Mutually beneficial: Why Sochi is to become a base airport for Aeroflot

(Basel Aero)

After successfully hosting the 2014 Winter Olympics, Russian Black Sea resort destination Sochi has evolved into a year-round tourist centre, with mature and steady passenger flows from both business and recreational markets.

Considering its continuing growth – in 2018 alone Sochi welcomed 6.5 million visitors – the region offers attractive business development opportunities, including the air travel industry.

The promotion of domestic tourism is also proving beneficial for the development of Sochi’s airport infrastructure and is creating growth opportunities for key performance indicators of Russian airlines. Notably, in May, president Vladimir Putin instructed the Russian airline industry to focus on offering direct connections between Russian regions so that 50 per cent of these routes would not involve Moscow – a declaration that is a major challenge to implement without losses in revenue. Thus, Russian carries are on the search for new opportunities to realise their new development strategies.

Aeroflot, the national carrier and Russia’s largest airline, has already announced plans to open new bases and hubs to fulfil the presidential programme. Sochi is among those airports to have been selected for the state-run airline’s development strategy. In late October last year news spread of Aeroflot considering Sochi International as a potential new base airport. In line with its new development strategy, designed to extend to 2023, Sochi has been selected as the airline’s stronghold in the south of Russia, along with Yekaterinburg, Novosibirsk and Krasnoyarsk across the country’s vast territory.

Aeroflot has set an ambitious goal: to double its traffic within the next five years, from 50.1 million passengers in 2017 to 90 or 100 million by 2023. To achieve these targets the airline intends to base its aircraft not only at its main hub at Moscow’s Sheremetyevo, but at selected regional centres across Russia.

(ATO.ru)

Why Sochi?

Sochi International Airport (IATA code: AER) is now one of Russia’s top-five airports by traffic, and is outperformed only by the country’s two largest cities of Moscow, with its cluster of three airports, and St Petersburg’s Pulkovo. In the first seven months of 2019 Sochi handled 3.87 million passengers, up eight per cent on the same period last year.

Sochi enjoys a favourable Black Sea coastal geographic location and its infrastructure capabilities are now well developed. Growing incoming tourist flows into one of Russia’s favourite leisure destinations offer wide opportunities for the further growth and development of the airport itself and for airlines operating there.

Sochi has been on a fast-growth track for the last several years, primarily due to the increasing popularity of domestic Russian tourism. In the wake of the weakening national currency and restrictions imposed on international travel due to geopolitical tensions, Russian holidaymakers have changed their preferences and now prefer to spending their vacations in the leisure resorts in the south of Russia.

Furthermore, over the last five years, the region hosted two major sporting events: the Winter Olympics and the FIFA World Cup, which further boosted its popularity and fostered the radical development of infrastructural elements both inside the airport, in the city itself and also in the wider region.

In the lead-up to the 2014 Winter Olympics, the airport underwent a thorough modernisation, including the renovation of apron and taxiway surfaces, upgraded lighting equipment and radio navigation services. Both of the airport’s two runways were extended, the weather minima was lowered, new air traffic management (ATM) technology implemented and new navigation, communications, surveillance and meteorology equipment was introduced.

Also, in 2013, the airport received a new VIP passenger terminal, an emergency and rescue station and air traffic control tower. Today, Sochi airport uses energy-saving technologies such as solar batteries installed on the terminal roof which provide 85 per cent of the airport’s hot water in the summer time and 25 per cent in the winter. Another key development was the airport being linked not only to the city by direct rail and bus connection but also to neighbouring Republic of Abkhazia, making that area also accessible for tourists. Sochi Airport’s capacity is now higher than its nearest neighbours of Krasnodar (Pashkovsky) and Anapa (Vityazevo).

Surprisingly, Sochi International doesn’t yet have a base airline. Its traffic has been growing at roughly the same rate as Aeroflot has forecast for the next five years, which gives ground to the belief that the airline’s plans for using the airport as its regional base will be mutually beneficial, contributing to the further development of this regional airport.

In this year’s IATA summer season the airport added new destinations to its network, with the total number now reaching 61, the widest route network of any airport in the south of Russia.

The airport is run by a collaborative venture of Basic Element group, Russia’s largest bank Sberbank and the Changi Airport Group of Singapore.

(Basel Aero)

Is the airport ready for hub status?

At present, the airport’s hourly capacity is 2,000 domestic passengers, 500 international travellers and 24 aircraft movements. It has previously demonstrated efficient operations serving several major international events in Sochi. For instance, during the Winter Olympics, the airport hired some 900 additional staff to facilitate the movement of passengers and 234 employees joined the team for the 2018 World Cup. The maximum passenger flow during the Olympics exceeded 26,700 passengers per day, and during the peak of World Cup traffic the number reached 37,000.

Such peak flows are a challenge that the airport has learned to manage well. Back in 2014, passenger check-in time at Sochi airport was cut from the 90 seconds recommended by Russia’s Transport ministry, to the widely accepted international standard of 45 seconds, further improving the passenger experience.

In 2018, for the fourth year in a row, Sochi International Airport was acclaimed as the best European airport in the category of annual traffic between five and 15 million passengers by Airport Council International’s (ACI) ASQ rating.

The role of Russia’s largest carrier in the airport’s development

According to the 2019 IATA summer schedule, the five carriers Aeroflot, Rossiya Airlines, Ural Airlines, Pobeda Airlines and Utair, operated most domestic flights from Sochi. Notably, the Aeroflot Group carriers of Aeroflot airline, Rossiya and low-cost carrier (LCC) Pobeda, are already significantly contributing to the airport’s traffic numbers. Since the start of this year, Aeroflot and its sister airlines generated 43.6 per cent of Sochi’s total domestic traffic.

The presence of Aeroflot Group’s airlines, which cover all market segments, including premium (Aeroflot), medium (Rossiya) and budget (Pobeda), has reduces the airport’s traffic forecast risks and provides offerings for all customer groups. The numbers speak for themselves – in the period from January through July 2019 Sochi handled 3.87 million passengers, up eight per cent year-on-year. The majority, roughly 3.7 million passengers, travelled domestically (eight per cent up) and, internationally, almost 185,000 passengers (up by 16 per cent). The number of aircraft movements of 14,685 increased by seven per cent compared to the same months of last year. In the period, the freight segment also demonstrated growth of four per cent to 1,837 tonnes.

The list of the most popular domestic destinations from Sochi included Moscow, St Petersburg, Yekaterinburg, Novosibirsk and Kazan. In the international segment, the top five were Tel Aviv (Israel), Yerevan (Armenia), Istanbul (Turkey), Minsk (Belarus) and Tashkent (Uzbekistan).

The connection with Yekaterinburg is served by both Pobeda and Rossiya Airlines. On flights to Kazan, Russia’s main airline group provides the bulk of the seating capacity, with LCC Pobeda operating twice-weekly flights to the capital of Tatarstan, complemented by a once-weekly service offered by sister airline Rossiya, as well as Nordwind Airlines. The destinations of St Petersburg and Novosibirsk are served by both Aeroflot and S7 Airlines, Russia’s two largest carriers.

(Aeroflot)

Developing direct regional connections

The Russian government is pushing ahead with its effort to provide affordable direct travel in Russia’s far east by subsidising airlines operating in that region. This is evident from Aeroflot Group’s newly adopted strategy that the airline is striving to link Russia’s far east with the south of the country by strengthening across the regional route network avoiding connection flights via Moscow.

At present, Aeroflot is the only airline that links Sochi and Crimea with direct thrice-weekly services. Sochi became the pioneer airport in Aeroflot’s programme of direct inter-regional travel outside Moscow.

The development of an inter-regional route network in the south of Russia from the Sochi base is proof of Aeroflot’s intention to turn the local resort city airport into a hub with a wide range of opportunities for further expansion.

Thus, Aeroflot as Russia’s national carrier is singularly capable of expanding both its network and its fleet to operate more flights across the European part of the country outside Moscow.

The airport’s history

The airport’s original airfield was constructed to protect Russia’s Black Sea coast during World War II, with building work starting in July 1941. The site became an established civil aviation airport in November 1945.

In 1956, the first terminal building and the Runway 1 airstrip were built. During its first full year of operations in 1957 approximately 35,000 passengers were served at the airport. From 1960 to 1965, passenger and baggage halls, a hotel, radio navigation and landing systems were all added to the airport as passenger traffic steadily increased.

(Sochi Airport)

Scheduled international flights were launched in 1981 linking the Russian Black Sea resort with Bratislava, Budapest and Prague and the airport later expanded to include flights to the Middle East and western European destinations.

(Sochi Airport)

Sochi International Airport was privatised after a company affiliated with Basic Element group won an auction to acquire 100 per cent of the airport’s shares in 2006. Basic Element, together with Russia’s largest bank Sberbank and Singapore Airport operator Changi Airports International, established a joint venture to manage airports in the Krasnodar region (including Sochi) in 2012.

In the 2007-2013 period, Basic Element spent more than 14 billion roubles (US$410 million) in the airport’s revamp. A modernised airport building now features a 65,000-sq m terminal with an adjacent advanced 450-metre-long boarding gallery, 10 boarding bridges ensuring comfortable access to the aircraft, a 4,000-sq m VIP Terminal with the handling capacity of 80 passengers per hour that hosted IOC delegates and other high-profile guests at the Winter Olympics.

Infrastructure

Runways

Sochi International Airport has two runways which, combined with its taxiways network, provides a total tarmac length of 4,310 metres and a width of 40.5 metres of pavement.

Sochi airport is certificated by the Aviation Register of the Interstate Aviation Committee for its suitability for international flights and has the ability to receive the following aircraft types: Airbus A310, Airbus A319, Airbus A320, Boeing 727, Boeing 737, Boeing 757, Boeing 767, Bombardier CRJ 200, Fokker 70, IL-62, IL-76, IL-86, IL-96, Tu-134, Tu-144, Tu-154, Tu-204, Yak-40, Yak-42 and other III and IV class aircraft. Since 2007 the airport has received all of these types.

(Basel Aero)

Main terminal

The airport’s capacity is 750 passengers per hour/2500 passengers per day. The new terminal building complex was first open to the public in 2007. It has three floors with total area of 62,000 square meters and is one of the largest in Russia. The airport has 440 metres of corridor space and 10 boarding bridges for the boarding and deplaning of passengers.