Siberia Airlines to keep fares down

02.07.2004

Since the start of 2004, the prices for aviation fuel rose, on the average, by 5% in Russia and by 9% abroad. The average rise in take-off and landing charges in Russia also amounted to 5%, while the cost of technical maintenance grew by 8%. These factors make a significant impact on the air fares, which, in 2002-2003, grew by 7.5%, on the average. Yet, the inflation for the same period was over 13%, with the aviation fuel prices increased by 18%. It is clear that the air fares of Siberia Airlines are increasing slower than the company's costs. Consequently, the air company has less funds to invest in the development of its business.
Under the circumstances, the management of Siberia Airlines, taking into account the international management experience, has embarked on implementing an effective cost-cutting program.
"As the world fuel prices and overall air transportations costs are rising, the company has to cut costs. The program launched will allow the air company to develop more effectively, while its passengers will not have to fully cover the growing expenses out of their pockets";, says Konstantin Koshman, Siberia Airlines Director for Regional Development.
The program has several components: putting modern foreign-made aircraft into operation, optimizing the structure and increasing the efficiency of the company's management, including outsourcing of non-core subdivisions (transfer of corresponding functions and personnel to outside organizations) and optimization of the inflight catering services.
Aircraft renewal
According to the company's plans, starting from July, some of the domestic flights of Siberia Airlines will be conducted with A310 planes manufactured by the Airbus European consortium. Putting these planes into operation on its main lines will allow Siberia Airlines to cut transportations costs and provide a higher level of comfort to its passengers.
Increasing management efficiency
By the year's end, the number of Siberia Airlines personnel is to be downsized by 10-15%. The reductions will take place mostly at the expense of non-core services, such as the aircraft cleaning and janitorial service, food-catering service, motor transport service and other services provided by the air company. The personnel of these services will be offered work in outside organizations which will sign outsourcing agreements with Siberia Airlines.
This will allow the formation of a more flexible management structure, boosting the overall efficiency of the company. The first results of outsourcing aircraft cleaning and janitorial jobs to Moscow-based Ronova company confirm the soundness of this decision.
"Optimization of the management structure, accompanied by the corresponding changes in the staff list of Siberia Airlines, is not just staff reduction. The employees will be transferred to organizations specializing in providing specific services. In this way, the jobs will remain in the Russian economy", - underlines Vyacheslav Novikov, Siberia Airlines's Director for Personnel.
In 2003, Siberia Airlines carried 3.4 million passengers and 21 thousand tons of freight and mail. Its aircraft fleet consists of 52 airplanes of the following types: IL-86 - 12 planes, TU-154 - 38 planes and TU-204 - 2 planes. Siberia Airlines has won prestigious international awards: the FLIGHT INTERNATIONAL AEROSPACE award for Excellence in Corporate Strategy and the AIR TRANSPORT WORLD award for Market Leadership.


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