Experts believe that the air transportation market in Russia can be simultaneously characterized as promising and as a major player in the stage of struggle with strong crisis trends. The depreciation of the ruble had a particularly strong impact on airline operations — a significant percentage of aircraft are bought or leased in foreign currency, while ruble revenues within the country are not increasing in proportionate proportions. Among the airlines that, according to analysts, have all the resources to withstand the crisis, are Orenburg Airlines. The carrier has an interesting, according to experts, business model, and most importantly, its passengers actively leave positive feedback on thematic portals.
Orenair is now concentrating on the charter market. However, the plans of the company’s management, which are largely determined by the realities of the market, include a reorientation of activities to the promising domestic transportation market. What are Orenair’s chances of developing a new segment? What is the degree of sentiment in expert reviews regarding the development prospects of the airline? How great can Orenair compete with other market players?
Orenair: general information
Orenair Airlines was founded in 1932. The first airline on which flights began to operate connected Moscow and Tashkent. The main airports for her aircraft are located, in fact, in Orenburg, as well as in Moscow. Orenburg Airlines is a subsidiary of Aeroflot. That is, 100% of its shares belong to the largest Russian air carrier.
Among the recently opened passenger transportation lines operated by Orenburg Airlines are the Chelyabinsk-Sochi flight. It has been operating since the end of December 2014. Orenburg Airlines will fly from Chelyabinsk on Sundays, from Sochi, in turn, on Saturdays. There is evidence that the company will continue to expand its presence in the market by increasing the routes connecting the Russian regions.
Consider the structure of the Orenair fleet.
Fleet
Orenair Airlines has a fairly large fleet of aircraft - about 30 aircraft. Its composition is fully formed by Boeing brand aircraft. The main part of the aircraft is the medium-range Boeing 737-400, 737-800, as well as several Boeing 777-200ER aircraft capable of performing long-distance transcontinental flights.
Economic indicators
Orenburg Airlines carried 2.8 million passengers between January and November 2014. This figure was 3.7% less than what was recorded for the same period of 2013. The financial results of the company also turned out to be very modest. In particular, the company's net loss for the three quarters of 2014 amounted to more than 3.5 billion rubles. However, in terms of revenue generation, Orenair is among the leading companies of Aeroflot holding: the earnings of an air carrier per passenger is about 7 thousand rubles. Moreover, according to some public information, out of 3.5 billion rubles. a loss of the order of 1.5 is the debts of other companies (which ones — we will consider a little later) to Orenburg Airlines.
The bulk of Orenair's passenger services is provided under charter contracts. There are about 35% of scheduled flights. It can be noted that Orenair flights are sold in more than 255 international charter destinations. However, as some experts believe, due to the likely decrease in the activity of Russians in terms of foreign travel, one can expect a change in priorities in the distribution of resources by the airline.
There is a version that now regular flights of Orenair Airlines operate only in those cases when tourist destinations, due to seasonal factors or other reasons, are idle or not in high enough demand. However, analysts believe that in the near future, the company may activate domestic flights due to the decline in activities of travelers who are accustomed to visiting foreign resorts: the dollar against the ruble has grown, and it is cheaper for Russians to relax in their homeland.
At the same time, as many reviews testify, Orenair is a provider of comfortable service in terms of flights to popular destinations in warm foreign countries.
Base Airports
The main cities where the Orenair air fleet is based, as we said above, are Orenburg and Moscow. There is only one airport in the first city; in Moscow, the airline operates two - Vnukovo and Domodedovo. It may be noted at the same time that, having originally planned transportation at a particular airport, the company may decide to use another as the main one. So, for example, in the fall of 2014, Orenair opened several new destinations from Moscow. The main airport was originally "Domodedovo". But already in November, the deployment of flights changed in favor of Vnukovo. From this airport flights are now operated to Rostov-on-Don, Omsk, Kazan and other large Russian cities.
Many passengers, as well as experts, did not like the fact (this is evidenced by comments and reviews present in the media profile for the airline industry): Orenair invited passengers to hand over tickets that were already in their hands. That is, if, for example, a person booked a seat on a flight to Kazan from Domodedovo, then upon the change of airport to Vnukovo, he needed to buy a new ticket. It’s true, however, that the airline allowed to hand over without any penalties.
Fleet modernization and personnel policy
We noted above that the basis of the Orenair air fleet is Boeing brand aircraft. There is evidence that the airline will replace them in the foreseeable future, and in some cases, remove the appropriate category of equipment from use. Employees on flights operated by this type of aircraft are expected to be transferred to other Aeroflot structures, the company that owns Orenair. As stated by representatives of the airline in the media, no staff reductions are expected.
A simple example: the interaction between Orenair, as well as structures such as the Dobrolet low-fire and the Pobeda airline that replaced it. As you know, the Russian low-fire stopped due to some difficulties in 2014. As a result, the crews of the Dobrolet aircraft switched to work in Orenair. This allowed Aeroflot to employ valuable personnel. In turn, when instead of Dobrolet, a new airline, Pobeda, began to function, the flight personnel began to move to this company from Orenair. Thus, Aeroflot Orenburg Airlines engaged as a reliable partner at a difficult time for one of its subsidiaries, namely Dobrolet. Actually, it will be interesting to study this precedent in more detail.
Help "Volunteer"
In the summer of 2014, the Dobrolet company, designed to solve the problem of giving Russian passengers the opportunity to fly cheaply, was, according to public information, subject to foreign sanctions. Their nature was that Dobrolet carried passengers to the Crimean peninsula, which, according to the foreign partners of the Russian company, entered the Russian Federation illegally. As a result, restrictive measures have been taken with respect to the low-cost fire, such as the cancellation of leasing contracts, insurance contracts and machine maintenance agreements. The airline, which had barely begun preferential transportation within the framework of the directions that are gaining popularity among Russians, was in a difficult position.
Due to the political factor, the carrier was forced to curtail its activities. However, soon after information about the difficulties of Dobrolet, various sources began to appear that Orenburg Airlines would come to the aid of the Russian low-cost fire. Feedback from experts and analysts regarding this scenario was generally optimistic. Orenair had a ready fleet and access to the necessary infrastructure.
True, Orenair was able to help Dobrolet only with a limited number of routes. The directions that the airline agreed to serve from Orenburg are a Moscow-Simferopol flight in both directions, as well as a flight from the capital to Volgograd and vice versa. It was assumed that Orenair will transport about 65.5 thousand Dobrolet customers. Regarding other low-cost flights - to Volgograd, Samara, Yekaterinburg, Perm, Ufa, Kazan - the cost of tickets was returned to passengers.
Note that many experts were not surprised that it was Orenburg Airlines (analysts confirm this) that were chosen as a partner of Dobrolet. The first reason is that both airlines have a common owner, Aeroflot. The second is that a significant part, according to experts, of Orenair aircraft was already available for use as part of domestic flights. The third probable reason, according to analysts, is that the planes used in the Dobrolet were of the same series as those used in Orenair, Boeing’s medium-range aircraft. That is, the crews of the liners, working in a low-fire, could easily transfer to the Orenburg Airlines.
Passenger reviews
What is the degree of mood that reflects the reviews published by airline passengers? Orenair, according to many tourists, is a carrier that, first of all, pays attention to competent pricing policy. The cost of airline services, as many passengers think (based on subjective views), is moderate. Orenair tickets for regular flights, according to the company's customers, are quite competitive in price with offers from other carriers in the regions where the airline operates.
Many are impressed by the willingness of the company to provide passenger comfort, in particular in terms of baggage transportation. So, for example, the company, having announced the introduction of a new route - Chelyabinsk-Sochi, which we noted at the beginning of the article, promised that the passengers of this flight will be able to take skiing, snowboarding, and hockey equipment with them on a plane for free. While most other airlines allow this, subject to additional charges.
Prospects
Thus, a trend is noticeable on the part of airline customers, reflecting the desire of people to leave positive feedback on thematic portals. Orenair, in terms of passenger satisfaction, is a carrier that is likely to compete with major Russian and international airlines. However, what do the experts say about assessing the development prospects of this brand of the airline industry?
According to some analysts, the growth dynamics of the company will largely depend on external factors. This is also recognized by the leaders of Orenair. Above, we noted one of the causes of the crisis trend - the depreciation of the ruble, and as a result - a decrease in tourist activity. At the same time, the airline has to make lease and lease payments in dollars and euros. Thus, business positions are threatened in two aspects at once.
Experts believe that despite the fact that Orenburg Airlines receives good reviews from its passengers, the market prospects for the company in the foreseeable future will probably not be described as promising. It is necessary to maintain current positions, analysts say, to adapt the business model to crisis conditions.
In search of a new development model
Many experts are impressed by the fact that Orenburg Airlines (many analysts confirm this) is an example of a company that does not sit still in a difficult market situation. In particular, the carrier’s management, as experts say, is working to find new market segments - it is exploring the possibility of reorienting flights from charter to domestic destinations. There are necessary infrastructure conditions in Russia for this, analysts say. Regional airports, experts believe, will be pleased with the growth of activity of air carriers. An example of one of the successfully implemented projects to transfer flights to domestic destinations is the opening of a route to Sochi, which we have already talked about.
In some cases, players of the market of related profile can go towards similar aspirations of airlines. For example, it is known that Aerofuels, a fuel supply company for carriers in Kurgan, expressed its willingness to make discounts for Orenair when flying from a designated locality to Moscow.
The company itself plans to develop a strategy to optimize the business model. Airports in various Russian regions are being studied, the prospects for payback for certain flights are being analyzed, agents' bases are being created that will sell airline tickets.
Competition in new markets
Among experts, there is an opinion that Orenair may face significant competition in new directions in market development, in particular in the domestic transportation segment. For example, other strong market players, such as, for example, Nordwind, which also specializes in charter flights, also expect to occupy a significant niche in the regional flights segment. The reason is the same as in the case of the revision of the Orenair business strategy - a decrease in the activity of Russian tourists traveling abroad.
Many experts believe that the concept of business development, to which Orenair can move, will thus be close to most other air carriers specializing in charter flights. Moreover, as some analysts estimate, the domestic Russian segment of transportation is actively growing. At the same time, experts believe that the capacity of the relevant market may not be as high as the airlines want to see. Russians traditionally prefer to travel by train inside the country. Despite the fact that airline tariffs are generally comparable to the prices for rail transport, many experts believe that reorienting citizens to travel by plane in Russia can go at a fairly slow pace.
Tourist factor
Prospects for the development of charter airlines, including Orenair, may be complicated by the crisis in the sphere of activity of the direct partners in the so far flagship industry - tour operators. Many of the companies in this field have gone bankrupt in recent years. A significant part is experiencing severe financial difficulties. It is known that some of the major players in the tourism industry market have very large debts to Orenair. Litigation is ongoing and it is not known whether the debtors will have enough resources to pay off Orenburg Airlines. And without these funds, experts believe, investing in new markets for the airline can be a very difficult task.