Sleeping giant

The vast shores of Russia are currently attracting much interest from the international cargo world.
Oleg Korolev, director general of Aeroflot Cargo.
Oleg Korolev, director general of Aeroflot Cargo.

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Drawing comparisons to the booming market in India, the vast shores of Russia are currently attracting much interest from the cargo world. Oleg Korolev, director general of Aeroflot Cargo, provides an analysis.

What opportunities does Russia offer to the global airfreight market?

Due to its geographical position, Russia has the ability to play a major role in the flow of world cargo. The country lies between Western Europe and Asia, meaning we can serve trade from Europe to Asia and from Asia to the western coast of North America, which are in effect the world's primary trade lanes.

 

"Russia can become a massive player in the global air cargo market, but first it must become integrated with global standards."

Russia itself largely relies on imports, with exports constituting only 30% of overall cargo figures. Due to the size of the country and its lack of effective road infrastructure, the most important means of distributing these imports domestically is by air. The demand for international and domestic air cargo services within Russia is therefore astonishing.

Where is Aeroflot Cargo positioned within the Russian airfreight market?

Aeroflot Cargo was founded in 2005 and is based in Shremetyevo airport in Moscow where it carries out regular freight transportation worldwide. Using a combination of belly capacity on passenger flights and pure freighters, Aeroflot Cargo offers a unique service for domestic flights across Russia.
 

Our priority region is Central Russia, but Siberia is also developing in importance, where we operate scheduled cargo flights to Novosibirsk using a DC-10. The Far East of Russia is another key area of the country.

We are currently expanding our hub in Khabarovsk and operate scheduled flights twice a week using an AN-12 between the city and Moscow. We are currently the leading domestic operator of belly hold services.

What market opportunities did Aeroflot Cargo explore in 2007?

While 2007 was not an easy transition period, it remained a thriving year for business. We began belly cargo operations on all of Aeroflot's passenger network, which covers more than 100 domestic and international destinations. Most notably, we initiated cargo flights as an independent self sufficient carrier from Europe to Asia via Russia.

We also set about establishing our global network, which included the appointment of a regional management team in Istanbul, which now controls the Mediterranean and Middle East region.

How does Aeroflot Cargo's fleet match its domestic and international aspirations?

Aeroflot Cargo very recently received delivery of a converted Boeing 737-300 Freighter, the first of its kind to ever be used by a Russian carrier. We consider the model a successful market solution for middle range flights from Moscow to the Middle East, Europe and other destinations within Russia. The B-737 is used on commercial flights to Manchester, Helsinki and Paris followed by Stockholm, Istanbul and Milan.

How important is the Indian market to Aeroflot Cargo's current expansion policy?

Currently, we transport cargo to India using the belly capacity on passenger flights to Dehli and Mumbai. Despite experiencing a slow growth on exports from India, largely due to stiff competition from other carriers, revenue generated by this route increased by 30% in 2007 in comparison to a general increase of roughly 7.5%. We have expanded our courier services by adding new destinations, such as Toronto and New York, to our Indian sales network.

In 2008, Aeroflot Cargo intends to initiate dedicated freighter operations to India through a service that operates from Moscow to Baku, Dehli and Dubai. It will be served by a DC-10F that can offer a capacity of 60 tonnes.

This will allow us to both strengthen our position in the rapidly growing Indian market while exploring new options between Russia, the Middle East and India.

What problems does Aeroflot Cargo face from operating within Russia?

Russia can become a massive player in the global air cargo market, but first it must become integrated with global standards. We believe that by establishing a fleet of modern aircrafts and developing a sophisticated network, we will stand above other Russian carriers.

However, airports, cargo handling operators and land infrastructure must be improved in Russia in order to match our aspirations. We believe that from the revenue we generate from our expanding operations, the economy will be able to grow and infrastructure will rapidly improve.

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