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Russia’s business aviation loses 9% of international traffic on sanctions

August 26, 2014, 13:34 UTC+3 MOSCOW
These airports serviced nearly 17,000 passengers on business flights, which is 59% above the parameters of the same period last year
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© ITAR-TASS/Marina Lystseva

MOSCOW, August 26. /ITAR-TASS/. Russia’s business aviation is changing routes. The number of international flights is dwindling, while business aviation services inside Russia are in ever higher demand. The western sanctions are not the sole reason, though. One should bear in mind growing business activity locally and some high-profile events, such as last winter’s Sochi Olympics, investment forums and the Formula-1 stage in Sochi beginning in October, market participants say. According to their estimates, the industry’s missed incomes from dwindling international traffic will be down by 5-9%

January-June, 2014 saw growth in passenger traffic and business aviation flights at the Basel Aero-run airports of the Krasnodar Territory (Sochi, Anapa, Krasnodar and Gelendzhik) only on intra-Russian flights - by 57% and 20% respectively, while international routes saw a decline by 2% in passenger traffic and by 9% in return flights in contrast to the same period of 2013.

All these airports serviced nearly 17,000 passengers on business flights, which is 59% above the parameters of the same period last year. The company says it is expecting a far greater increase in traffic in the business segment with the Hydro Air Show in Gelendzhik and the Formula-1 stage and investment forum in Sochi.

The destinations of business jets remains traditional despite the introduction of sanctions by the European Union and the United States. The destinations stay unchanged for years, several polled market participants have told ITAR-TASS. The most active business aviation flights are between Moscow and the European countries - France, Italy and Germany. In summertime Turkey joins the list of popular destinations.

“In June and July Nice was in the greatest demand, accounting for 11% and 9% of all serviced flights respectively,” says the general director of Domodedovo Business Aviation Centre, Andrei Stepanyuk.

But the number of business flights keeps going down. Germany’s consultancy WINGX Advance in its June survey of business aviation activity noted a considerable decline in traffic between Europe and the CIS countries - 25% less in annual terms. The traffic between Russia and the European Union was down by 12% in contrast to January-July 2013.

According to Diamond Aero Group (a brokerage on the business aviation market) Russia’s business aviation market is estimated at 6,000-6,500 flights.

“These are charter flights only. If one adds flights by private jets, the rate may well go up 30-40% to a total of about 8,500 flights a year,” Diamond Aero Group managing partner Dmitry Tolstenyov has calculated for ITAR-TASS.

With the average cost of one flight standing at 50,000 euros, the annual revenues of airlines operating on the Russian segment of business aviation, may reach about 425 million euros, and net profit (profitability margin being rather low) 17 million euros, the expert said.

According to Dmitry Petrochenko, of the specialized periodical Bizavnews, international flights account for about 75% of Russian business aviation traffic.

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