The revenue of JSC Aeroflot from the sale of passenger transport services increased by 18.9% in 2013, to RUB 182.7 billion (equivalent to USD 5,740.71 million).
Passenger traffic sales are carried out both in Russia and abroad.
Structure of JSC Aeroflot revenue in 2013,%
Structure of sales channels in
The largest share of revenue from traffic sales is generated by the agent network (73.6%). The share of sales through the Internet and call centre was 18.4% in 2013, while sales at Aeroflot’s own offices accounted for 8% of total sales in 2013.
Ticket agents in the Moscow region accounted for the largest share of sales in 2013 (34.7%) with representative offices abroad in second place (28.6%). The contribution from branches and representative offices in Russia remained unchanged compared with 2012 at 14.9% of total sales.
Aeroflot continued to develop Internet sales in 2013. Their share in total sales revenue increased to 17.1% and totalled RUB 36.2 billion roubles, which is 24.4% more than in 2012.
Various new technical services and other sales capabilities were put in place in 2013:
- A ‘call-back’ service from the website (the same service is under preparation for foreign language versions of the site).
- Expansion of available call lines.
- Extension of the time during which recordings of phone conversations are kept to six months.
- Payment by passengers via call centre using air-mile credit cards.
- Capability to credit air miles earned on flights of other Sky Team member airlines.
- Capability to change name and address in the Aeroflot Bonus member profile.
- Expansion of the team of English-speaking agents to serve traffic during the Olympic Games in Sochi in 2014.
- Creation of a Prime Club office for Aeroflot Bonus Platinum members.
Credit card sales via the call centre increased 3.2 times in 2013 compared with 2012.
Sales in Russia
Sales in Russia in 2013 developed in a context of ongoing work to optimise the structure of Aeroflot Group and integrate subsidiary airlines. A single Far East carrier, Aurora Airlines (based on Vladivostok Air and SAT Airlines ), was created within the Aeroflot Group in 2013 and was a major factor helping to increase revenues generated in Russia by more than 18.6% in 2013 compared with 2012.
In 2013, Aeroflot revenues from sales in Russia increased by more than 14.1% year-on-year to RUB 114.2 billion, of which almost 72% were in the Moscow region. The largest share of sales in Russia are for routes to Vladivostok (18%) and St. Petersburg (14%).
Structure of sales revenue generated inside Russia
(not including Moscow),%
Structure of JSC Aeroflot sales revenue generated inside Russia,%
Passenger traffic in Russia is sold through the following channels:
- Neutral sale systems (Transport Clearing Chamber, BSP Russia).
- Official agents (companies that have direct agency agreements with Aeroflot).
- The Company website.
- The Company’s own sales offices and call centre.
The major portion of sales in Russia is through agency sales channels: official agents (31.1% of total sales) and agents using neutral systems sales (37.8%). Two of the Company’s own sales offices in Moscow will be closed in order to reduce costs.
The first phase of an initiative to optimise motivation of the agency network in Russia was carried out in 2013, when the basic agent commission was reduced to 4%. The second phase will see reduction of the basic agent commission to 0.1% and the introduction of a bonus commission component. The first phase gave Aeroflot a saving of about USD 63 million and reduced the effective commission rate from 6.4% in 2012 to 4.8% in 2013. Launch of the full, multi-component agent motivation system should save the airline USD 90 million in 2014.
Ratio between domestic and international ticket sales inside Russia,%
Optimisation of the Aeroflot Group route network and reduction of the minimum connection time at Sheremetyevo Airport led to increase in the share of international transport sales in total sales made in Russia by more than 4.0%.
Work will continue in 2014 to integrate subsidiary airlines into the structure of Aeroflot Group, and to optimise and improve the efficiency of the motivation scheme of the Russian agent network.
Sales outside Russia
Revenue from sales of passenger transport made outside Russia increased by 24.4% year-on-year in 2013.
Various steps were taken during the year to strengthen sales on foreign markets, including optimisation of base and bonus commission, advertising and promotional actions, joint marketing activities with major BSP/ARC agents, participation in travel industry exhibitions, product and service presentations, and convening workshops for members of the agency network.
Structure of revenue by regions outside Russia in 2013,%
Structure of JSC Aeroflot sales revenue generated outside Russia,%
The largest shares of international sales in 2013 were made in Western Europe (41%), Southeast Asia (20%), and the CIS and Baltic countries (19%).
Tickets are sold outside Russia through the following channels:
- The neutral agency network, unified by the BSP and ARC systems for settlements between agencies and airlines.
- Official agents (companies that have direct agency agreements with Aeroflot).
- The Company’s own sales offices.
- The Company’s Internet site.
The share of sales via the BSP/ARC neutral systems increased substantially in 2013.
Own sales of passenger traffic on foreign markets are carried out through 72 Aeroflot offices.
Aeroflot continued to further expand its presence in Southeast Asian markets in 2013 by entering the Singapore and the Philippines BSP via the IBCS system. The authorisation of new agents for Aeroflot sales in China was continued.
Sales growth abroad has done much for the growth of both direct air traffic and also of transit business, leading to new volumes of passenger traffic from points in Europe and Asia. Aeroflot’s main transit destinations are traditionally in Asia (China, Japan and Vietnam). The Company also achieves substantial volumes on transit routes to Europe, and particularly to destinations in Germany and Eastern Europe. The total number of transit passengers carried by the Aeroflot route network in 2013 was 8.6 million, which is 23.7% more than in 2012.
Work that began in 2012 to adjust commission terms was continued in 2013. Basic commission has been abolished on most markets and a bonus commission for achieving specific growth rates and sales volumes has been introduced. A marketing fund is available to partners for joint marketing activities.
A system has been put in place since 2013 to boost sales of Aeroflot flights by the largest agents on foreign markets: agreements are made with TMS agents and largest consolidators for payment of a bonus commission, distinct from the standard bonus system. In 2013 Aeroflot carried out actions to adjust the terms of commission payments in the Netherlands, China, Italy, Uzbekistan and India.
Main tasks in sales business in 2014
On foreign markets:
- Development of sales on new Aeroflot routes.
- Integration with Rossiya Airlines, expanding sales on routes from St. Petersburg to the CIS countries, Europe and Southeast Asia.
- Increase of revenue volumes through promotion of the new ‘Comfort’ service class to long-haul destinations.
- Improving the system of commission on markets with a high level of basic commission.
- Further integration of the sales systems of airline subsidiaries into the unified Aeroflot Group system.
- Optimising and increasing efficiency of the motivation system for agents in Russia.
- Launching an incentive system for sales staff at the Company’s own sales points.
- Initiatives to develop online sales. Introduction of a discount coupon programme.
- Alternative forms of online payment for transport services.
- Cooperation with meta-search systems.
- Development of corporate loyalty programmes.
Corporate sales by Aeroflot saw further development in Russia and abroad during 2013. A specialised unit was established at the Company for work with corporate clients, and a system of key performance indicators for corporate sales growth was implemented. An improved system of discounts was introduced after the discontinuation of agency commissions, and direct communications with customers were established.
The Company continued to work on development of its cargo sales in 2013.
Aeroflot sells freight transport services through electronic auctions, which provide a guaranteed source of income. Electronic auctions are held for freight carrying focused on three major airports in Russia: Sheremetyevo, Vladivostok and Khabarovsk. Freight transport on 15 routes was offered for auction in 2013. Freight auctions for popular Far East destinations were held in the Winter
Increase of direct sales via CASS (Cargo Agency Settlement System) is an important aspect of the development of freight traffic, contributing to the growth of revenue. Since 2011, the CASS system is increasingly used in a number of countries, particularly in Northern Europe, Germany, the Czech Republic, Turkey, China (including Hong Kong) and Switzerland. Several companies from other countries in Eastern and Western Europe, and the Middle East (14 countries in total) changed over to the CASS system in 2013.
Regional sales centres were set up in 2013 in Moscow, Vladivostok, London, Hahn (Germany) and Shanghai in 2013 to assist the development of freight business. Operations at the regional sales centres match best global practices of leading airlines.
The company also carries out transportation of high revenue cargos using the internal customs transit regime. As a licensed customs carrier, Aeroflot can offer an exclusive service to its customers for the delivery of goods under customs control from other countries to destinations in Russia. Up to 450 transit shipments of internal customs transit are organised each month via Sheremetyevo Airport. Aeroflot’s service is used by leading international courier companies such as DHL, TNT, DPD ARMADILLO and PONY EXPRESS. Aeroflot regularly carries out transit delivery of cargo for the Russian aircraft manufacturer OJSC Sukhoi.
Aeroflot decided in mid-2013 to suspend the use of cargo aircraft and pursue its freight business using passenger flights.Top