Regional Market Russia

About Lufthansa Consulting Russia

The Russian Federation stands out as a high-growth region for the aviation industry even among the BRIC countries with promising opportunities and challenges for all stakeholders. Lufthansa Consulting clients include airlines, airports and aviation authorities as well as related industries such as ground handling companies, cargo terminal operators, aircraft manufacturers and financial institutions. Our experts, including Russian speakers, are ready to assist you and find solutions to match your aviation business needs. Our clients range from global network airlines to medium size and small regional carriers, large aviation hubs and small regional airports. We look forward to working with you.

Latest Activities

  • 11 - 12 Nov 2020 , Moscow, Russia

    Wings of the Future

    The 18th International Aviation Forum is the largest international meeting point for the Russian & CIS market in the Eurasian region for top management of civil aviation. The event is designed to examine the main trends in future of commercial aviation but also to address topics such as business process optimization or local air transportation market development in Russia. Representatives of the aviation industry from across 20 countries of the world will participate in the event. 

    Meet Stansislav Solomko, Head of Market Russia, CIS and the Baltic States and Askhat Torshin permanent representative for Russia/CIS at the event.

    Wings of the Future Website

  • 09 - 12 Nov 2020 , Zurich, Switzerland

    GAD World

    At the GAD World airport leaders, airlines, financiers, governments and regulators come together to discuss airport development and finance issues. Strategies concerning airport investings will be presented and overviews of the impact of demographics on airports’ finances will be given. Airport investment opportunities in emerging markets will, thus, be a relevant topic at the event.

    Lufthansa Consulting is sponsoring the event and our experts will speak on topics regarding airport development and financial growth

    GAD World Website

  • Navigating an airline through the COVID-19-Crisis

    As health authorities around the world combat the spread of the COVID-19 virus, airlines are taking drastic measures to minimize the impact on their business. How should one maneuver an airline through these stormy times? Six questions to Christine Weigner, Associate Partner at Lufthansa Consulting in Frankfurt:

    COVID-19 has a massive impact on aviation. What is your assessment of the current situation for our industry?

    Following years of strong growth, the aviation industry already slowed down in 2019 in some markets, driven by economic and political uncertainties as well as the rising debate about the effect of travel on the climate. With COVID-19, we see a significant cut for the entire industry. The shut-down and isolation measures that began with countries like China or Italy escalated to the closure of the US market for European travelers, traditionally a very large traffic flow. This was then dramatically worsened by most large countries closing their borders to international visitors. Domestic travel may also be hit, as seen by the week-long suspension of flights in India and the drastic reduction of capacity in the USA. These global restrictions on travel are an existential threat to many players in our industry. Only those who have built up a financial buffer and resilience, with the flexibility to react immediately to this development, will be able to emerge from this crisis stronger.

    What financial impact will the crisis have on aviation?

    In my opinion, it is still too early to evaluate the real cost of the crisis for our industry. In its latest update, IATA estimates a global loss in passenger revenues of over 250 billion USD. That is a little over 40% of airline revenues in 2019, and does not account for the losses that will be borne by other operators along the aviation supply chain. And, given the scale of the disruption, every airline, especially smaller ones, have to respond to the individual threats to their revenues and cash flows in order to survive.

    What are your recommendations to airline leaders in these days?

    First of all, to protect your employees and promote compliance with hygiene recommendations. Besides that, the biggest challenge is uncertainty. Nobody knows, how exactly the virus will spread, which markets will eventually be affected most and how long the slowdown will last. While everybody is hoping for a short-term impact only, I would rather recommend to anticipate a challenging 2020 and maybe beyond. Demand may bounce back in one or two quarters, but the financial aftershocks will be felt longer.

    From a business perspective, the foremost priority must be ensuring financial liquidity. Drastic and courageous cuts are necessary to minimize cash out and optimize those products and routes that still deliver a positive cash contribution. The challenge lies in identifying those in times of daily changes in demand and travel regulations. Examples of selected air freight routes show that these opportunities do exist. And, looking ahead, this is an opportunity to rethink business models and recommit to leaner, more efficient ways of operating. For some airlines, the crisis might even be a chance to play an active role in further consolidation of the market.

    Looking at cost positions – what are the main drivers from your perspective?

    Airlines need to ensure that they have the liquidity to cover all costs that are relevant for operations, such as fuel cost, ATC fees, leasing/financing costs, salaries, etc. They can only ensure this through drastic measures of cost reduction. We recommend bold moves on one side and on the other hand keeping a strong focus on those actions that allow for a fast and smoothest-possible recovery from the crisis.

    Prominent measures are immediate budget reductions in routine functions and projects. A hiring freeze and the negotiation of short-term work compensation programs can also lead to a significant relief of the cash-outflow. Obviously, in times of shortage of skilled labor, large-scale layoffs can only be the very last solution. Airlines also need to consider carefully which of their strategically relevant projects should continue in order to ensure fast recovery and achieve a potential competitive advantage after the crisis. Grounding aircraft is a measure that needs careful consideration of the costs for ‘mothballing’ and recovery as well as the resulting real benefit. If aircraft are leased, negotiating with your lessors and financiers might offer more relief. Airlines have learned from prior crises that the pace of recovery after the slump depends on the decisions made at the beginning.

    For airlines that were already struggling to produce sustainably positive financial results before the crisis, often only fast and well organized ‘stop-the-bleeding’ programs to optimize cost positions are the solution.

    You also mentioned securing revenues. What are your thoughts on this one?

    Obviously, at a time when travel is so significantly impacted, this is easier said than done. First of all, an efficient and highly flexible network as well as revenue steering can help. On a daily basis, the network planning experts need to ensure that the combination of offered frequencies and operated aircraft type is steered to an optimum. This should be complemented with state-of-the-art highly flexible revenue/pricing management that allows airlines to react to demand and competition in order to remain attractive without wasting revenue potential. Dealing with the uncertainty of travelers is a key success factor. Therefore, introducing flexible re-booking and cancellation policies can also be of help to avoid cancellations (which would then negatively affect your cash position) and secure demand in markets, which are not affected too much. For airlines in full or sub-charter business as well as for those players with a high share of large accounts (for example, business travel), we recommend a very close exchange with your clients to understand their current issues and assess the impact on your business to reduce the risk of uncertainty.

    Have you experienced similar situations? What was your advice to clients back then?

    We are supporting several airline leaders in these days and the reaction is always the same. This situation, especially in Europe and North America, is unprecedented because of the global and simultaneous effects on business as well as leisure travelers. Nevertheless, there were similar situations in the past from which we can learn such as the Asian crisis, 9/11, SARS in 2003, the global financial crisis in 2008/2009 or the ash cloud over Iceland in 2010. This crisis is unique in its global scale and duration, yet manageable amid the uncertainty. Every crisis had its own dynamics, but the combination of revenue protection, cost cutting and preparing to jump-start the business after the crisis was the common denominator to navigate through them. In the last 30+ years Lufthansa Consulting has successfully guided its clients through these situations to not just survive the crisis, but thrive in the recovery. An experience from which our current and future clients all over the world will benefit.

    If you would like to discuss the measures you have taken or challenge the scenarios you see for the future, we offer complimentary 60-minute consultation calls. Please contact our Associate Partner Christine Weigner for further information.

  • Airport Operational Excellence Survey

    Airports are vital to provide safe, reliable and efficient air transport. The aviation industry is growing rapidly: worldwide passenger figures have doubled within the past 15 years and will continue to evolve by 3.5 percent annually over the next 20 years, according to ICAO and IATA. This growth is leading to capacity constraints and infrastructural needs at airports to provide state-of-the-art and reliable operations. Flight delays and thus disruption costs are rising due to limitations of infrastructures and in collaboration with system partners; according to SITA the aspect of mishandled baggage alone globally accounts for U.S. Dollars 2.4 bn in financial burden. The individualization of airline product demands and passenger expectations for a seamless travel experience require airports to adapt operational excellence measures.

    Our experts at Lufthansa Consulting are envisioning continuous improvements in operations to tackle current industry challenges. We are looking to turn these challenges into success factors empowering airports to grow profitably while ensuring customer satisfaction and enabling dynamic advancements to infrastructural and capacity needs. To better understand the latest developments and perspectives of airports in relation to operational excellence Lufthansa Consulting has created an online survey on this relevant issue.

    We would like to invite airport managers (Chief Executive Officers, Chief Operating Officers, Operations Directors, Operations Excellence Managers and Heads of Operations Control) to take part in our research by 31 March 2020.

    The survey focuses on Operations Steering and Performance Management, Data Analytics and Organization as well as Partnerships and Services. Areas of research range from the use of data to forecasting tools, the presence of operational excellence programs and cover particularly topics such as the state of digitalization in operations and collaboration with joint partners.

    The questionnaire consists of 30 questions and will take less than 20 minutes to complete.

    If you would like to participate or have any questions, please click here, fill in your details and put the word “SURVEY2020” into the message. 

    Your Benefit: The outcomes of this anonymous study will be published in spring 2020 allowing you to benchmark your airport with the industry and identify your individual strengths and areas for development. You can also select to identify your company and receive a more detailed individualized report about the status of your operational excellence.

  • 10 - 11 Mar 2020 , Moscow, Russia

    MRO Russia & CIS

    The MRO Russia & CIS 2020 is a two-day event, consisting of an exhibition and a conference. It is designed to bring together Russian & CIS airline technical and engineering management with local and international MRO providers, component suppliers, aircraft industry, OEMs and media to discuss challenges in the MRO market in the region. Besides addressing the topic of Aircraft MRO development, insights about the latest trends in aircraft maintenance, repair and overhaul market development and maintenance airworthiness, about industry leader’s innovations, are given within the MRO Conference.

    Meet our delegates, Axel Schauenburg, Managing Consultant and Askhat Torhin, Permanent Representative for Russia, CIS and Baltic States at the event!

    MRO Russia & CIS 2020 website

     

Projects

EASA Part-145 conformity assistance

Airline in Russian Federation

Processes and procedures were improved to conform with EASA requirements, particularly in material related activities. The airline achieved the first steps towards compliance both as an organization and as a maintenance organization.

Extended market potential analysis, traffic forecast and peak capacity analysis

Airport in Russia

Independent and professional market potential analysis and traffic forecast for the Russian airport with capacity requirements analysis. Benefits were a clear understanding of the Russian market dynamics and the potential of the airport at national level, network development opportunities, quantification of the traffic potential of the airport and flight plan projections for the next 30 years.

Five-year network development plan update

Russian Airline Group

Optimized route network of airlines of the Group with regards to their interconnection in order to maximize profitability. Optimized schedule for the five-year period with recommendations for fleet planning strategy. Systematic approach to frequency and capacity changes based on level of contribution of a given route to the Group network and enabled economic based decisions.


Clients

Award

Best of Consulting

For the second time in a row Lufthansa Consulting has been awarded the renowned consultancy prize "Best of Consulting" by the German weekly business news magazine WirtschaftsWoche. The “Excellent” award went to a successful Air Service Development project with Auckland International Airport, the largest airport of New Zealand and the third busiest international airport in Australasia. Lufthansa Consulting and its client Auckland International Airport are incredibly pleased about the award and that the WirtschaftsWoche jury could also be convinced of this successful project. Both look very much forward to their further productive and prosperous cooperation.