Russia's S7 Airlines has indicated that it plans to order 24 new Airbus A320neo planes by 2024. When speaking to the press earlier today, S7 Airlines Chairman of the Board Tatiana Fileva said she wanted to create a new Russian low-cost carrier.
A new low-cost airline for Russia
As announced today, S7 is looking to form a new low-cost airline for Russia, flying point-to-point routes and connecting regional airports. The group hopes to launch the new airline in July 2022, with a focus on bypassing Moscow. Tatiana Fileva, Chairman of the Board of Directors of S7, said at the press conference (as reported by RBC),
"These will be inter-regional flights, bypassing Moscow. We will now negotiate with the airports."
Fileva has high hopes for the new low-cost airline, eyeing carrying 7.8 million passengers by the year 2024. In just the first year of operations, the new airline is anticipated to carry as many as a million passengers. Investment in the project is anticipated to reach around 2.5 - 3 billion rubles ($34 - $40 million).
The airline will operate all A320neo family aircraft, with the backbone of the company formed from the ever-popular A321neo. The high capacity, high-efficiency Airbus has proven to be a key aircraft for low-cost operators in Europe, and it could work well in Russia. Fileva says that the first leased aircraft have already been secured and that, by 2024, it will fly a fleet of 24 neo jets.
Does Russia need another low-cost carrier?
Depsite the size of the country, Russia is actually woefully lacking in low-cost airlines. In fact, Pobeda is the only true low-cost airline in Russia's domestic market. It therefore operates 100% of Russia's domestic low-cost capacity, and around 40% of the international low-cost traffic, according to CAPA.
Russia remains incredibly underpenetrated by air travel, with around 0.69 trips per person in 2018 compared to 3.73 in the UK and 2.5 in the US. Price sensitivity is a major factor in this, and more low-cost competition would be a positive outcome for the country.
Fileva notes that the income of the population in Russia is not growing. As such, lower-cost options are a high priority to get people traveling more frequently. While existing airlines have lowered prices over the course of the pandemic, with many operating an almost hybrid model, there's still much scope for a home-grown LCC to succeed.
Born from the ashes of Globus
The new airline will not be a child of the S7 airline; rather, Fileva says that it will be a standalone enterprise and a part of the group. S7 Strategy Director Grigory Davydov is earmarked to be placed in charge of this new carrier.
The new airline will be formed from the remnants of former Russian airline Globus. Globus Airlines was founded in 2008 by S7 Airlines and operated with Tupolev Tu-154M initially. Later, it acquired 737s, even taking delivery of a couple of 737 MAX 8s, before it was shut down and absorbed into the main S7 airline.
S7 intends to apply for a new operator's certificate under Globus, but assets that the carrier will be rebranded. There is no word yet on what the airline will be called, but it is hoped that things will become clear by the end of this year.
About S7 Airlines
Created in the Soviet Union as an airline in 1957, S7 was originally called Siberia Airlines. In 1997 the airline tried to buy the now-defunct Vnukovo Airlines to create a hub at Moscow's Vnukovo International Airport (VKO). In 2005 Natalia Fileva decided to rebrand Siberia Airliners as S7 Airlines following the Chechen suicide bombing of Siberia Airlines Flight 1047 in the late summer of 2004.
Since the rebranding, S7 continued to grow, joining the oneworld airline alliance in 2010. Today S7 Airlines is the largest domestic airline in Russia, with its main bases at Moscow's Domodedovo International Airport (DME) and Tolmachevo Airport (OVB) in Russia's third-largest city Novosibirsk. According to the aviation data and statistics website ch-aviation, S7 Airlines has a fleet of 103 aircraft comprised of the following planes:
- 7 x Airbus A319-100s
- 16 x Airbus A320-200s
- 28 x Airbus A320neos
- 9 x Airbus A321-200s
- 4 x Airbus A321neos
- 2 x Boing 737MAXs
- 18 x Boeing 737-800s
- 2 x Boeing 737-800BCFs
- 17 x Embraer ERJ 170-100SUs
What do you think of S7 Airlines' idea to purchase Airbus A320neos, and what do you think would be a good name for the new airline? Please tell us what you think in the comments.