Aeroflot Eyes 40% Decrease In Fares With Russian Deregulation

On Sunday, Aeroflot, the Russian state air carrier, predicted that the last obstacles to its ability for low-cost air travel throughout Russia will soon be lifted.  According to the airline, the last two obstacles that prevent airlines for charging for food and for baggage will soon be lifted.  A prediction that will pave the way for significant decreases in the cost of air travel.

The airline has said that if these regulations are lifted, the cost of fares will decrease by up to 40%, something Aeroflot says will be a big win for consumers.  The statement was made ahead of this year’s ever important Farnborough Airshow.

The Russian government has shown a willingness to begin to deregulate its airline industry.  Most recently, the government got rid of laws that prohibited hiring foreign pilots and preventing airlines from selling non-refundable fares.  These laws were revoked shortly after an announcement of a launch of a low-cost carrier sponsored by the Russian state airline called Dobrolet.

In an interview with Reuters, chief executive Vitaly Saveliev said, “These are the laws that will allow Russia to have low-cost airlines which will operate under the same rules as those in Europe and America.  Low-cost, it is a very simple service – no food and no free-of-charge luggage.”

Saveliev said that the Russian Parliament is near making a decision on allowing the carrier to charge for bags, something other low-cost carriers such as easyJet and RyanAir already do as part of Europe’s low-cost carriers.  The Russian-state airline said that they are using RyanAir as a model for what they are trying to build, saying “For us, Ryanair is maybe one of the best low-cost carriers.”

Russia has not had good luck with low-cost carriers, two of which failed by 2011.  However, Saveliev says that all that is changing given the changes in Russia laws governing the airline.

Dobrolet’s first flight took place in June in a flight from Moscow to Simferopol, the capital city of Crimea.  The airline has said that its flights have been operating at full capacity, with flights completely booked through August.  Saveliev says that the key to the growth of the low-cost carrier will be capitalizing on the growing middle-class of Russia as its customer base.

Aeroflot has said that it predicts that traffic within Russia and the ex-Soviet states will grow by 4.4% annually over the next 20 years.