Annual Report 2015

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Route Network

Route Network Development Strategy

Aeroflot Group implements a strategy of balanced route network development based on a multi-brand model ensuring maximum coverage of the air transportation market and the Group's presence in various price segments across different regions.

The route network management strategy relies on increasing frequency of flights to most popular destinations and improving flight connections by adopting a wave system structure in flight schedules, which enhances customer experience. Flights to new destinations are launched based on the analysis of demand, competition, and potential efficiency of new routes, both in terms of direct passenger traffic and contribution to the route network synergy across the Group.

In 2015, Aeroflot Group continued to implement its network development strategy based on the adopted approach, with an extra emphasis on the development of domestic routes, in line with the market trends.

Aeroflot Group Route Network DevelopmentDue to the separate status of the low-cost segment, the data on Aeroflot Group's route network presented in this section include the routes of Aeroflot airline and subsidiaries excluding Pobeda, unless otherwise stated.

319
scheduled unique routes operated by Aeroflot Group
54 countries
covered by Aeroflot Group's Route Network
12.8 %
growth in the number of Aeroflot Group's scheduled domestic routes

In 2015, Aeroflot Group's total network comprised 319 scheduled routes to 54 countries, including 36 unique routes operated by the low-cost carrier Pobeda. Excluding the low-cost segment, the Group's airlines operated scheduled flights to 283 destinations.

Regional developments imply a steady growth in the number of scheduled domestic routes — up 12.8% to 123. At the same time, the number of scheduled international routes continued to decline, reaching 160 in the reporting year (down 12.1% y-o-y) as a result of the subsidiaries' route network optimisation. In 2015, the total number of routes decreased by 29.5% to 403, primarily due to the reduction in the number of charter flights driven by the shrinking demand for tourist flights, and the relevant adjustments to the Group's strategy in this segment.

Number of Aeroflot Group routes
2014 2015 Change, %
Scheduled Charter Total Scheduled Charter Total Scheduled Charter Total
Total 291 351 572 283 186 403 –2.7 –47.0 –29.5
International 182 292 436 160 130 260 –12.1 –55.5 –40.4
Domestic 109 59 136 123 56 143 12.8 –5.1 5.1
Long-haul 36 50 78 34 16 47 –5.6 –68.0 –39.7
Medium-haul 255 301 494 249 170 356 –2.4 –43.5 –27.9

During 2015, airlines of Aeroflot Group launched scheduled flights to the following destinations:

  • from Moscow to Aktau, Aktobe, Almaty, Astana, Atyrau, Shymkent, Samarkand, Hurghada, Sharm el Sheikh, Arkhangelsk, Magadan, Makhachkala, Murmansk, Saratov, and Voronezh;
  • from Russian regions (Chelyabinsk, Irkutsk, Khabarovsk, Krasnoyarsk, Kazan, Mineralnye Vody, Novosibirsk, Perm, Orenburg, Yekaterinburg, Tyumen, Ufa, and Volgograd) to Simferopol;
  • from Novosibirsk to Yuzhno-Sakhalinsk.

At the same time, due to economic and other reasons, in the reporting year Aeroflot Group cancelled scheduled flights to the following, mostly international, destinations:

  • from Anapa to Samara;
  • from Sochi to Almaty, Frankfurt, Munich, Istanbul, and Tashkent;
  • from Barnaul to Hannover;
  • from Chelyabinsk to Munich;
  • from Yekaterinburg to Hannover;
  • from Khabarovsk to Blagoveshchensk;
  • from St Petersburg to Blagoveshchensk, Bishkek, Heraklion, Karaganda, Qarshi, Namangan, Osh, Pula, Pavlodar, Rhodes, Rimini, Sofia, Salzburg, Oskemen, Ovda, Dushanbe, Yerevan, Fergana, Baku, Khujand, Minsk, Tenerife, Blagoveshchensk, and Navoiy;
  • from Moscow to Dubrovnik, Dnеpropetrovsk, Innsbruck, Vladikavkaz, Ulan-Ude, Hurghada, Sharm el-Sheikh, Cairo, Chita, Kiev, Odessa, and Karlovy Vary;
  • from Mineralnye Vody to Yekaterinburg;
  • from Omsk and Orenburg to Varna;
  • from Rostov to Antalya, and Khujand;
  • from Vladivostok to Tokyo;
  • from Krasnodar to Khujand.
9.2 %
growth in the number of Aeroflot Group's scheduled flights
Change in the number of Aeroflot Group scheduled routes (2015 vs 2014)
Change in the number of Aeroflot Group scheduled routes
Change in the number of Aeroflot Group scheduled flights by region (2015 vs 2014)
Change in the number of Aeroflot Group scheduled flights by region

In 2015, the total number of Aeroflot Group's scheduled flights grew by 9.2% y-o-y due to aforementioned changes in Aeroflot Group's route network and to the increase in capacity on the most popular routes. The key growth driver was the significant increase in the number of scheduled flights within Russia (by 16.2%) and to Asia (by 14.0%) due to the surging demand for the destinations in these regions. The number of scheduled flights to Europe grew by 3.0% in response to additional market opportunities in the region. At the same time, the number of scheduled flights to North and Central America fell by 13.2% due to cancellation of a number of commercially inefficient flights mainly targeting leasure passengers. The number of flights to the Middle East reduced by 5.6% in 2015, also due to the falling demand for certain leasure destinations. The decline in the number of flights to the CIS countries was driven by suspension of flights to Ukraine, as well as to some other destinations, from Russian regions following the route network optimisation.

11.8 flights
per week — the average weekly frequency of Aeroflot Group scheduled flights
6.0 %
growth in the average weekly frequency of Aeroflot Group scheduled flights
8.5 %
growth in the average weekly frequency of Aeroflot Group's international flights

In 2015, the Group continued to increase the frequency of flights to major destinations within its route network in accordance with its route network management strategy. The average weekly frequency of scheduled flights grew by 6.0%, from 11.1 to 11.8 flights per route per week. The weekly frequency of scheduled international flights increased by 8.5%. A 12.7% decline in the frequency of domestic flights was due to the launch of low frequency routes by Orenair as airline's focus moved from international todomestic market.

Average weekly frequency of Aeroflot Group flights
Average weekly frequency of Aeroflot Group flights

Transit Passenger Traffic

Aeroflot Group's well-developed route network provides passengers with an opportunity to use transit fligh options in addition to direct flights between destinations as well as enables the Group to compete for international transit passengers with other international airlines. In terms of the Group's business, the transit passenger traffic falls into three groups: domestic transit, transit between Russia and other countries, and international transit. Aeroflot airline serves the bulk of the Group's transit passenger traffic.

14.0 %
of the total number of passengers carried by Aeroflot airline are international transit passengers

Transit passengers accounted for 44.2% of Aeroflot airline's total passenger traffic in 2015 as compared to 39.2% in 2014. The increase of the total transit passenger traffic was mainly driven by the growth in the domestic and international transit, reaching 13.5% and 14.0% of the total number of passengers carried by the airline in 2015, respectively. The share of the transit passenger traffic between Russia and other countries was 16.7%.

Aeroflot airline's key international transit routes
Aeroflot airline's key international transit routes
Share of transit passengers in Aeroflot airline total passenger traffic

Aeroflot Airline Route Network Development

In 2015, Aeroflot airline's route network covered 133 scheduled routes to 52 countries. In the reporting period, the number of scheduled domestic routes continued to grow — up 4.5% to 46, while the number of scheduled international routes decreased by 3.3% to 87.

The total number of Aeroflot airline's routes, including charter routes, fell by 2.1% to 140 in 2015.

Throughout the year, Aeroflot airline continued to develop its route network and launched 13 new scheduled routes from Moscow, including six domestic routes (to Arkhangelsk, Voronezh, Magadan, Murmansk, Saratov, and Stavropol) and seven routes to the CIS countries (Aktau, Aktobe, Almaty, Astana, Atyrau, Shymkent, and Samarkand). Scheduled flights to nine destinations were cancelled or suspended. Flights from Sochi to Frankfurt, from Moscow to Blagoveshchensk, Ulan-Ude, Dubrovnik, Innsbruck, and Karlovy Vary were cancelled. During the year the airline also suspended flights to destinations in Ukraine (Kiev, Odessa) and Egypt (Cairo).

Number of Aeroflot airline routes
2014 2015 Change, %
Scheduled Charter Total Scheduled Charter Total Scheduled Charter Total
Total 134 16 143 133 21 140 –0.7 31.3 –2.1
International 90 7 95 87 12 92 –3.3 71.4 –3.2
Domestic 44 9 48 46 9 48 4.5
Long-haul 30 1 31 26 26 –13.3 –16.1
Medium-haul 104 15 111 107 21 114 2.9 40.0 2.7
Change in the number of Aeroflot airline scheduled routes (2015 vs. 2014)
Change in the number of Aeroflot airline scheduled routes (2015 vs. 2014)
Change in the number of Aeroflot airline scheduled flights by region (2015 vs. 2014)
Change in the number of Aeroflot airline scheduled flights by region (2015 vs. 2014)

In 2015, the total number of Aeroflot airline's scheduled flights grew by 12.3% y-o-y due to the increase in capacity on the most popular routes and the changes in the route network mentioned above. The growth was mainly driven by 18.5% increase in the number of flights within Russia. It was also supported by an increase in the number of flights to the CIS (by 11.9%), Europe (by 7.7%), Asia (by 4.5%) and the Middle East (by 2.5%).

11.5 %
growth in the average weekly frequency of Aeroflot airline scheduled flights
Average weekly frequency of Aeroflot airline flights
Average weekly frequency of Aeroflot airline flights

In 2015, Aeroflot airline continued to step up the frequency of its scheduled flights. The average frequency of scheduled flights went up 11.5% from 14.4 to 16.1 flights per route per week. This increase was due to a rise in the flight frequency by 12.6% on domestic routes and by 7.7% on international routes.

ROUTE NETWORK OF AEROFLOT GROUP

Group's Subsidiary Airlines Route Network Development

In 2015, the Group continued to optimise subsidiaries' route networks. Thus, the frequency of flights was increased in markets with sufficient potential for direct and transit passengers, and a schedule was set up to ensure maximum flight connectivity. A major development in 2015 was the subsidiary airlines' route network optimisation prompted by changes in the market environment.

ROSSIYA

In 2015, the airline operated scheduled flights to 61 destinations, including 24 domestic and 37 international routes.

The primary objective of Rossiya airline's route network optimisation in 2015 was the creation of the Northwestern regional transport hub. The airline continued to increase flight frequency on the most popular routes, including flights from St Petersburg to Arkhangelsk, Murmansk, Kaliningrad, Simferopol, Gelendzhik, and Astana. In addition, the airline increased the frequency of its flights from St Petersburg to Vnukovo and Domodedovo airports in Moscow. Flights from St Petersburg to a number of international destinations were suspended due to the reasons mentioned above.

DONAVIA

In 2015, the airline operated scheduled flights to 29 destinations, including 17 domestic and 12 international routes. During the year, the airline gradually increased the frequency of flights from Rostov-on-Don and Krasnodar to Simferopol to daily flights and launched flights to Simferopol from Mineralnye Vody and Vnukovo in the summer schedule. Upon completion of the transfer of all flights arriving at Moscow Sheremetyevo airport to the parent airline, Donavia launched flights from Rosov on Don, Mineralnye Vody and Krasnodar to Vnukovo and Domodedvo airports in Moscow, thus strengthening Aeroflot Group's position in the Moscow air transport hub. To reduce operating costs, aircraft are no longer based at Sochi airport, while the bulk of the route network originating from this airport was maintained. Given the economic situation, flights from Rostov-on-Don and Krasnodar to Khujand were suspended.

ORENAIR

In 2015, the airline operated scheduled flights to 73 destinations. Scheduled flights from Moscow to major cities of the Urals, Siberia and Southern Russia have been placed under commercial management of Aeroflot airline. The number of the airline's charter flights declined considerably versus 2014.

During the summer season, flights to Simferopol were operated from ten Russian cities. Scheduled flights to Hurghada and Sharm el Sheikh from Domodedovo and Sheremetyevo airports in Moscow were planned for the winter season, but the ban on passenger flights to Egypt introduced by Russian aviation authoroties in November 2015 prompted a review of operations in this region.

POBEDA

In 2015, the airline operated flights to 58 destinations, including seasonal routes from Russian regions to the Black Sea resorts in Sochi and Anapa. During the year Pobeda operated 36 unique routes which have not been operated by any other airline within the Group. In 2015, Pobeda actively expanded its route network and launched over 40 new routes, mainly within Russia. Flights from Moscow to Astrakhan, Volgograd, Vladikavkaz, Yekaterinburg, Makhachkala, Ufa, Perm, Sochi, Surgut, and Tyumen are the key flights in Pobeda's route network in terms of passenger traffic. In addition, in December 2015, the airline launched international flights from its base at Vnukovo airport to Milan (Bergamo airport) and Bratislava. These flights include an option of a group transfer to Milan city centre and Vienna, respectively.

Pobeda route network
Pobeda route network Note: routes operated in 2015.

AURORA

In 2015, the airline operated scheduled flights to 23 destinations, including 11 domestic regional and 12 international routes. Also the airline operated 15 domestic local flights.

Aurora is focused on securing transport accessibility and accommodating the demand for flights in the Russian Far East and Siberia. In the reporting year, the airline strengthened its position in the region's international air transportation market. Aurora remains the only carrier operating flights from Vladivostok, Khabarovsk, and Yuzhno-Sakhalinsk to Harbin and from Vladivostok to Busan. To attract transit passengers and offer them a smooth travel experience, the airline increased flight frequency on the routes connecting the major hubs in Khabarovsk and Yuzhno-Sakhalinsk, and adjusted certain flight schedules. Additionally, during the summer season, Aurora increased flight frequency on the Vladivostok — Novosibirsk route to daily flights.

Aurora's domestic local routes
Aurora's domestic local routes in 2015: Note: routes operated in 2015.

International cooperation

In 2015, the SkyTeam Alliance had
20 members,
including
Aeroflot,
Aerolineas Argentinas,
Aeromexico,
Air Europa,
Air France,
KLM,
Alitalia,
China Airlines,
China Eastern and
China Southern Airlines,
Czech Airlines,
Delta Air Lines,
Kenya Airways,
Korean Air,
Middle East Airlines,
Saudi Arabian Airlines,
TAROM,
Vietnam Airlines,
Xiamen Airlines,
and Garuda Indonesia

Сodeshare agreements

Aeroflot Group's airlines actively cooperate with other, foreign carriers under codeshare agreements. These arrangements enable the Group to build its presence in promising markets, gain a foothold in the markets where restrictions apply, expand the route network coverage, and more efficiently use own fleet.

In 2015, codeshare agreements with Saudi Arabian Airlines and Garuda Indonesia came into force, and the number of marketing flights operated by Aeroflot airline increased from 278 to 299.

As at the end of 2015, PJSC Aeroflot's existing codeshare agreements included: 20 agreements where Aeroflot airline is both an operating and marketing partner (with Air France, KLM, Delta, Alitalia, Finnair, Czech Airlines, Tarom, LOT Polish Airlines, Bulgaria Air, Korean Air, Air Serbia, MIAT, Air Baltic, Air Europa, Garuda Indonesia, Icelandair, Kenya Airways, Saudi Arabian Airlines, China Eastern Airlines, and China Southern Airlines); three agreements where Aeroflot airline is only an operating partner (with Cubana, Iran Air, and Middle East Airlines); and three agreements where Aeroflot airline is only a marketing partner, selling flights operated by its partner carriers using its own code (Adria Airways, Bangkok Airways, and Royal Air Maroc). Aeroflot airline also has intragroup codeshare agreements, providing for commercial management of codeshare flights with Donavia, Rossiya, Aurora, and Orenair airlines. Commercial management of flight loads of its subsidiary airlines under codeshare agreements enables PJSC Aeroflot to implement a comprehensive centralised management model for the Group's strategic issues, including sales, revenue management and fleet planning.

Interline agreements

As at the end of 2015, PJSC Aeroflot had interline agreements with 150 carriers, including four subsidiary airlines, five other Russian carriers, and seven airlines from the CIS.

The SkyTeam Alliance network encompassed
1,057  destinations in  179 countries

Membership in the SkyTeam Alliance

In 2015, Aeroflot continued to actively expand cooperation with other members of the SkyTeam global alliance. Membership in the SkyTeam Alliance enables Aeroflot and its subsidiary airlines to expand their route networks while offering their clients access to the global marketing alliance's unique services, and providing Aeroflot Bonus members with an opportunity to enjoy the benefits offered on the flights of other members of the SkyTeam Alliance.