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Far East airline reduces capacity amid uncertainty in travel market

By The Siberian Times reporter
04 February 2015

Falling demand for seats, problems with the rouble, and fluctuating exchange rates force Yakutia Airlines to axe three planes.

Bombardier Dash 8-400 aircraft in Yakutsk after the first passengers flight. Picture: Yakutia Airlines

A decline in domestic travel twinned with the collapse of the rouble has forced a Far East airline to scale back capacity as part of an efficiency drive.

Yakutia Airlines will reduce its fleet of Boeing 737-700s from three to one and its number of Dash 8-400 aircraft from four to three as demand for seats falls.

Marking the carrier's 12 birthday recently chief executive Olga Fedorova said the deepening economic depression in Russia had prompted a scaling back of operations as a whole.

Now there will be less planes ferrying passengers across the country and beyond, as management looks to streamline costs and look for medium-term savings.

Ms Fedorova said: 'The financial condition of the airline is strongly affected by fluctuations in exchange rates, as leasing agreements are concluded in the currency of the company, usually in Dollars and Euros.

'We are also closely monitoring the situation with the banks, because the whole air transport industry is constantly in need of credit resources. Instability in the banking sector leads us to actively seek loans, and we are working with [Yakutia's] owner to provide guarantees to secure these resources.'

Airlines in Russia have reported increasing passenger numbers year-on-year, but the travel industry has been hit hard by the recent economic problems.

Last year Siberia-based UTair was unable to pay for two loan bonds totalling 2.7billion roubles ($41million), with the carrier in the grip of a cost-cutting exercise that saw 800 employees laid off.

Founded in 2003, Yakutia Airlines operates scheduled and seasonal charter services to over 20 destinations across Russia and to China, the United States and parts of Europe from bases in Yakutsk and Krasnodar.

Ivan Vinokurov, the head of the carrier’s fleet management committee, said the surplus leased aircraft would be returned to the Aviation Capital Group and to Jetscape by the end of the month.

The airline's medium-term strategy is to focus on maximising passenger numbers on the reduced number of planes, as well as optimise routes in the Asia-Pacific region.

Plans are also under way to attract a strategic investor to the airline.

Comments (1)

At least now there is a railway to Yakutsk...
Enrique, Spain
04/02/2015 23:18
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