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Vitaly Saveliev: Aeroflot out in the open

February 20, 8:00 UTC+3

CEO of public joint stock company Aeroflot in a TASS special project Top Officials

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© Simon Dawson/Bloomberg via Getty Images

On business awards, five star rating, handy tips to put nervous passengers at ease and relations with aircraft manufacturers

- I never doubted I would see aircraft models in your office. Is it a legacy inherited from your predecessor?

- I am sure you would agree it would be rather strange of me to keep models of railway steam engines or space rockets here. We leased this building in Arbat Street after I joined the company in April 2009. There were no model planes in the old office. What is far more important, in those days Aeroflot didn’t have corporate e-mail, either.

- How did Aeroflot manage to carry on then?

- The old ways. By using paper. There were hard copy documents all over the place.

- Now the walls of your offices are adorned with awards and various business recognitions.

- In the past, Aeroflot never placed very high in international rankings, so there was nothing to put on display. The plaques on these walls are visual teaching aids for our staff. And for the visitors who come here. Everybody can easily see the company is developing. We have achieved a lot in recent years.

- Like what?

- Each award has its own history. For instance, in 2016 we obtained four stars from Britain’s Skytrax. This is the most authoritative appraiser of the quality of air services in the world. Their auditors scrutinize more than 800 criteria. It took us several years to attain that goal. De facto we enjoyed recognition in the industry in the past. Aeroflot was reputed as one of the best in Europe, but it was put on record officially for a variety of reasons. There are more than 3,000 air carriers around the world, but just forty of them have earned four gold stars. This is a sort of premier league for such criteria as the level of comfort and reliability. There you will find Emirates, Lufthansa, British Airways, and Air France… Now Aeroflot has joined them. We take great pride in this achievement.

- But some airlines have five stars, don’t they?

- There are just nine such air carriers in the whole world. None of them are European or American. They are either Asian or from Persian Gulf countries: Qatar Airways, Singapore Airlines, Cathay Pacific Airways, Asiana Airlines, Hainan Airlines, ANA All Nippon Airways, Garuda Indonesia, EVA AIR and Etihad Airways.

There are some other rankings, too, where we are present alongside the very best. Take, for instance, the Net Promoter System (NPS) – a metric measuring customer loyalty. We were the first in the Russian airline industry to use it back in 2010. I came to Aeroflot from the telecommunications sector, where NPS is a key benchmark. The scores are awarded by a special international appraiser. The polled passengers – and there are very many of them, at least several thousand – are asked: “Would you recommend Aeroflot to your relatives, friends and neighbors?” Then there follows a detailed questionnaire that focuses on the slightest details of the quality of meals and catering service on board. To my recollection our latest rating was as high as 72%. In this respect Aeroflot is second best after Emirates. The leading European air carriers are now mulling a variety of excuses for not offering meals to their passengers on flights that last less than five hours. We, on the contrary, have been doing our utmost to improve the quality of meals and services.

The NPS is a good prompter that instantly lets us know what extra options our passengers would like to enjoy in flight: USB ports for electronics, a collection of movies or music programs… We make many of our changes after studying these requests. And each extra point scored, our consultants tell us, yields us a hefty $15 million dollars of additional revenues. These are not trifles I’m talking about, but very specific commercial gains. This explains why Aeroflot kept growing even against the market trends, when the ruble’s devaluation sent the Russian air industry into a nose dive.

We obtained two 2016 Air Transport News Awards in two categories. Our ambitions are not a secret to anyone. Under the strategy covering the period through 2025 we hope to join Europe’s Top Five and the world’s Top Twenty global air groups in terms of passenger traffic and revenue. A five-star rating from Skytrax is among our goals, too. We are already working on a roadmap. Very large costs are involved. And far from everything depends on Aeroflot. For instance, business class departure and arrival lounges must be available. No single company or airport can bear all costs on their own. This is unfair. There are to be joint projects, if the partners find providing support for us worthwhile.

We are conducting talks with the board of directors of Moscow’s Sheremetyevo Airport. This program is of interest to them, because it allows for increasing the number of loyal passengers.

I always keep in touch with the main investors – Arkady Rotenberg and Alexander Ponomarenko. We have meetings at the company board level. Just recently we inspected Sheremetyevo’s facilities still under construction, including the tunnel under the airfield. A tremendous amount of work has been done. I have some photographs for you to see. Take a look. All of us dressed properly: the hard hats, worker outfits, high boots…

Investors spend real money and they are by no means indifferent about the returns they will get and when. To be able to contest a five-star rating the proper groundwork has to be laid. In the meantime, Sheremetyevo already operates at peak capacity. The existing facilities are no longer enough. We have shifted to a six-wave mode of operation, using Europe’s major airports as an example. But that’s the limit. We cannot achieve more no matter how hard we try. The whole air traffic will have to be reorganized first.

- What are the waves you are talking about?

- I mean the traffic peaks that occur every 24 hours. In 2009 there were only two waves – one in the morning and another in the middle of the day. Six is the maximum. We make 630 outbound and return flights between pairs of cities every 24 hours. That’s some 80,000 passengers. This explains why it is so important for us to ensure that Sheremetyevo makes improvements. We are certain it will.

Five stars is not the ultimate end, though. We should have a sober judgement of our own resources. We keep a close watch on the front-runners and compare their costs with our own capabilities. Each has one’s own merits. Some offer better meals, while others boast more comfortable seats and larger room between the rows of seats, making it easier to stretch your legs…

When in 2009 we declared we were destined to become a premium segment air carrier, we saw many skeptical grins: just another adventure doomed to fail, ha ha! We started with new uniforms for our flight attendants. This triggered a torrent of criticism. Gift packaging is all these guys can think of, and that’s where they’ll stop, we heard many say. In the meantime, a new uniform was our first step just because we turned an attentive ear to psychologists. It is very important for passengers to see who welcomes them on board, that person’s appearance. During a certain period of time Aeroflot had no uniformity in that respect. Flight attendants were free to decide what they should wear at work. Some preferred colored blouses and skirts, and others, white blouses and pantsuits. It might seem an unimportant detail to some, but passengers began to have a feeling of uncertainty and anxiety. That’s why the psychologists advised us to change the uniform first. The old one was utterly out of date. As for the plane’s livery, we have preferred to preserve it instead of launching a comprehensive rebranding program.

For the first two years we heard only bad news: this is no good and that is disgusting, food is tasteless and the luggage is lost… Today’s problems remain many. We are still very far from ideal. But we go on working and addressing issues. And people can see that.

- And what can you say about Deputy Prime Minister Dmitry Rogozin’s advice addressed to Russian airlines they should stop using foreign aircraft? How about that?

- I believe it would be more appropriate to put this question to Rogozin first. He is a professional. His idea is clear by and large. There are Russian aircraft and there must be options encouraging our airlines to purchase them. What such options can be? Rogozin speculated that the most lucrative routes might be awarded to companies flying domestically-made aircraft.

- But no special permission from the federal government is required for flights inside Russia.

- Precisely. I’m talking about foreign routes. Certainly, the air carriers need preferential treatment. When we agreed to have the Sukhoi Superjet-100 (the contract had been concluded before I joined Aeroflot), certain subsidies were promised. We have not seen them, though. The government’s resolution expired before the planes reached us. We have made several queries but no solution has followed to this day.

Let me say once again: to encourage Russian companies to take on new aircraft for promotion some very specific steps and proposals from the government are needed. This applies not only to Aeroflot.

- Rogozin speculates breathing a new life into Ilyushin-114 and Ilyushin-96-400 is a possibility.

- We have made a reply already. We explained that Aeroflot sees no place for these planes in its fleet at this time.

- Oh, yes, it was in March 2014 that you withdrew from operation the previous model of Ilyushin-96 and apparently heaved a sigh of relief.

- That’s what I am driving at. Please remember: when I joined the company we had 26 Tupolev-154 liners. By 2010 the last was gone. The media slammed me as the terminator of the Russian aircraft manufacturing industry. But for God’s sake, do I look like a killer? Those Tupolev-154s were great planes – 15-20 years ago. But they are too fuel-intensive, they devoured too much fuel.

Government incentives do make sense at the initial stage, no denying that, but Russia would like to market planes internationally. Prime Minister Dmitry Medvedev keeps saying that we must deliver products matching world standards. If our Ilyushin planes are good enough – fine! Otherwise, no incentives will help. We had a long experience of operating six Ilyushin-96 jets. This plane is very costly to fly.

We are doing business, aren’t we? We are efficiency-conscious people.

We are very concerned about fuel consumption per passenger per kilometer. If the aircraft burns more fuel than its foreign competitors, customers will be hard to come by. Let’s learn to make aircraft at the level of world standards first. Then you are welcome.

- One has the impression that Russian air carriers and aircraft manufacturers exist in different centuries and even in different countries. Our aircraft manufacturing industry is stalled way back in the 20th century, in the Soviet Union.

- It is true. We do purchase foreign planes. Whatever some people around may say, these planes are equipped far better and are superior in quality. Where does the problem lie? Not a single aircraft manufacturer – be it in the United States or in Europe – does everything on its own. The whole world relies on cooperation. In the meantime we would like to manufacture everything on our own. The way I see it, it would be far better to keep manufacturing that part of the plane in which Russia uses its critically important technologies the best way. For instance, we make the landing gear, the undercarriage of titanium. This market niche is ours.

Or, for instance, Russia sells space rocket engines. The Americans take them despite their own policy of sanctions. They cannot do without such technologies. Let us focus on these areas first. It is common knowledge that European avionics is the best in the world.

Why should we be trying to reinvent the bicycle? Let alone a plane?

In the long run we can do everything ourselves, but the end product will turn out costly and not competitive. In the meantime, making products in cooperation with partners, by investing the best knowhow… This would make Russia secure from being ousted from the market altogether. That’s my personal vision, though. The Chinese are trying to make their own plane to the last rivet. Let’s wait and see what will come of it. Let me say it again that pooling efforts is a solution that is far closer to my understanding of the problem. Take cooperation with China’s COMAC over a long haul plane…

There is no ban prohibiting US and European air carriers from using planes manufactured by their competitors. No such ban exists. Or has ever existed. Ryanair flies only Boeing 737-800s. Half of the Air France KLM group’s fleet consists of Boeing planes. And Airbus is significantly present in the fleets of US air carriers. The American Airlines Group is the world’s largest operator of A320s.

True, each country keeps pressing for its own interests, but bans would be counterproductive.

- How about the MS-21 plane? Are you looking forward to it?

- Very much so. If this aircraft turns out to be what has been promised, it will be a real competitor to Boeing 737 MAX and Airbus 320Neo. We saw the plane when it was rolled out. The fuselage is bigger and the portholes are larger… In the end everything boils down to cost efficiency and quality. If the Irkut corporation sticks to the promised parameters, this will be a great breakthrough. The plane being developed is within a niche that is in the greatest demand.

Very tough competition is in store for us and we’ve got to be prepared. Many planes are on offer in this segment: Airbus and Boeing deliver about 50 a month and 600 planes a year each. If we are to gain a segment for our MS-21, we should be making at least half as many. We will never achieve any growth if we make no more than 30-40 planes a year. Technologies keep developing and the competitors will push ahead with their innovations.

- Does the promised date when you are to have the first MS-21s remain unchanged – the end of 2018?

- In any case we know no other date. At the beginning of February the board of directors met and it the issue was raised of the 20 Sukhoi Superjet-100 liners that Aeroflot is supposed to get in addition to the 30 we already have. We agree to have them, but at the same time we are asking concrete questions about the dates, details and schedules of delivery.

The same applies to the MS-21s: we’ve got to have a clear idea of the configuration and layout and the real dates to be able to make plans and to set the money aside for the purchase.

We are prepared to order fifty planes.

- Don’t you find somewhat worrisome the negative experience of operating the SSJ, which seems to have technical problems too often?

- Look, Aeroflot is a state company and the SSJ-100 is an international project involving many countries. The Italians and the French make the engines together with Russia. Nobody uses force to dictate anything to Aeroflot. We believe that this plane must fly. Who but us will be able to make it happen? In the whole country there is no other such company. True, this implies certain costs. In a sense it’s a headache. If Aeroflot were a private company, its shareholders might refuse to do that. But we respond to this situation with understanding.

We believe that the SSJ-100 will be flying properly.

Take any foreign plane, the very same Dreamliner. Did it go out of order less frequently? It was recalled very often. And it remains to be seen whether the Airbus 380 has a future. Possibly, the potential market for the Superjet-100 was misjudged somewhat, but the infantile disorders that surface in the process of operation are curable. That’s what the incentives and preferences are meant for. They enable the operator company to address them in a working fashion.

- How many Superjets had to be grounded for a while due to stabilizer problems?

- Ten planes all in all. The problem has now been addressed. All planes continue to fly.

I’m saying again that we will eagerly have domestically manufactured planes, provided their quality is good enough. We are not against it.

- Are you going to share some Superjets with the air carrier Rossiya?

We operate within one group. When the SSJ-100 fleet grows to 50, then we will give thought to this.  For now we need all 30 planes we have ordered. At the moment Rossiya has no routes where it might use this plane.

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