Commonwealth of Independent States

Strong travel growth

The commercial aviation outlook for the Commonwealth of Independent States (CIS) foresees continued growth. The region's geographical size and diverse terrain make airline travel an attractive transportation option. Air travel will increase over the coming 20 years as personal incomes rise and air transport regulations are liberalized to make aviation services more available and affordable. The region's demand for new airplanes is increasing. Over the next 20 years, airlines in CIS will need 1,330 airplanes, valued at $150 billion.

The economies of the CIS are expected to continue to expand, with GDP growing 3.3 percent annually over the next 20 years. Russia's economy continues to be the region's largest, accounting for nearly 75 percent of the region's GDP in 2013. The economies of Ukraine and Kazakhstan follow that of Russia in size.

The Russian Transport Ministry's Federal Air Transport Agency reported that the number of passengers carried by Russian airlines rose to nearly 85 million in 2013, an increase of 14.2 percent compared with 2012.

Developing fleet

International traffic is expected to grow at an annual rate of 4.6 percent, nearly doubling over the next 20 years, as market regulation liberalizes. Airlines will need 180 widebody airplanes to handle the increased traffic. The new airplanes will help the region's airlines increase their international footprint. Within the region, traffic is expected to grow 4.3 percent, creating a need for 990 single-aisle airplanes. Although the region's fleet continues to grow, 52 percent of new airplane deliveries will be to replace older airplanes as they retire from the fleet. New airplanes, such as the 737 MAX and the 787 Dreamliner, are more efficient than the airplanes they replace, so overall fleet efficiency will improve.

Shifting business models

The low-cost carrier (LCC) business model has been expanding throughout the globe, though with limited success in the CIS. This may be changing, as recent increases in the number of LCC flights from neighboring regions and Aeroflot's intention to launch a low-cost subsidiary could signal the market's readiness for airline business model innovation. Rail transportation is still very popular in the region, but LCCs operating with competitive airfares and faster travel time may capture traffic from the rails.