KrasAir reports a 28% increase in passenger traffic and a 30% rise in cargo and mail carried

Published: 3/16/2000

KrasAir has increased its passenger traffic by 28% during 1999 to 763,168 and saw a 30% rise in cargo and mail carried. The number of routes served also increased significantly from 6487 to 6552. This indicates a continuing improvement in the fortunes of the company since it reported its ten-month results in January this year when it reported a 29.3% growth in passenger traffic and increases in domestic routes, international routes and domestic cargo. According to KrasAir, these results show that the company's present strategy is proving to be the right choice and that results could be improved considerably if jet fuel prices remained stable, which appears to be something of wishful thinking given expectations of further rises of 40% this year from the US Air Transport Association. However, although revenues increased in terms of roubles – by 107% to 1754m rubles - they decreased by 19% in dollar terms. This could be explained by the fact that KrasAir has not increased prices significantly to compensate for inflation – ticket prices increased by only 20% in 1999 compared with inflation of 36.5%. As for this year, KrasAir has plans to increase the number of hubs and the number of routes by 36% and to enter the business aviation market. It aims to carry 4% more passengers and 2% more cargo during 2000. According to KrasAir, the Russian air market will only see a positive trend through a decrease in supply rather than increasing demand. Over the next couple of years, it expects there to be a decline in traffic followed by two years of stabilisation and then a small annual growth of 1.5-2%. It also believes that this is the right time for mergers and acquisitions and that state participation will be needed to ensure that this proves efficient.

Article ID: 1686