkok (Thailand); also, China Southern announced flights from Shenyang. In March this year Russia’s NordStar launched flights to Sanya (China); Aurora is resuming flights to Tokyo and will extend the period of the flight program to Harbin. Vladivostok airport is actively negotiating new destinations with Japanese, Korean and Chinese air carriers, as well as a number of other airlines from South-East Asia.

Within the five years of the program, international flights via Vladivostok have registered a total of 2.45 million passengers, with Korean destinations covering 44% of that. The share of international passengers in the airport’s overall traffic mix grew from 26% in 2012 to 30% in 2016 (an average of 28% across the five-year period). This year, international traffic through Vladivostok may hit 33-35%. By comparison, international traffic at Khabarovsk, the city’s main competitor, comprised 14% in 2016.

The sky over the Black Sea

After the 2014 Winter Olympics an Open Skies regime was also introduced at the renovated airport of Sochi on the Russian Black Sea shore. A year before the event, the gateway’s daily capacity was increased to 2,500 passengers per hour (mobilized to 3,800 during the Olympics). Last year the invigorated hub airport served a record-breaking 5.3 million passengers (29% up on 2015 and 68% up on 2014) and became Russia’s fifth largest airport in terms of passenger traffic. But this success can hardly be attributed to the Open Skies regime. Instead, the growing performances of the Sochi gateway have, to a certain extent, been determined by a combination of bans imposed on flights to popular foreign leisure destinations, Turkey and Egypt, along with other factors including ruble depreciation and overseas travel restrictions for employees of Russian security agencies. Nonetheless, the official response of Basel Aero’s press office (the operating company of Sochi Airport) states that the positive effects of the Open Skies regime should not be underestimated.

Air space liberalization for Russian airports.

The Open Skies regime at Sochi was utilized by as many as seven foreign airlines last year, although the real increase in passenger traffic was stimulated by other factors (Leonid Faerberg /

The Open Skies regime was introduced at Sochi in autumn 2014 for three IATA seasons (winter 2014-2015, summer 2015 and winter 2015-2016) and, on May 31, 2016, the airport was informed about its prolongation for three additional periods: summer 2016, winter 2016-2017 and summer 2017). In 2015, flights within the program were performed by three carriers: Mahan Air (Iran), Turkish Airlines and SCAT. Last year four more – Qeshm Airlines and Meraj Airlines (both Iran), IsrAir (Israel) and SkyBus (Kazakhstan) – joined the list. Finally, in February this year German company Condor Airlines accomplished a program of charter flights to Sochi, a development made possible by Open Skies.

Basel Aero emphasizes that it works non-stop on enhancing the effectiveness of the Open Skies regime at Sochi. “However, the visa issue – the price and the lengthy application procedure – hinders the growth of incoming tourism,” a statement points out. The introduction of a 72-hour visa-free regime would give the local air service market a timely impetus. ‘We are witnessing a unique situation here. Major players of the global travel industry are actively searching for new markets due to security risks in Turkey and ongoing political unrest in Northern Africa. All of this creates a perfect opportunity for Sochi to become a holiday destination of choice for many countries, if a more relaxed visa requirement was introduced (such as an e-visa and also lower airfares),” Basel Aero’s officials insist. Experts have already calculated that the introduction of a visa-free regime at some Russian airports would increase the number of incoming foreign passengers travelling by air by as much as 5-8 million annually.

The Baltic says hello

Khrabrovo Airport at Kaliningrad is the third Russian hub to have embraced an Open Skies regime. The Russian Transport Ministry granted the status to the country’s westernmost gateway in December 2014. Initially, it was planned to be active for only three seasons – summer 2015, winter 2015-2016 and summer 2016 – but later, the regime was prolonged until the end of next year.

Air space liberalization for Russian airports

In 2015-2016 the Open Skies regime at Khrabrovo Airport was not used by a single air-line (Fyodor Borisov /

In November last year, Alexander Kopytin, the airport’s general director, revealed in an interview with the Interfax news agency that the Open Skies project had turned out to be groundbreaking. “It has been prolonged for 2017 thanks to our serious efforts. We were given a great favor [with this extension] despite no airline having used it in the previous two years. That does not mean that the program has no future, quite the opposite. Although, in my opinion, it can only be tied to foreign air carriers which will start to come back to us as we approach the 2018 FIFA World Cup”. Last year Kaliningrad Airport registered 1.57 million passengers, up 7.6 and 1.8 per cent compared to figures in 2014 and 2015 respectively. International traffic through Khrabrovo in 2016 dropped by 57% year-on-year in 2015 and totalled 62,400 people (or four per cent of the total passenger traffic).


In the past, several other Russian airports have shown interest in the Open Skies regime, including Emelyanovo (Krasnoyarsk) and Novy (Khabarovsk), both of which are in the process of actively upgrading their infrastructure. Evidently, the most active among them is Pulkovo Airport at St. Petersburg, which is rightly concerned about the growing market share influence of the Moscow air cluster, a factor which has lead to less investment in infrastructure at regional airports.

“This is crucial to be able to create a competitive environment first of all among Russian carriers and at the same time, perhaps, create opportunities for them to compete with rival international air companies too. Current international practices indicate that, since the 1950-60s, when domestic regulations were designed to protect the interests of national carriers, many administrative constraints have been eliminated and today the European sky is open. This is a huge market, with Russia being a part of it. So by closing those markets today or hiding behind intergovernmental agreements and various restrictions, we no doubt serve the interests of national flag carriers but at the same time lose out strategically, globally. And the critical situations in which the Russian civil aviation business finds itself every now and then is a good example here,” said Denis Pavshinsky, director of the Northern Capital Getaway Consortium (Pulkovo operating company) in early 2017.

The growing dominance of the Moscow air cluster in the national spectrum of air transport services is leading to a lack of infrastructure investment at Russia’s regional airports.

Pulkovo would certainly like to see air space and visa regulations liberalized. Considering the Open Skies regime has already been introduced at Vladivostok, Sochi and Kaliningrad, the St Petersburg airport administration thinks it would be fair to do the same there. As a reminder, in 2015, Pulkovo was refused the special status – instead, the city was encouraged to use the resources of its base carrier Rossiya for the development of the airport.

In early 2017 Alexander Neradko, head of the Russian Air Transport Agency (Rosaviatsia), replied to Pavshinsky’s statement saying that any decision about an Open Skies regime “should be preceded by a thorough analysis of a potential outcome that it might produce over the air service market. The thing is that the examples of Vladivostok, Sochi and Kaliningrad demonstrated no significant increase in passenger traffic or number of foreign airlines. We expected that we would open up the sky in Vladivostok and everyone would start flying there after the APEC Summit. What’s more, we created certain infrastructure there but saw no remarkable activity there. We have no special enthusiasm for Sochi either, although we have prolonged the regime for a certain period of time. So, when discussing the Open Skies regime, we have to analyze lots of factors first.”

Both Neradko and Pavshinsky agree though that the introduction of Open Skies at St. Petersburg should be “figured out mathematically” and the interests of Rossiya Airlines should also be taken into account.

By Artyom Korenyako


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