Is the Charter out of Favor?

Is the Charter out of Favor?
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Russian Volga-Dnepr, the most profitable aviation group back last year (the absolute leader in the number of carried cargoes according to Rosaviatsiya – Federal Air Transport Agency), can be short in most of its profits this year, as reported by Vedomosti newspaper. Just so, the most money-winning Group subdivision – Volga-Dnepr Airlines performing special air freight by An-124 (Ruslan) aircraft – reduced the sales of charter flights by own fleet by 6.5% as of January-June 2013, cargo turnover – by 15.2%, quantity of carried cargoes – by 17% to 29,160 tons, as mentioned in the company’s content. The Group’s representative speaks about global decline in airfreight market as the main reason. According to IATA, cargo transports in 2012 dropped by 1.5%, also in Europe and USA — by 2.9%, and in Asia-Pacific countries — by 5.5%. That’s why Lufthansa Airlines decided to suspend operation of some of its cargo fleet, a German carrier’s representative told Vedomosti previously. Aeroflot also intends to stop using its MD-11 for air freight, as noted by an Aeroflot source.

Out of USD 1.6 billion of Volga-Dnepr Group’s revenue in 2012, USD 785 million was attributed to charter flights of the same-name airlines (another Group’s member — Air Bridge Cargo – carries out regular freight services). Meanwhile, Volga-Dnepr’s charter flights rose by 13.2%. 

“Up to now, the charter freight segment has earned the highest profit and has been actually subsidizing other types of business,” noted Oleg Panteleev, Head of Aviaport analytical department. According to him, this is also because the airplanes (10 Ruslan aircraft) are owned by the Group.

The main focus shall now be on domestic flights – their share is increasing. They also contribute to growth of the Russian air freight market, while in Europe it is already recessed, thinks Mr. Panteleev. According to Volga-Dnepr, following the results of six months, the quantity of orders in Russia has grown by 24% owing to increased demand for industrial energy equipment transports to Sochi. Preparation for the Olympics has entered the final straight. Rosaviatsiya mentions that for the first five months, the Russian freight market has been rising by same 13%, with the assumption that the quantity of cargoes carried by aircraft is at the last-year level. But so far, the share of domestic Russian freight in Volga-Dnepr’s total sales scope is minor, regrets the company’s representative.