Aeroflot Will Hugely Shrink, Become 5-Star Airline

Filed Under: Aeroflot

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

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?

Comments
  1. I think their effort to become 5 star won’t require too much. I flew Aeroflot two years ago, from Istanbul to Moscow, and was blown away by how professional and friendly everyone was, from the Russian ground manager at IST to the onboard crew (though the female FA’s bright orange uniform took some getting used to). The plane itself was immaculate and the food and IFE were both topnotch.

  2. I am happy to see Aeroflot is not too far away from getting 5 stars airlines, and I also agree this seems achievable. SU has great crews, lounges, and modern aircrafts. Excellent business class service compared to their direct rival like S7 or regional rivals like KC. However downside is SVO airport needs big improvement for transit passengers, especially Terminal E and F, it is always a nightmare.

  3. How would this work domestically for Podeba? if you want to credit it to a sky team partner?

  4. 51% government owned, which means the usual corruption from the Putin crime syndicate. How will airlines from democratic countries with private investment capital compete?

  5. If there was a time when Aeroflot was a joke, it’s certainly not in 2020. And since Lufthansa was mentioned by way of comparison, I can say the only joke here appears to be LH itself. Even before embarking on that admittedly dubious ‘honor’ of gaining a 5* rating from ScamTrax, Aeroflot is already an excellent airline to fly. It’s certainly better than anything from the soiled stables of IAG and LH group of airlines. Of the euro flag carriers, only AF does it better for me.

  6. omg, just pay scamtrax 10 million bucks and get the 5 star rating jeez. if Lufthansa can do it, so can Aeroflot.

  7. Agree with the comments thus far. I would already place Aeroflot as a premium-light airline so this is certainly achievable. My main concern is that this strategy might cause the airline to lose its edge in the regional Euro market (short-medium haul routes) where it truly excelled featuring a proper business class cabin unlike most competitors. I’ll even go so far as to say that SU is the best intra-Europe airline for business class trailing only TK (and the long layovers in IST frequently make them impracticable anyway).

  8. Air Canada paid for 4*, LH for 5*, both at best 2* airlines.

    SUrely the fee will be lower for an airline that’s almost there anyway

  9. Is there a way to redeem miles for Aeroflot or are AirFrance and Delta still blocking those awards? Expert Flyer usually shows plenty of availability LAX-Moscow, but neither AF or Delta will show it.

  10. A bit sad about this change. Their short and mid haul business class product is really, really good and affordable on miles. And there’s really nothing like it left anywhere in Europe bar 5th freedom flights.

  11. I was expecting that Aeroflot would go for SQ model where SQ is long-haul, and premium while SilkAir is 100% subsidiary with regional network. But the biggest difference is that Silk Air is the full service air company while Pobeda is sh..t – think about RyanAir or EasyJet in their worst years. And in Russia there are domestic flights which are 8+ hrs long (Moscow to Far East like VVO, UUS, KHV, PKC) – SU needs to maintain good quality there. But SU doesn’t care about domestic too much as Russian people hardly speak English hence cannot vote on SkyTrax etc for 5-star award.

  12. SU offered excellent fares from Asia to the US and Europe, both in coach and business. Hopefully it will maintain that with the new strategy.

  13. SU frequent flyer based in Hong Kong here, I must say the change is expected, especially when you observe the divergence of SU long and short haul in the past few years.

    That being said, personally I still think that Aeroflot will still serve a number of short haul destinations like London, Paris, or Berlin/Frankfurt, where Business travellers and high-end Russian travellers may go.

    Moreover, Pobeda seems not substituting SU short haul though. Landing slot in SVO costs something and I doubt the cost structure for Pobeda will fit that, especially given that they are now in VKO.

    It seems to be that the change should mean a stronger Rossiya presence in Moscow, (they currently operate the SU routes from LED) in order to take over short haul SU route.

  14. Oh Ben, don’t be so naive. It’s Russia…

    Besides paying for and getting SkyTrax 5* rating most of the strategy change will never happen. As for the rating. Well… if LH can do it SU definitely deserves it. The truth is neither LH or SU is somewhat close to 5*. Things are not getting prettier for SU either – multiple service cuts were introduced in 2019 (no baggage fares, no meal on short flight, joke meal on 3-4 hours flights, limited alcohol in Premium Economy, no or joke alcohol in longhaul economy, reduced cabin crew – they have to run like on fire to serve full business class cabin, like 2 FAs need to serve hot plated dinner with courses change, beverage service, refills, tea/coffee for 20 biz pax on 1h 20m SVO-LED ).

    Aeroflot is not a bad airline, but you should get that it’s a government owned airline in a country like nowadays Russia. There is always a real reason behind everything happening:
    1. Transfer of SSJ and MC-21 orders to Rossiya
    Aeroflot would never order a single SSJ or MC, but it has no choice other than to ‘support aircraft manufacturing in Russia’; since they took delivery of the 1st SSJ back in 2010 they’ve been looking for ways to offload all SSJ one way or another; the aircraft is great in terms of passenger comfort but such an underperformer for the airline (like after 10 years in service Aeroflot managed to max out flying hours to 60 per month! on average – pre covid)
    2. Offloading 737s to Pobeda
    Aeroflot never wanted to operate 737s. They’ve chosen A320s and has been successfully using the aircraft for more than 15 years. Then there was a huge order of 50 737s placed in 2006-2008 by another government owned corporation (Rostech) under not market conditions (and you would assume the sole reason for the order was to get some ‘compensation’ back from Boeing). When time came to deliveries the order was transferred to Aeroflot which has no choice and began to accept deliveries (significantly overpaying for lease).
    So they try to use the opportunity to finally offload 737s (with terrible economy cabins), lower unit costs on domestic flights and fuel growth of Pobeda without 737 max deliveries.
    3. Rossiya
    Rossiya is a monster combined from Pulkovo (a regional airline used to be based in LED and served flights to dozens of destinations from St. Petersburg) and military unit that operated all government related flights (including the president’s IL-96 flights). It was dead on arrival. Then they merged Rossiya with some little government owned regional airlines with huge debts (Orenair, Donavia). Then they included Rossiya into Aeroflot Group for Aeroflot to manage it. Aeroflot has been trying to kill Rossiya or at least offload it one way or another for years. Then Transaero (2nd largest privately owned airline in Russia) folded in 2015. It ceased operations with the active help from the government to clean up the market for Aeroflot and Poboda (that grew like crazy the next few years). Transaero operated some fresh 747s and 777s that were financed by government owned banks (Sberbank namely). So when Transaero folded there was a risk of huuuuge loses to those banks as nobody wanted to take on these aircraft. That’s why these 747s and 777s were transferred to Rossiya to operate somehow and keep making lease payments. Other Transaero’s 737s, 747s, 767s, 777s were retuned to foreign lessors without accounting for their losses.

    So basically Aeroflot is trying here what it always wanted – to offload Russian built aircraft, offload unwanted 737s and offload unwanted Rossiya with its unwanted and expensive 747s and 777s in the name of strategy change – and finally operate just like any other commercial airline.
    Let’s see how it goes (not sure it will sit well with other parties involved – government owned banks, government owned leasing companies, government owned aircraft manufacturers and so on).

    PS. I’ve been Aeroflot stakeholder since 2004.

  15. No way SU will become 5* unless they buy their way into SkyTrax top, which some other airlines do.

    SU maybe good in the sky, but SVO transfer experience is beyond miserable for people.missing connections. Part of it is airport fault,but many friends had tickets cancelled after missed connections and left without any help by rude SU ground staff.

    After missing connection myself in HEL from SU to AY due to late arriving SU, SU incorrectly rebooked by rude agent in HEL, then phone agents were unable to fix error after admitting it and this was after talking to multiple supervisors and tech support – only HEL was able fix error next day after many hours spent.

    If anything goes wrong SU will leave you stranded. I think it will take years to re-train ground agents and fix backends and to empower agents to actually help people. Soviet style attitude towards customers that customer is always wrong and agents can not be trusted to hekp will be very hard to fix.

  16. FYI, In the Russian language, “Pobeda” means “victory”. Visit the Museum of the Great Patriotic War (WW2) and you will see the word everywhere.

  17. I’d be very interested to see if there has ever been a study on the effect of attaining a 5* rating. Anyone who is familiar with the airline industry knows it’s a total joke, hence “scamtrax”, but the general population has no idea. Does getting 5* boost sales that much?

  18. Alexander, no need to apologise. You call the Far East North Asia if you want, or the Far East.

  19. I recall reading that during some operational issues at Moscow Aeroflot started returning passengers not to their destination or their passport nationality But to the country of their ethnicity. Since that could pose major issues for some of us I would never fly Aeroflot.

  20. @Alexander

    Your provincialism is showing. That is the Russian term for the region of the country on the Pacific. It would be odd *not* to use the term.

  21. I agree with Mr. Ac the short haul service was top notch – only Turkish provide something similar. But with the A320/321 remaining maybe it will continue on the prime money center routes like SVO-LHR, CDG, FRA.

    The food onboard has gone downhill since the sanctions a few years back – especially on flights catered in Russia so they need to step up that game and investment.

    Up to the mid-2010s it was outstanding though.

  22. Aeroflot already a good airline? Did you try the economy? I once had two identical back to back meals of potatoes (and some mystery meat) on the same flight, contrary to what the menu said. I found their cold salads consistently better than anything hot they served, which says a lot.

  23. At least SU is making an effort to make itself 5*, unlike some airline’s “five star concept” of some only-god-knows-how-long-it-will-take-to-fly business class seat.

  24. Wikipedia has an interesting anecdote about how Aeroflot fired its overweight flight attendants in 2017 — based on their dress size — with the reasoning that it cost 800 rubles a year to fly each extra kilogram. Of course, the ruble was worth more back then. Are they still doing that? I think they lost a court case, but that just means they can find some other reason. Meanwhile, the article also says that crew are not allowed to carry smartphones. That makes sense, if you think of Aeroflot as the Huawei of the airways. When Putin sent a couple goons to London with poison in a bottle of perfume, to kill a former KGB comrade, of course they flew Aeroflot. But I suppose other countries have similar deals with their flag carriers.

  25. Sure they will invest more monay now that they stole our money for cancelled flights, they give only vauchers for the next 3 years, I am sure they will increase the prices due to “5 star” and we have to pay double now. Never using their flights again. Also the food is crap.

  26. Aeroflot is very good right now, and I am happy they are striving to be even better in the future. Good choice also on the Airbus A350’s.
    I noted that some have commented previously that Aeroflot is a government controlled airline. Is that not OK? With the Billions that recently went to various U.S airlines, is that not a similar thing? Or is that “different….let’s change the subject”?

  27. @Rob B

    I’m totally with you on this one. There’s nothing wrong with the concept of an airline that is gov’t owned. In fact this is how many flag carriers got their start (i.e. SQ, MH, EK, EY, QR). Russia is no different. I find that most who people who bring up the topic of gov’t controlled airlines are the ones who just use it as a segue to talk about what’s really on their minds: politics, politics, politics. It’s bait-and-switch, for the most part. Sure we should talk about gov’t control insofar as it affects the airline for us as customers (i.e. UL, SA). But to fill up 98% of one’s spiel about how bad a dictator you think Putin or Erdogan is [or insert your ‘dictator’ of choice] is really a waste of time for the reader who doesn’t give a rat’s a** about private political views.

  28. Shaun – interesting usage of “…to fill up 98% of one’s spiel about…”. Not a native English speaker, eh?

  29. Just an additional point, which supports their new strategy: The Russian government is slowly waiving the visa requirement for many countries. They already allow short stays in LED plus some other cities and plan to include the SU hub Moscow, soon. This certainly helps, because you no longer have to fear to be locked up in the airport Novotel in case you miss the connection.

  30. Mhahahah. This is funny. The company with lack of service and disgusting attitude towards clients. They can terminate membership in loyalty programs if you leave negative review in social networks. Yep, international flights are a little better but the internal flights are a kind of slavery for the staff. Also the company is the biggest buyer of Suchoy Superjet jets, and if you don’t know, these aircrafts is horrible.

  31. I just worry about how this decision will go down with Russians. Aeroflot is an iconic company in Russia as the flag carrier of both Russia and the Soviet Union its name carries a serious amount of weight. I wonder if seeing Aeroflot planes disappear across Russian airports in favour Pobeda and Rossiya will be popular. I doubt it will be as neither brands carry even an ounce of the weight that the Aeroflot name carries in Russia.

  32. It’s certainly easy enough to buy a Skytrax 5 star rating. That makes it pretty much worthless.

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