Aeroflot’s New Low Cost Carrier is a Big Middle Finger Pointed at the West

Aeroflot

I love it when politics and airlines come together into a single story. We all know that the West and Russia have been ratcheting up the rhetoric over the last few months. Heck, for Russia it’s more than rhetoric – it’s actually invading a sovereign nation. But as this tension builds, we get to sit back and watch as if it’s a chess match. And airlines, including Aeroflot’s new low cost carrier Pobeda, are pawns.

Dobrolet Becomes Pobeda

This particular story goes back to a little low cost carrier called Dobrolet. Russia has never been a good place for low cost carriers because of the heavy-handed regulation going on over there. (Just ask Sky Express or Bill Franke and Avianova.) But if Putin wants a low cost carrier, Putin can have one. Aeroflot announced Dobrolet last October.

According to Aeroflot’s CEO, Dobrolet would only work if rules changed to allow for non-refundable tickets, baggage charges, meal charges, and foreign pilots. When Dobrolet was announced, the release noted that “We expect the appropriate legislative decisions to be taken by the end of this year.” It’s good to be Aeroflot.

When initially planned, Dobrolet was going to serve a variety of domestic destinations and would ramp up quickly. It would later move into nearby foreign destinations as well. That plan abruptly changed.

I take that back. The plan to begin serving domestic destinations held, but the places that were considered domestic changed. When Russia annexed Crimea, the Russian government decided it needed a whole lot of flights to bring Russians to one of their favorite vacation destinations from years past, and it wanted those flights on low cost carriers. (No better way to sway public opinion than by offering cheap flights.)

Dobrolet became the perfect vehicle to fulfill this need. On June 10, the airline’s first flight connected Moscow with Simferopol in Crimea. Sure, there were going to be other destinations, but Dobrolet’s first mission left the biggest impression on the West.

In late July, the European Union (EU) ramped up sanctions against the Russians, and it targeted Russian people and companies with ties to Crimea. Dobrolet was on the list. That meant that European companies couldn’t provide products or services to Dobrolet, and that was a big problem for the airline.

Dobrolet’s last flights were on August 3. The biggest hurdle was that the aircraft lessor would no longer be able to lease the airline airplanes. But it was more than that. Maintenance providers could no longer service the airline, and there were insurance issues as well. It just wasn’t going to be feasible for Dobrolet to continue. While this was announced as a temporary suspension, it was pretty clear this was permanent…ish.

How would Aeroflot respond to the suspension of the airline? It just created a new one. Last week, Aeroflot announced Pobeda would be the new low cost carrier. Pobeda means “Victory” in Russian. I’ll assume that means “victory over Western sanctions” or something like that.

So what is different about Pobeda? Not the airplanes, that’s for sure. The aircraft livery is even the same. What’s different is the route map. The first flight will go from Moscow to Volgograd. That will be followed by Samara, Yekaterinburg, Perm, Kazan, Tyumen, Surgut and Belgorod. Simferopol and Crimea are nowhere to be found on that list. Even though Belgorod is dangerously close to the Ukrainian border, the expectation is that sanctions won’t hit Pobeda because it’s unrelated to Crimea.

Does this mean Pobeda is headed for, ahem, victory? Well, no other low cost carriers have been able to make a go of it under Russia’s stifling regulatory regime, but that has been loosened. If this were a truly free market, then we’d see the same thing we always see. Other low cost carriers would come in and do this much better than a legacy carrier like Aeroflot could. But this isn’t that kind of market. My guess is Dobrolet Pobeda will do its job to bring lower fares to the masses. It won’t be hugely profitable (in the unlikely event that it’s profitable at all), but it will “succeed” whether it should or not. Victory!

[Edited last paragraph on 11/3 at 958a PT because apparently I can’t even keep Dobrolet and Pobeda straight.]

By Dmitry Petrov [CC-BY-SA-3.0 or CC-BY-SA-3.0], via Wikimedia Commons

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26 comments on “Aeroflot’s New Low Cost Carrier is a Big Middle Finger Pointed at the West

  1. Brett, whether Crimea was annexed and Ukraine invaded by Russia is heavily disputed, depending on which side of the propaganda line you fall–meaning if you live in the West or Russia. I have no idea since I am not there, but the Crimeans claim they asked to rejoin Russia, through a vote, and Russia denies it invaded Ukraine. I would imagine if Russia had actually invaded Ukraine the war would have been long over.

    1. The “correct” interpretation to this is:

      1) Crimea has been annexed by Russia, but is not recognized by the international community as being a part of Russia. So you are correct that they voted for annexation, but Ukraine claims Crimea is occupied.

      2) There is 0% doubt that the non-uniformed soliders that entered Ukraine were from Russia and under Russian command. Russia can deny they were there till the cows come home but that does not change the facts on the ground. To beleive random soldiers just got drunk on vodka and decided to visit Ukraine with loaded guns is a bit far fetched.

      1. Jim, I guess you’ve bought the western media reports hook, line, and sinker. I would imagine the reality is much closer to the middle, where the West precipated the protests (see Victotia Nuland’s actions), Russia may have sent some covert forces in, but it did not unilaterally “annex” Crimea. Look up definition of annexation. Finally, much of “international community” has not decided what is correct interpretation. Much of the world abstained or was absent during UN vote.

        1. I should have said “Crimea voted to join Russia. The correct term is accession, or merging.”

          As for Western news media or Russian state media (the other choice?) I will choose the former 9 times out of 10.

      2. My work colleagues in Kiev and Odessa claim that Crimea has been occupied. Ukrainians seem very clear about things. I’m willing to bet that people in Crimea are more conflicted, or would say something different.

    2. So the people of Texas or SoCal could just vote to rejoin Mexico (ya know, historically it was part of Mexico…)? ;)

    3. Oh, who would have expected a dictatorial apologist to come out of the woodwork concerning Brett’s wholly undisputed claim.

      You cockroaches of the internet always find a way to creep out and denounce the country that gave you the podium to spew such bile.

      Why not just see if you can share an apartment with Snowden? I will pay for your one-way ticket on Pobeda to get there.

    4. Eric – Well yeah, you’ll get propaganda on both sides and there’s no way to know for sure what’s going on. But everyone has to make a call on what they think happened. Seems to me that the separatist factions in Crimea were more than eager to rejoin Russia, but the Ukraine-loyalists weren’t. And the voice of the latter was suppressed pretty handily. I find it nearly impossible to think that the vote process in a newly-separated territory is going to be fair and democratic.

      As for invading Ukraine, it seems nearly impossible to believe that the Russians or groups under Russian influence haven’t gone into Ukraine. There’s plenty of proof of that happening. What isn’t proven is the exact line being drawn to Moscow, but I’m willing to draw the conclusion myself. This isn’t unique to Russia, of course. All superpowers love to dip their toes into places they don’t belong.

      Oliver – Yes, Aeroflot flies to Crimea, but I think it’s safe to assume that Aeroflot flew there before any of this drama started so it’s not as much of an issue. Plus, it’s all a political game. Aeroflot sanctions would likely result in pain for EU airlines that depend on Russia for good revenue.

      1. Brett, fair enough. It’s your (excellent) website and editorial prerogative. I appreciate you allowing dissenting views, and in the main I agree with your clarification here. I’m sorry if some think I was spewing bile!

        1. Eric – I love dissenting views, as long as they don’t turn into personal attacks. (You’re getting dangerously close, danyay.)

    5. Right, just as Austria “asked to rejoin Germany” in 1938 – right after the Wehrmacht occupied the country. So did the Crimean, right after the Russian Army occupied it (Putin himself acknowledged it a few months post factum)

      How do you spell “Anschluss” in Russian?

  2. Without engaging into a debate about the wisdom of sanctions/geopolitical maneuverings etc., it seems at best that this is a temporary bandaid to a market that is going to see significant pain from the sanctions regime. While the Sukhoi Superjet project has not been impacted yet by sanctions (mostly due to carve outs that recognize the investment from western partners), it is hard to imagine if things continue the trajectory they have been going some level of pain for Russia’s aviation and aerospace industry. Outside of the Sukhoi, who else is going to buy their old haggard Tupolev’s and Illuyshin’s? North Korea? Iran? Hell even most countries can obtain Airbus’ these days; the only substantial orders outside of the domestic Russian market is Cubana, which again, only exists because of their own sanction issues, not because Russia beat Boeing/Airbus to the punch.

  3. Jim, I’m not saying trust Russian state media either, but I also have a hard time believing US media more on a 9:1 ratio when it comes to issues of war and peace. Remember the Maine, Operation Mockingbird, Gulf of Tonkin, the lies exposed by the Pentagon Papers and Edward Snowden, WMDs in Iraq …

  4. Jim, I wouldn’t trust US media over Russian state media on 9:1 basis regarding issues of war and peace. Remember the Maine, Operation Mockingbird, Gulf of Tonkin, the lies exposed by the Pentagon Papers and Edward Snowden, WMDs in Iraq …

    1. Heck, what happened to that new terror group, the Khoisans? According to the Pentagon, they had imminent plans to attack the U.S.

      It’s been 8 weeks and I haven’t heard a peep from the Sunday morning talking heads in military uniforms.

  5. Eric,

    You don’t think there were WMDs in Iraq? It is pretty clear that Saddam used them against his own people (esp. the Kurds).

    Bob S.

    1. The only chemical weapons Saddam had, were the ones we sold him during the Iraq-Iran War.

      SPOILER: We backed Saddam in this war

  6. Another historical connotation to the name: its first destination is Volgograd (former Stalingrad), the place of the victory of the Soviet army over the Germans.

  7. A few notes here. Firstly, Aeroflot doesn’t need a low-cost subsidiary that much. When Dobrolet launched from Sheremetyevo SVO airport it was kind of strange, since obviously Dobrolet could have eaten off a chunk of Aeroflot’s client base by offering low fares for those who only wanted to get to Moscow for cheap without connecting on SU’s international flights. Now Pobeda is announced to launch from Vnukovo VKO airport (where Orenair, another SU’s sunsidiary, is currently relocating most of its flights). The main target here is Russian Railways of course, from which Dobrolet wanted to lure a lot of passengers and even advertised initially to that end.

    Why did Aeroflot agreed to have all that low-cost thing in the first place? A number of reasons. Aeroflot is state-controlled and is the first to please the government with their toys, like an idea of a budget airline. Also Aeroflot’s European allies play a lot with budget subsidiaries (unlike their American counterparts that had a less than profitable experience with them).

    But reason number one (or two, after pleasing the government) is that the whole affair was used by Aeroflot to lobby certain legislative changes, namely the introduction of the so-called non-refundable tickets and potentially (I am not sure if this went through) cancelling the minimum free baggage allowance or minimum free in-flight catering. As far as I understand, only non-refundable tickets made it through and became a legal possibility in Russia so far, but that’s a start.

    Plus, Aeroflot and Russian aviation authorities broke the law (lobbied by Aeroflot a few years ago to limit start-up airlines to a minimum of 8 planes) when Dobrolet was given its AOC having only two planes. Now, Pobeda is trying to obtain its own AOC and I am sure the law will be broken again.

  8. Sure, but… Has there ever been a significant difference between Aeroflot’s basic and their newer, ‘Low Cost” associates? Even the Mother Line is essentially a LCC, pocketing the difference for their own purposes. Aeroflot would not not understand superior hard and soft products – even on their most popular routes, if it bit them in a tender spot. While they have made a few improvements since the early 80s and then again in the mid-90s, they still dimply do not get it. For a long haul, it is still “Pasta or Meat.” Do not ask questions! If the lovely Ms. Ursula Russmanski, has lots of pasta and only a little ‘meat,’ on her service cart, without a little flash-cash, you WILL eat pasta – or nothing. (Trust me… A little ‘nothing’ or sometimes bringing your own is usually superior to Aeroflot’s catering, no matter where they bought it, East or West. Sorry folks, but the still don’t get it.
    The idea of Aeroflot operating a LCC branch or two is a joke, at least for international travel; they still cannot make even their major brand function well. The cabin crews are insulated from criticism, obviously don’t care and are as brusk as they come. Even after paying an enhanced “J” or better fare, the most simple request is likely to be greeted with a crisp, “NO! Do not have.” Ans they want to add more LCC operations?
    That “F” class ticket on Aeroflot, for a long-haul flight, might get you a little caviar – maybe – but don’t expect grace or courtesy. One should also NOT expect a clean, fluffed cabin, even up front. Their turn-around cleaning may remove some trash, but don’t expect much more, even for a 10-12 hour flight. Aeroflot is already a LCC, but attempting to charge first world prices. Never again!!!

    1. Let me disagree with you. You sound as if you remained in the 1990s or early 2000s of stereotypes and have never flown Aeroflot since then.

      Aeroflot itself is an international style company that even got some first place prizes in some expert qualifications (not judged by the general public). They have a decent product including one of the most modern fleets in the world (surely, younger planes than most of the US companies), international standard cabins and catering.

      As for pasta or meat, you are wrong, as in most cases it is fish or meat, or chicken or beef. And isn’t it the same as with most international carriers? Plus on domestic flights you still get some sandwich and drinks, unlike with most (if not all) US carriers. And hey, you still have no minimum $ spending to reach elite status on their FFP (unlike DL or UA), though I am sure most companies will sooner or later adopt this practice.

      So, instead of commenting mostly on the subject of Cranky’s post you chose to revive the stereotypes not related to it.

      1. I agree with Samara Citizen. We’ve had several clients fly on Aeroflot and have received very good reviews. In particular, there’s one person who I trust a lot who flew from LAX to Moscow and said he’d definitely like to fly them again. So this is definitely not your father’s Aeroflot.

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