Transaero heads Stateside

Russian carrier Transaero has announced new services from Moscow Domodedovo to the US from October. There will be two new flights - one four times weekly service to New York (JFK) operated with B747-400 equipment and one weekly rotation to Miami with a B777. Strong traffic flows between the countries should support the new service - Routes News takes a closer look.

Russia's Transaero will begin US operations in October with new flights to New York and Miami. The airline already operates long-haul westbound destinations to Cancun, Varadero, Punta Cana and Toronto, but the new links will be its only services to the USA.

Transaero is the fourth largest scheduled operator in the Russian market in terms of weekly seat capacity, with Aeroflot being the leading carrier followed by S7 and UT Air. However, with its large charter operation, Transaero is widely regarded as the second largest operator in Russia, behind Aeroflot.

Currently Transaero operates 44% of its total network out of Moscow Domodedovo to over 60 destinations, with a mix of scheduled and charter flights.

The US-Russia Market

There are currently just 40 weekly scheduled flights between Russia and the US, with four carriers operating six city pairs, including a Singapore Airlines Fifth Freedom flight between Moscow Domodedovo and Houston (IAH). The table below illustrates the existing frequencies between Russia and the US:

Source: Flightbase September 14-20, 2010

Aeroflot is currently the leading carrier in the US/Russia market operating 16 weekly flights and Transaero's move shows renewed confidence in the US-Russia market. This is despite oneworld member American Airlines discontinuing its five times weekly Moscow Domodedovo to Chicago (ORD) service during 2009.

US majors such as Continental and US Airways have also taken the decision not to operate services to Russia. Instead both of these airlines have employed a European growth strategy based on B757 equipment, which do not have the range to serve Moscow. These airlines' larger aircraft, such as A330-200s and B777s, are already allocated on higher priority routes and any decision to operate the Moscow market would depend on the arrival of new aircraft.

However, it is clear that the US-Russia market is growing. According to IATA BSP data over 583,000 O&D passengers flew between the two countries during the period April 2009-April 2010. This compares with 379,000 during 2007.The table below illustrates passenger share by carrier between the US and Russia.

Source: IATA BSP Data April 09-10

Interestingly, Lufthansa carries 6% of all traffic via its Frankfurt and Munich hubs, and indirect traffic accounts for 16% of the total market.

THE TRANSAERO STATEGY

Transaero has bought to cheap long-haul aircraft (B777-200s and B747-400s), which means that it can look at ultra long-haul leisure routes from Russia. Travel agents and tour operators also closely support its services (particularly to the Caribbean) something that the carrier heavily relies on in order to fill its aircraft.

As its limited connections at the Moscow end of the route, Transaero relies upon reasonably priced packages to sell to the Russian domestic market. Transaero's connection to Miami will also be helped by the dramatic rise in the Russian ex-pat community in Florida, which has risen exponentially in the past 10 years. Transaero should be in a good position to serve this community, which could provide it with two-way traffic, as a Russian airline with Russian speaking crew may appeal to these expats.

Transaero has also picked two route pairs with no direct competition. SkyTeam members Delta Air Lines and Aeroflot operate Moscow Sheremetyevo-JFK, carrying over 150,000 annual passengers on this route. However, despite the daily non-stop services out of Sheremetyevo, over 7,000 O&D passengers flew from Domodedovo to JFK between April 2009-2010, mainly via Zurich with Swiss International Air Lines. This should fill Transaero with confidence that it can run a successful operation from Domodedovo.

IATA BSP data also demonstrates that the Florida market is a popular one from Russia. Over 28,000 passengers flew from Russia to the Sunshine State between April 09-10, with Miami being the most popular destination followed by Orlando and Tampa. There is, therefore, clearly existing demand for a Miami service and with no competition on the route, Transaero will be confident of making the Miami route work, particularly with its tour operator backing.