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.
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.]