The Renova Group whose assets include Ekaterinburg Koltsovo Airport, Samara Kurumoch Airport and Nizhny Novgorod Airport are studying the budget airline market closely with a target to increase the low-cost airline penetration at its facilities. The most notable focus is on the smallest of the three airports, Nizhny Novgorod, where it is believed a small network of services into the developed Western European market can be secured.
Nizhny Novgorod is the fifth largest city in Russia and is the economic and cultural center of the vast Volga-Vyatka economic region, and also the administrative centre of Nizhny Novgorod Oblast and Volga Federal District. It has a large based population which would support new air services and is also a hugely popular tourism destination.
“We see a great potential to further expand operations at Nizhny Novgorod and are confident that a LCC operation would suit the market particularly well,” said Evgeniy Chudnovskiy, Director General of Ekaterinburg Koltsovo Airport and the man responsible for Renova Group's airport business. “We see an opportunity to develop the city as an alternative to Moscow for budget operators.”
Nizhny Novgorod is located approximately 250 miles to the East of Moscow but the introduction of high speed rail services to Kursky Rail Terminal in the capital in July 30, 2010 means the journey time city to city has been greatly reduced. “The high-speed train did initially hit traffic at Nizhny Novgorod by around 30 per cent, but it has since rebounded and we are now seeing that the rail link is stimulating the market by enhancing mobility, ” Mr Chudnovskiy.
Renova Group has already secured the low-cost breakthrough at its largest airport, Ekaterinburg Koltsovo, with flydubai and Air Arabia both serving markets in the United Arab Emirates (UAE). “We have the low-cost carriers but although they have brought capacity, they have not actually brought the low-fares that we anticipated,” explained Mr Chudnovskiy, using the Ekaterinburg – Duabi route as an example. “Both Ural Airlines and flydubai serve the route and actually charge very similar fares.”
As Mr Chudnovskiy acknowledges, Samara and Ekaterinburg are much harder to sell to budget operators. “We are on the border of range limitations for traditional low-cost aircraft models to fly from parts of the European Union. They could fly the services direct but with performance limitations and that is simply not attractive,” he said. This means that airline’s operating narrobody equipment non-stop from Europe need to gain a very high load to reach break-even, with a figure of more than 90 per cent occupancy being highlighted by one carrier.
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