Friday, 17 March 2017

BELARUS: Belavia Acquires New Boeing 737-800

Belarusian flag carrier Belavia has finalized the acceptance of new narrow-body Boeing 737-800s under a contract inked in 2014. The airplane with the tail number EW-457PA turned out to be the last one in the batch of three aircraft, the airline reported on its Facebook page.

The newly arrived airliner received a revamped livery just like the two previous aircraft delivered in August and September.

The new look of the airplanes is the part of the airline’s branding project.

Belavia’s acquisition of all three aircraft is brokered by the Bank of Development of the Republic of Belarus.

The carrier underlines that the new airliners will allow it to reduce operational costs and, thus, bring down ticket prices.

The Boeings will replace company’s Soviet-era Tupolev Tu-154Ms.

Therefore, Belavia sticks to its previously announced plans of switching to Western-made aircraft operations only.

Belavia arrives in Zhukovsky.

Belavia launched daily flights between Minsk and Moscow's Zhukovsky in September 2016.

Belarusian flag carrier Belavia has launched a daily Moscow service from Minsk to Zhukovsky (IATA code ZIA) in September, with evening flights departing both capitals on Tuesdays, Thursdays, and Sundays, and morning flights on the other days.

"This odd-even timetable is deliberate," reveals Ihar Charhinets, the airline’s deputy general director for marketing. "As we develop the route we are planning to add three more morning flights and four evening flights per week to eventually operate twice-daily services each way; this winter's timetable will include an additional Friday evening flight.

“We are gauging the route's popularity with 76-seat Embraer E175s, with a view to increasing capacity as required. Several flights have already been performed with 148-seat Boeing 737-300s.

On certain days of the week we will be flying bigger Boeings instead of the Embraers," he adds.

The inauguration of the Minsk-Zhukovsky service may have strategic significance for Belavia.

Belarus and Russia enjoy a fairly liberal intergovernmental agreement on bilateral air services: there are no restrictions on the number of designated carriers, destinations served, capacities, or frequencies.

The only exception is the Minsk-Moscow route, on which either side has the right to operate seven flights per week, a concession currently being used to the full by both sides.

Belavia, which already operates to Moscow’s Domodedovo (DME), is the designated Belarusian carrier for the city pair, with Aeroflot and Utair the Russian operators, and even though it is located just outside of Moscow (some 43 km from the city centre), Zhukovsky is not formally regarded as a Moscow airport.

This affords Belavia access without any restrictions.

Although the new Moscow airport remains underserved by public transport, the regional administration promises this situation will improve as passenger numbers grow over time the Zhukovsky management plans to serve 350,000 to 400,000 passengers this year and up to two million in 2017.

For Belavia, adding the Zhukovsky service to its existing Domodedovo portfolio is of strategic importance especially with regard to developing its transit traffic through Minsk.

"The Zhukovsky flight connects passengers to virtually all our European services," Charhinets notes. "We make a point of developing transfer services. The population of Belarus stands at just 9.5 million, which is less than the population of Moscow, not to mention the entire Moscow region.

The demand for point-to-point out of Minsk is there, but it is limited. Our strategy, therefore, is to go with the transfer business model; at present, more than 30 per cent of our passengers take connecting flights."

The current economic situation in Belarus has been stifling demand for direct flights. More than 50 per cent of the Belarusian economy is linked to Russia, so we are affected by the same economic processes," Charhinets explains.

The population's purchasing power in dollar equivalent has shrunk and our costs, just like those incurred by all the other carriers, are denominated in dollars.

But we cannot adjust our fares directly by tying them to the euro exchange of the day, because this way we will not be able to sell any tickets. We have to look for alternative solutions."

Belavia has been lucky in a way: because of the soured relations between Russia and Ukraine, bilateral air services between the two stopped on October 25, 2015, thereby prompting a significant number of passengers to fly via Minsk instead.

As a result, from spring 2016, Kyiv-Minsk has been the busiest route linking Ukraine and Belarus. Furthermore, an intergovernmental agreement liberalising air services between Belarus and Ukraine has enabled Belavia to increase its frequencies between Minsk and Kyiv from two to five a day, and inaugurate services from Minsk to Odesa, Kharkiv and Lviv.

Charhinets dismisses the luck factor though. We first introduced our transfer business model five years ago and we have been working actively to evolve it.

It was because of this that we managed to get a portion of the Kyiv -Moscow passengers.

We have plenty of rivals, so it is not about us having been lucky, rather about us being best positioned to operate in this manner.

Charhinets reveals that Belavia, which does not enjoy a monopoly position on any single market, has done a lot to promote and modernise its products in a variety of countries.

Amongst other developments, the Belarus airline has introduced new information technologies, joined IATA's Billing and Settlement Plan system, made sure its layover times are minimal, and introduced through fares for transit passengers.

For example, there are a multitude of possible connection flights from Paris to Moscow, not to mention direct services,he says.

However, we carry some passengers traveling from Paris on virtually every flight to Moscow. We certainly need to keep working, but we are moving in the right direction.

An additional boost to the airline's transfer business model may come in the form of a simplification of transfer rules for foreign passengers transitting Belarus, but no relevant government decision has yet been made.

There is also potential for further growth in connecting Russian regional centres to European destinations via Minsk.

Belavia's convenient geographic location makes it possible for the airline to do what Kaliningrad-based KD Avia attempted in 2007: offer Russian regional passengers transfer flights to Europe bypassing Moscow.

A combination of factors forced KD Avia to cease operations in 2009, and this business model has not been tried by anyone since.

Apart from Moscow, Belavia currently serves Russia's St Petersburg, Kaliningrad, Sochi, and Krasnodar, and formerly served Samara, Yekaterinburg, and Novosibirsk.

Restraining further development of regional Russian operations though are the high service charges Belavia is forced to pay in Russia. Charhinets reveals that the Belarus carrier is charged five times more than Russian airlines for air navigation services.

Airport handling fees are also higher, although not drastically as steep.

This price difference persists despite both countries being part of the common union state and the Eurasian Economic Union – and renders Belavia's fares so uncompetitive that it is currently cheaper to fly with a Russian carrier from a regional airport to Minsk via Moscow.

There is a possibility that this price disparity will be eliminated by late 2016: a preliminary agreement to that effect was signed more than two years ago between Russia, Belarus and Kazakhstan, but there has been no further progress, says Charhinets.

Meanwhile, a further increase in Belavia's passenger numbers may result from the company's substantial rebranding effort from mid-August of this year.

Apart from introducing an all-new livery for its airliners, the carrier overhauled the corporate style of its offices, launched new crew uniforms, refurbished its website and re-conceptualised its advertising campaign.

The management insists that with the new image Belavia will not only distance itself from its Soviet legacy but will also mark the airline's transition from a full-service business model to a hybrid concept incorporating low-cost elements. "We are not planning to turn into an low-cost carrier completely, but we are studying and introducing certain approaches along these lines," Charhinets reveals. "Last year we managed to bring our fares down by 20 per cent; this year, we aim to achieve a further 10 per cent reduction."