Russian airlines’ consolidated loss trippled YOY

Photo by Russian Aviation Insider

Consolidated loss of Russian airlines in the first six months of 2015 stand at RUR 28 bln (US $509 mln), thrice the loss at the same period last year, Russian Air Transport Operator Association’s president Vladimir Tasun said at the ongoing Wings of Russia aviation forum.

According to Tasun, the plunge in the carrier’s revenues is the result of the surge of their costs. The first half-year saw the airlines’ direct costs increase by 25%. Fuel and aircraft leasing costs grew fastest, 17% and 45%, accordingly.

Along with that, airlines refrained from raising fares. An average fare for a flight between city pairs stood at RUR 6382, whereas it was 5 rubles higher a year before, Tasun emphasized.

“Financial reserves accumulated in previous years [of growing market] helped avert a total collapse,” RATOA president said, admitting, that the country’s civil aviation has entered a new stage of its development, which is likely to last from five to seven years. He characterized the period as being plagued by erosion of the population’s purchasing power, shrinking of international travel market, growing prices on natural monopolies’ services, hindered access to international financial resources, loss of government’s trust towards the industry.

Vladimir Tasun also pointed out that since the beginning of the year Russian carriers removed 120 aircraft from operation as a reaction to decreasing demand. However, the load factor continued to decrease from 81.2 in 2014 to 80.9, which is not an evidence of overcapacity.

Speaking of possible relief, RATOA president mentioned annulling VAT for domestic travel altogether (the tax was brought down to 10% from regular 18% in April) and compensation of credit interest rates for Russian airlines.

Russian airlines’ traffic in the first months of 2015 decreased 0.9% YOY, at 73 mln passengers.