Aeroflot Will Hugely Shrink, Become 5-Star Airline

Aeroflot has revealed a significant strategy shift, which will be implemented over the coming years. For context, in addition to “mainline” Aeroflot service, the Russian airline has three subsidiaries:

• Pobeda Airlines is Aeroflot’s low cost carrier, and operates a fleet of 30+ Boeing 737s
• Rossiya is also an Aeroflot subsidiary, and operates a fleet of 60+ aircraft to leisure destinations, both short haul and long haul
• Aurora is an Aeroflot subsidiary, and operates a fleet of 20 aircraft (including A319s and turboprops) out of the Far East

Aurora A319 at Tokyo Narita Airport

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Basically everything about Aeroflot will be changing, so let’s take a look at the details…

Aeroflot will focus on long haul & premium flights

Aeroflot wants to become a Skytrax 5-star airline, and as part of that the airline intends to exclusively operate long haul and premium routes.

The company notes that the only Skytrax 5-star airline carrying more than 35 million passengers per year is Lufthansa, so generally the company feels that bigger airlines can’t deliver amazing quality. Therefore Aeroflot will for the most part not operate regional routes, instead focusing on markets where it can excel and deliver a high quality product.

While many people like to joke about Aeroflot, the reality is that the airline is already excellent. I was incredibly impressed when I flew it a few years back. Now Aeroflot is getting A350s with new business class seats, and I really feel like the airline could easily achieve its goals.

Aeroflot’s new A350 business class

Pobeda will take over regional routes & aircraft

Pobeda is Aeroflot’s low cost carrier. Aeroflot is planning significant growth for the airline:

• Aeroflot will transfer nearly 50 Boeing 737-800s to Pobeda
• Pobeda operates an all-economy model, so this also means that these flights would no longer feature business class; the planes would go from featuring 158 seats to featuring 189 seats
• Pobeda has significantly more seats on planes and a lower cost structure, so Aeroflot believes this could lead to a 30% reduction in regional fares
• It’s noted that 12% of Pobeda passengers have never flown before, and the plan is for the airline to expand in that market

Pobeda Airlines 737-800

Rossiya will expand significantly

Rossiya currently operates a fleet of nearly 60 aircraft, about a third of which are long haul aircraft (including 777s and 747s). The airline will more than quadruple in size over the coming years:

• Aeroflot’s fleet of up to 150 Sukhoi Superjets will be transferred to Rossiya (the airline so far has about 55 in its fleet, with a further 95 on order)
• Aeroflot’s order for 50 Irkut MC-21-300s will be transferred to Rossiya

This means Rossiya’s fleet will eventually feature mostly Russia-built aircraft.

Image courtesy of Anna Zvereva

Bottom line

This is a huge, gutsy business model change for Aeroflot. The airline is transferring nearly 250 aircraft (including current planes and future orders) to subsidiaries, so Aeroflot will be way smaller in the future. Eventually Aeroflot will operate just A320s, A321s, A330s, A350s, and 777s.

Aeroflot hopes to become more premium, which seems achievable. The biggest potential downside here, as I see it, is that those connecting regionally on Aeroflot from long haul flights may be stuck on Pobeda, offering a watered down product in both economy and business class.

What do you make of Aeroflot’s strategy shift?