Revenue of Russian Airlines Grow Despite Traffic Decline

The revenue of Russian airlines in 2023 increased by a third, reaching record levels despite a decline in passenger traffic to the level of 2017, according to an analytical report by ACRA. The main factors contributing to this growth are the increased ticket prices and a nearly 20% increase in the average flight distance over the past five years.


In 2023, the aggregate revenue of Russian airlines increased by 31%, reaching 1.37 trillion rubles, which is a record high and exceeds the indicators of 2019. These figures are cited by "Kommersant" referring to the ACRA report. Adjusted for inflation, revenue corresponds to the levels of 2014-2015, despite the fact that the number of passengers (105 million people) returned to the level of 2017. The average RASK (Revenue per Available Seat Kilometer) indicator in the industry, according to ACRA data, increased by 16% year-on-year. This is primarily due to the increase in ticket prices. Over the past decade, there have been two periods of significant price increases - from 2015 to 2016 and in 2021, when RASK increased by more than 15%. The average annual growth in RASK from 2013 to 2023 was approximately 6% with inflation around 7%. According to ACRA, the increase in ticket prices in 2023 compensated for the lack of adequate indexation in previous years.

ACRA assumes that the RASK growth in 2024 will not exceed the level of the previous year. The second factor contributing to the revenue growth of airlines was the increase in the average flight distance - from 1,85 thousand km in 2019 to 2,2 thousand km in 2023. This is associated with the development of domestic tourism, which partially replaced international trips, as well as with the increase in the length of routes to the unclosed airports in the south of Russia. This affected both the market passenger turnover and the increase in airline expenses, which cannot always be transferred to the end consumer.

The CASK (Cost per Available Seat Kilometer) indicator in 2023 increased by only 2.7%, remaining almost at the level of 2022. As a result, the ratio of airline revenues to expenses per seat-kilometer (RASK/CASK) in 2023 turned out to be exceptionally favorable - 1.21. For comparison, from 2012 to 2019, the dynamics of this ratio consistently ranged from 1.04 to 1.13, and in 2020 it decreased to 0.88 due to the pandemic and a decrease in air ticket prices. ACRA believes the likelihood of the aviation market maintaining the RASK/CASK ratio at the level of 2023 is low.

According to experts, the main surge in airfare prices has already occurred, and further significant increases may negatively impact transport volumes. At the same time, operating expenses will continue to rise due to increased costs for fleet maintenance and salary indexation for employees. This could result in aviation sector revenues in 2024 ranging from 1.3 to 1.6 trillion rubles, with the revenue per passenger-kilometer to operating expenses per passenger-kilometer ratio decreasing to 1.1–1.15.

ACRA analysts present two scenarios for the development of the aviation sector situation in 2024. In the base scenario, they predict that the volume of transportation will remain at a level comparable to 2023 (up to 115 million passengers). Airlines will find it difficult to achieve growth, primarily due to the limited size of the fleet and difficulties with its maintenance. In the stress scenario, with the tightening of the sanction regime and an increase in ticket prices, passenger traffic may decrease to 85–100 million people. The total revenue of airlines may drop to 1 trillion rubles, and the ratio of revenue per passenger-kilometer to operating expenses per passenger-kilometer may fall below 1.

Source: Kommersant


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