Russian Flights Victims of Slump as Lufthansa Joins Exodus

Deutsche Lufthansa AG Annual General Meeting

An image of a Lufthansa airplane sits on a display banner in Hamburg.

Photographer: Krisztian Bocsi/Bloomberg
  • German No. 1 follows EasyJet, Air Berlin in quitting routes
  • Capacity crunch looming following collapse of Transaero

Russia’s airline connections to the outside world are diminishing as an economic slowdown hurts demand and renders more and more routes unprofitable, with Deutsche Lufthansa AG, British Airways and SAS AB the latest to join an exodus led by discount carrier EasyJet Plc.

Lufthansa will cease flying to Moscow Vnukovo airport, Samara on the Volga and Nizhny Novgorod, east of the capital, with the start of its winter schedule a week from now. That leaves 63 weekly flights to Moscow Domodedovo and St. Petersburg, down from 153 to nine Russian destinations four years ago.

SAS’s schedule shows Scandinavian Airlines will halt Copenhagen-Moscow flights in March, when EasyJet also ceases its sole service from London Gatwick to the Russian capital. Air Berlin Plc said Thursday it would end trips from Dusseldorf and Berlin to Moscow and Berlin to Kaliningrad on the Baltic, and British Airways is taking 747 jumbos off its London-Moscow route.

Foreign carriers are retreating from Russia after the economy entered recession for the first time since 2009 in the second quarter, with the ruble down almost 25 percent against the euro in 2015 and wages declining for 11 straight months. Western sanctions imposed after the annexation of Crimea last year are also hurting trade, and stricter visa terms are hindering travel.

Transaero Demise

Carriers based outside of Russia are cutting weekly flights to and from the country by 15 percent this winter season, figures on 52 airlines provided by air-transport data supplier OAG show.

Ticket sales are suffering even as the collapse of Transaero Airlines, Russia’s second-biggest carrier, removes a significant chunk of capacity from the market. The company has ceased sales after Aeroflot PJSC, the local No. 1, decided against buying it, and is poised to fold completely on Dec. 15.

The Transaero exit alone is likely to increase international fares by 25 percent as competition diminishes or ends, according to calculations by Aviasales.ru, Russia’s biggest airline search engine, which said Aeroflot stands to benefit most.

BA Downgrade

Transaero offered the cheapest January ticket to New York at 15,000 rubles ($241), with Aeroflot -- which will have a monopoly once Delta Air Lines Inc. suspends services for the winter -- selling seats from 26,600 rubles. Among Russian carriers, S7 and UTAir Aviation also have international services.

Lufthansa’s latest cuts will eliminate 15 weekly flights, or 25 percent of the total. Its Austrian arm will also cut routes this winter, limiting services to Moscow and Krasnodar in the south after quitting St. Petersburg and Rostov-on-Don. The Swiss unit will pare frequencies from Zurich to St. Petersburg.

British Airways will cut capacity by deploying Airbus Group SE A321 narrow-body jets on a five-times weekly London-Moscow flight that currently uses Boeing Co. 747 and 777 wide-bodies. Two other daily services already use the single-aisle planes.

Wizz, Vueling

August passenger numbers fell 2.9 percent at Moscow’s Sheremetyevo hub and 4.9 percent at Domodedovo -- marking the steepest drops in Europe for terminals with at least 25 million annual passengers, according to ACI Europe.

Eight-month figures showed a 1.1 percent drop at Sheremetyevo and 6.5 percent at Domodedovo -- where freight volumes are down 20 percent -- as well as 7.2 percent fall at St. Petersburg.

Some low-cost carriers may help fill the void, though EasyJet’s exit from Moscow flights it began in 2012 after battling Virgin Atlantic Airways Ltd. for route rights suggests Ryanair Holdings Plc is unlikely to add services from Ireland that it’s been evaluating since 2014.

Wizz Air Holdings Plc, an East European discount specialist, began serving Vnukovo from its Budapest base in 2013, while Spain’s Vueling, a British Airways sister company, this summer added frequencies to Sheremetyevo from Barcelona and began serving St. Petersburg from Malaga.

Aeroflot Arm

Ceske Aerolinie AS or Czech Airlines said last week it will boostfrequenciesto St. Petersburg, Yekaterinburg, Rostov and Samara this winter, after observing “signs of stabilization and consolidation” in the Russia market.

Aeroflot’s discount arm Pobeda, which began flying in December and is currently able to serve only domestic routes, plans to start selling tickets for services to Europe after Russia changed regulations to allow it begin international operations early, according to analyst Mitch Mitchell of BCS Financial Group in Moscow.

Pobeda replaced Aeroflot start-up Dobrolet, which last year became a victim of the sanctions regime after the European Commission ruled that its flights from Moscow to Simferopol in Crimea fostered the integration of an illegally annexed region. Pobeda doesn’t serve Crimea.

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