Recently Russian air travellers have received encouraging news that yet another attempt to launch low-cost flights will be made. This time people may have slightly more optimism as the talks about a no frills airline come from the Russian national carrier - Aeroflot. However, with almost 30% higher pilot salary rates than the ones in neighbouring Europe, local airlines might find it difficult not only to prove that Russia is able to have its own low-cost airlines after all, but also to compete with the increasing number of foreign discounters in the regional market.
‘Despite being somewhat detached, the Russian air transportation market cannot help but develop in line with the major global trends. Regardless of the fact that there is no such thing as alternative airports in the country and ground handling and fuelling industry has only recently begun de-monopolizing, the Russian market is certainly attractive to most European low-costers due to its immense growth rates. Wizz Air, easyJet, Blu Express – these are the discounters which are already carrying (or are soon to start) Russian air travellers. In order to compete in the increasingly intensifying market as well as to satisfy a natural demand for no-frill flights, Russians must find ways to raise effectiveness and lower operational costs. Otherwise developing a locally-based low-cost carrier may prove an unrealistic endeavour,’ comments Skaiste Knyzaite, the CEO of AviationCV.com
While being serviced in Russia, both foreign and local carriers are more than likely to be subjected to same high airport handling rates. But at the same time, European low-costers have certain advantages which allow them to reduce their expenses, including the sale of non-refundable tickets or charging for on-board meals and baggage transportation extra. Meanwhile, for Russian carriers the aforementioned services are mandatory and must be included in the ticket price.
Pilot salaries also come as a significant advantage to foreign carriers. Average pay for Commanders in Europe is around USD 7-9 thousand, while their Russian counterparts earn as high as USD 11-12 thousand. With regard to First Officers, in certain cases the salaries in Russia may be twice as high as in Europe. The factor which keeps Russian pilots’ salaries high is poor competition on the local job market as the Russian training industry doesn’t keep up with airlines’ development pace.
Foreign pilots could have helped Russian carriers to reduce their HR-related costs, but unfortunately they are still forbidden from entering the market. Though the majority of Russian market players have supported the amendment to the current regulation which would allow foreigners to pilot aircraft operated by Russian airlines, the bill has yet to be discussed by the Russian Parliament. Furthermore, the bill doesn’t propose the liberation of the entire pilot market. It includes only temporal, five-year long facilitation of employment of foreigners, based on 200 pilots quota per year. Considering the ambition of the Russian market, the number is far less than sufficient.
‘According to the current law, the upcoming Russian low-coster, which is probably to operate under its own AOC, must have at least 8 aircraft in its fleet. In the long run the carrier is expected to operate a fleet of approx. 40-50 aircraft. This means that the discounter alone might employ around 500-600 pilots thus having the strongest interest in future foreign pilot quotas. Should the Russian authorities acknowledge the low-coster’s specific needs for cheaper labour force, other Russian carriers will be left with practically no chance of successfully competing with the European low-cost airlines rapidly penetrating the Russian market. That is why the industry should reconsider the issue of allowing a larger amount of foreign pilots to its market. If it does so, there are plenty of Russian-speaking pilots out there who are ready to move to Russia already today,’ concluded the CEO of AviationCV.com.