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Russians back on solid international growth footing

International traffic at Russia’s biggest airports is booming once more, while the biggest markets for Russian travel are all seeing high double-digit growth.

Exclusive analysis from CiR Business Lounge shows all but two of the top 20 biggest destination countries for Russian travellers have seen double-digit growth in the seven months to July 2017. The two exceptions are Ukraine down by -3%, but still the biggest market with about 700,000 pax, and 13th-placed Kyrgyzstan, at -1%.

Among the top five markets – which together account for almost a third of international outbound Russian traffic – Germany, China, Turkey and Italy saw respective growth of +23%, +32%, +93% and +32% in the first seven months to 2017 (see chart below). In terms of absolute growth, some markets outside the top 20 were prominent – Iran was up by +137% and demand to India grew by +49%. 

“Overall, some 7.1m travellers departed Russia in the year to July,” says Garry Stasiulevicuis, Founder and President CiR. “That is a +22% average increase which is very good news for the duty free channel. This is particularly so for markets like Turkey, Germany, Italy and Spain which had suffered when Russians cut their travel and spending following the rouble’s devaluation and the Russian economy’s slide into recession.

“Turkey’s return to growth has been helped enormously by the strengthening of political relations between Russia and Turkey after a period of antagonism.” 

Russian airports bouncing back

The Russian economy is not yet on a stable footing but GDP declines have reduced this year and airports are back to growth following almost two years of contraction. In YTD July 2017, international passenger numbers rose by +19%, equating to an additional 6.2m international passengers passing through Russia’s gateways.

The main hubs of Sheremetyevo (SVO) and Domodedovo (DME) – both in Moscow and handling seven in 10 international passengers from Russia between them – have had double-digit growth of +20% and +17% respectively.

The much smaller Moscow airport of Vnukovo (VKO) saw exceptional growth of +112% in the period, handling 3.4m passengers in the first seven months of 2017, the same number as during the whole of 2016. Other regional gateways like St Petersburg, Novosibirsk and Krasnodar also soared in high double digits. “In 2017, we could see international passenger numbers at Russian airports reach levels not previously seen since 2014 where they peaked at just over 53m per annum,” comments Stasiulevicuis. 

Tax free spending also returns

The rise of Russian passenger numbers – coupled with a general strengthening of the rouble against the euro until April 2017 – had an immediate impact on tax free sales, with Global Blue reporting average spends by Russians rising to €1,000 in Q1 2017, up from €600 in the same period 2016.

The company says the trend has continued throughout 2017, with spending across Europe in August 2017 rising by +25% year-on-year although the rouble has been on a downward trend again versus the euro and could hit this level of spending. 

Regional gains

By region, the detailed Business Lounge report suggests that the Americas has seen the biggest growth at +22%, based on scheduled departing international seat capacities (Oct 2017-Mar 2018). Europe and the Middle East/Africa have followed with +17% and +16%, while Asia was up by only +5%, however, China saw a +21% rise.

“Into 2018, Europe should see arrivals from Russia continue to rise whilst the Americas can expect to record the highest rise in scheduled seats,” says Stasiulevicuis.

For further information, please contact Simon Best, Business Lounge Director: simon@counterintelligenceretail.com

 


NB. PAX Source: CiR Business Lounge | Advanced Analytics Tool - Data based on Scheduled departing international passengers only. Data displayed for nationalities is based on residency through place of ticket purchase