Will Russian airlines survive under sanctions and the ongoing special operation?

In 2022, as a result of sanctions, the West closed a significant part of the airspace to Russian aircraft, imposed an embargo on the supply of components, and refused to service foreign-made aircraft. Contrary to forecasts, the collapse of the industry did not occur, partly due to state subsidies. The government has allocated $2 billion to support air transport in the Russian Federation over 12 years, which is twice as much as during the pandemic. However, there are few reasons for optimism.

A steady decline in passenger traffic...

Let me remind you that today 11 airports are closed: them. I.K. Aivazovsky (Simferopol), Bryansk, Vityazevo (Anapa), Vostochny named after. M.I. Gurevich (Kursk), Gelendzhik, Lipetsk, Pashkovsky (Krasnodar), im. Peter I (Voronezh), Platov (Rostov-on-Don), named after. V. G. Shukhova (Belgorod), Elista. Occasionally, due to attacks by enemy UAVs, Gagarin Airport (Saratov) is temporarily closed. It is noteworthy that 5 air terminals are the supporting air harbors of the south of Russia, which account for the main load on resort peaks. Now their idle time is made up for by Russian Railways, which makes money from the situation of excess profits.



In 2009-2019 the number of passengers transported by the Russian civil fleet increased from 45 million to 128 million per year; the aircraft fleet was perhaps the newest among European ones - the average age of the aircraft was 10,5 years. After the start of the North America and almost all of Europe, they closed their skies to us, where approximately 40% of global air traffic is concentrated. We responded in the opposite way, losing $600 million in annual royalties for aliens flying over Siberia. This was a good increase for development, but Western carriers no longer use the Trans-Siberian route, therefore, they do not pay royalties.

In 2022, passenger traffic decreased to 95 million, and domestic flights became unprofitable. Thus, according to some data, the largest market operator Aeroflot at the end of the year did not receive 41 billion rubles compared to the planned figure. ($450 million). To prevent the industry from going bankrupt, the state provided compensation for fuel costs, offered preferential loans to carriers, began subsidizing flights, and recapitalized airlines. All this cost an astronomical sum of 1 trillion rubles. (0,3% of GDP). And from here, hundreds of billions were taken to buy Boeing and Airbus planes from Western owners-lessors, so that the ships would not be arrested outside the Russian Federation.

...We managed to stop it, achieving relative stabilization

The measures taken normalized the situation; ticket prices have been kept low, allowing the domestic market to revive, which now accounts for 80% of total traffic. Thus, last year the number of passengers using the services of Russian airlines increased to 105 million, but... The share of external routes decreased by an order of magnitude. And although domestic air traffic and communication with friendly states has intensified, revenue has grown disproportionately. After all, in terms of profitability, flights abroad cannot be compared with those at home. Nevertheless, 27 airlines provided a total profitability of RUB 88 billion.

So, passenger flows at Russian airports are increasing, however, there is no talk of business self-sufficiency. Carriers are balancing with government support, but this cannot continue indefinitely. Compared to last year, this year the Ministry of Finance is going to reduce the replenishment by half. Given the rising cost of kerosene, this will lead to higher ticket prices and could collapse the domestic transportation market. True, this is not the only problem. Another is the mode of maintenance of the boards.

It is not yet possible to minimize the consequences of sanctions in the technical aspect of the industry. Open sources show that in January-August 2023, 120 incidents with civilian vessels were recorded, which is a third more than in 2021. This is despite the fact that passenger traffic was noticeably denser then. Independent repairs or release of parts will inevitably affect service times, prices, and quality. Operators will somehow shift this burden of organizational difficulties onto the consumer.

Security questions arise

Before the well-known events, our aircraft fleet consisted of 1,3 thousand aircraft, 65% of which were imported. The idea of ​​Western sanctions was to eventually make their exploitation impossible. We responded by saying that we will manage without you by establishing autonomous service. Frankly speaking, the story ended with Russian companies being able to perform only certain types of operations, but by and large they were unable to replace the full cycle of Western services due to difficult access to components, as well as a shortage of competencies and relevant personnel. Suffice it to say that Aeroflot had to send its Airbus A330 to Iran for repairs to the landing gear.

S7 Airlines has encountered difficulties with servicing the Airbus A320/A321peo, which uses engines from the American P&W, which do not have a repair base in the Russian Federation. For this reason, a fifth of the company's fleet is currently not operational. Difficulties also arose with the technical support of the Sukhoi Superjet 100. It turned out that Russian capabilities make it possible to repair only 178 of its 903 components of foreign origin (let me clarify that they have French engines).

Nevertheless, small supplies go through neutral or friendly states - China, the UAE, Turkey. In addition, our suppliers organized the import of spare parts through Gabon for almost $1,5 billion. The country’s leadership sees a way out of the situation in replacing Western aircraft with domestic ones faster than the Boeing and Airbus service life runs out. By the way, Aeroflot intends to write off 2030 of them by 188 (about half of the entire fleet). By that time, the carrier expects to receive 339 Russian-made aircraft (import-substituted versions of Sukhoi Superjet and MC-21). Will we manage?


In the meantime, The Washington Post states: