Routes Silk Road Speaker Series

Q & A with Yolanta Strikitsa, Managing Director, Strikitsa Consulting who shares her perspectives on the region’s aviation landscape. Strikitsa will speak in the Routes Silk Road Strategy Summit, Session 3: Airports developments – meeting the changing needs of the region.

1. How has the aviation landscape in the region evolved over the past ten years?

Over the past ten years in Russia, there has been a tendency to consolidate in the aviation market. A number of small regional carriers, in addition to weaker national carriers have either gone bankrupt or sold their businesses to more successful airlines. Flying is still a luxury for the majority of the population, though in some areas, air transport is the only method of transport.  The aviation sector recognises the deficit of regional (decentralised) routes, however a lack of small fleet keeps that market limited.  Russia is still a high potential market with large possibilities of development, especially in areas of inbound tourism and regional route development. 

In Kazakhstan, the aviation landscape is even weaker, with two major carriers (Air Astana and Scat) dominating intercity and international routes.  There is huge potential for inbound tourism, especially with a no-visa policy and government investment in regional airports.

2. How do you think the Routes Silk Road Event benefits the region?

It offers huge benefits to Kazakhstan and also offers great opportunity for participants from the smaller regions.

3. What’s the future for the aviation landscape in the region?

In the short-term, the future for the aviation landscape in Russia is average; the passengers that the local legacy carriers are aiming to attract will not stop flying. However, due to economic conditions, those passengers will probably fly less frequently than they have been, and there will be a shift in passengers choosing the economy class cabin, as opposed to premium cabins. This could lead to mild ‘price wars’ on leading domestic routes between key legacy carriers. Regional short-haul routing will stay underdeveloped and overpriced.

From a long-term perspective, the future of the aviation landscape in Russia looks promising.  It is inevitable that more and more people will prefer air travel to bus or auto travel.  For routes 500km or longer people will fly and the current generation of policy makers will be substituted by a younger generation that have tasted Ryanair and Spring (China).  A change of mentality should open more doors for LCCs and small regional carrier investors. 

Kazakhstan looks good from both a short and long-term perspective.  The market is hugely underdeveloped.  Key routes like Astana-Almaty and Karaganda-Astana can add more slots of legacy and budget type and some carriers may think of introducing full business-class flights.  Inbound tourism should benefit from weak local currency and visa-free policy; not many carriers, in particular LCCs are aware of this benefit.  Ideas of open-sky regime are currently under discussion among officials. 

4. How have carriers such as Aeroflot and Transaero become leading carriers within the region?

Aeroflot’s main competition is outside Russia.  Over the last ten years, their business and customer services have improved significantly and it has become a stable regional carrier.  However, in order to further develop, Aeroflot might need to make acquisitions outside of Russia. Transaero is moving towards becoming a leading carrier within the region but it isn’t quite there yet.

5. Which markets are expanding within the region and why?

Asian inbound tourism is an expanding market, as are economy class cabins and the Kazakhstan market as a whole.

6. What are the most popular destinations in the region?

In Kazakhstan it is the Astana-Almaty route and in Russia, the most popular destinations are Moscow, Sochi and St Petersburg.

To find out more about the Routes Silk Road Strategy Summit, visit our dedicated web page.

Disclaimer: The ‘region’ in all of the above text is referring to Russia and Kazakhstan