Paul Duffy/MOSCOW

New figures on the state of the Russian airline industry make sobering reading - although the improved performance of a handful of carriers, achieved in a harsh economic climate, suggests there may be grounds for cautious optimism.

Russian passenger traffic fell 3.7% last year compared with 1998, to 53.42 billion route passenger kilometres, while total passengers embarked dropped 3.9%, to 21.46 million. On the positive side, however, an improved average seat load factor of 62.3%, up 3.5 points, suggests fleet restructuring is beginning to show results.

Aeroflot remains Russia's largest and most profitable carrier, reporting a provisional gain of $35 million on sales of about $1 billion. Though results are drawn up to Russian accounting principles and are little more than simple cashflow statements, Aeroflot's improved load factor of 59.3%, achieved on increased embarkations, suggests it remains on the path to recovery. Reports suggest the airline may show a net profit for 1999 of $16 million, on a par with, or up on, the last few years.

Alarmingly, Russia's Federal Service of Air Transport (FSAT) reports that international passenger numbers dropped 14%, reversing an upward trend prevalent since the mid-1990s. Traffic to other CIS countries, regarded as a separate category, fell 20%, with short haul feeder traffic down 17%. Only the domestic sector showed an improvement, with traffic up 2.9%.

Of the 17 FSAT regions, eight showed traffic growth, with Krasnoyarsk in central Siberia highest at 31%, one was static and eight showed falls. The Komi republic, down 25%, fared worst, with its principal carrier, Komiavia, forced to transfer longer routes to rival Komiinteravia.

Most surprising was an 11% fall suffered by a group of airlines under the supervision of FSAT's head office, including Aeroflot, Domodedovo, Transaero and Vnukovo. Passenger figures for these airlines show the drop was not uniform, however, with Aeroflot posting a modest rise, but Transaero and Vnukovo each boarding only about half the number of people compared to 1998.

The latter two carriers had contrasting fortunes financially, pointing up one of 1999's key developments. Whereas Vnukovo's plunging figures were mirrored by poor revenues, Transaero's traffic fall was in line with strategy as, from late 1998, it shed five Boeing 757s, a 767 and three McDonnell Douglas DC-10s, leaving a fleet of eight 737s.

Transaero has consequently returned a profit since the second quarter of last year. It is clear that fleet reduction moves across Russia were crucial to the load factor improvement, and the country's fleet is now at least of a size proportionate to its reduced air traffic. Another 494 aircraft will be retired this year and 1,307 more by 2006.

Figures show Western aircraft - mostly with Aeroflot and Transaero - had the highest usage, with the former's two Boeing 777s averaging 5,049h, well ahead of the leading Russian types, the Ilyushin Il-96 (2,202h) and the Il-62 (866h).

Other positive developments included a 5.2% rise in the volume of freight and mail carried, to 492,900t, generating 7.06 billion tonne kilometres. The improvement was due to a 6% rise domestically, however, with international freight traffic falling unexpectedly.

Simple volume figures do not begin to tell the whole story, and, although few financial figures are available, it seems unlikely that more than one or two Russian airlines made a profit last year. Operating costs - especially for fuel - climbed sharply, and although fares rose by 50% in roubles, they were down by 40% in dollar terms, and stand at about $30/seat hour.

Civil aviation funding rose 50%, to 410 million roubles ($14.4 million), but this amounted to just 13.2% of the 3.11 billion roubles the industry contributed in taxes, up 86% on 1998 as cash-hungry national and state governments squeezed the sector.

During the year, 26 new operators were licensed, totalling 607 since Aeroflot broke up in 1991, and 33 licences were withdrawn, making 284 since 1992. A further 17 did not apply for renewal and six remain suspended, leaving 300 active at year-end. Civil aviation saw overall employment fall 6%, to 231,000, with an average monthly salary of just 3,100 roubles.

Source: Flight International