11/08/2019 16:21

War Of Tariffs

[IMG=20194-5976] In the middle of June Air France new tariffs resulted into problems for Aeroflot. Air France brought to retail market tickets for a Moscow - Paris flight for $209. However, in practice the price is 9,905 rubles (about 300 Euro) considering all the fees. Meanwhile, even such a tariff is called scandalous comparing to a standard rate – 17, 250 rubles (about 500Euro). Alexander Korolev, Director of Income management Department of Aeroflot, commented on the situation as follows: ‘at the moment the minimum retail prices of Air France are comparable with the block tariffs we offer to tour operators on terms of strict financial liability’. Traditionally French and Russian national airlines set prices for tickets upon the agreed tariff. For example, in autumn 2005 Aeroflot offered discounted prices for flights to Paris within its seasonal sale, however they had to exclude flights to Paris from the list of discounted flights due to the protest from Air France. Therefore, Aeroflot did not expect dumping prices from Air France. According to experts, passenger traffic volume of Air France on the route Moscow – Paris is lower than the one of Aeroflot. Air France is mostly supported by business-class passengers, however in summer when business activity normally reduces, the passenger flow on Air France flights from Moscow drops down. Apparently, Air France offered dumping prices in order to balance financial performance. Victoria Zhenchevskaya, General Director Deputy of DSBW, confirmed the higher demand for Air France flights. For Aeroflot the maneuver of Air France contributed to the reduction in demand caused by the increase of visa issuing period. When the French Embassy announced this, some tour operators contacted Aeroflot asking to reduce quotas for Moscow-Paris flight. At the moment Aeroflot is negotiating with Air France aiming to stabilize the situation.