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Green shoots of recovery for Russian passengers? CiR Insight

Building on insights shared in the TFWA Research Workshop, CiR provide further insight into the forecast for Russian Passenger recovery.

It has been well documented, since the start of 2015, that Russian international passenger traffic has fallen dramatically due to multiple economic and geopolitical factors.

Signs of recovery?

The below chart shows promise for PAX recovery. In the year-to-date (YTD) July 2016, Russian international passenger numbers departing Russia have remained static versus the same period in 2015. Furthermore, in both February and April this year we have seen the first months of positive growth since 2014. 

But where is this growth coming from? The relaxing of restrictions in travel to a number of countries has been a major boost. From July 2016 many Russian airlines now operate flights to Turkey, following the lifting of an imposed ban by the Russian Government. 

New destinations

New destinations that have been key to the green shoots of recovery, in particular into Asia, where a steady increase in PAX has been recorded in recent months. A key driver behind this growth has been China, where Russian passenger numbers have risen by almost a third whilst Japan and South Korea have also seen Russian passengers grow significantly. 

Also Contributing to this improved performance has been a distinct change in the Russian Airline industry. With a number of smaller operators going out of business during the economic downturn, the market has opened up for both Aeroflot and foreign airlines to expand on existing routes out of Russia whilst also launching new routes.

The future

The signs of the potential recovery in Russian international passenger traffic seen YTD July 2016, correlates with CiR’s forecast that YoY growth will return to the market as soon as 2017.

However, it will not be until early in the next decade before Russian passenger traffic is expected to return to the levels seen in 2014. Still one of the highest spending nationalities in Travel Retail, the green shoots of recovery will come as welcome relief and, although it may be some time before numbers return to the levels previously experienced, Russian passengers in the short term should still remain a focus for brands and retailers alike.