Russia - Civil Aerospace: Improving economic conditions to drive growth (Strategy, Performance and Risk Analysis)
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Russia is a key market for aviation services. After decades of restrictions on international travel during the Soviet period (which dissolved in 1991), many Russians are now using the opportunity to travel abroad for business and tourism purposes. In order to cater to high demand, the development of aviation infrastructure has been a key focus area for the Russian aviation industry; the number of airports in Russia increased from 1,218 in 2013 to 1,260 in 2016. The major airlines of the country are also planning to acquire more domestic routes. The civil aviation regulatory body, State Civil Aviation Authority of Russia (SCAA), is responsible for the management of governmental services related to civil aviation, usage of air space over Russia, the registration of aircraft, and maintaining state registers of civil aircraft, airdromes, and airports.
Demand for passenger aircraft to drive growth of the active fleet size
The active fleet size increased with a rate 23.5%, from 527 aircraft in 2015 to 651 aircraft in 2016, and is forecast to increase at a CAGR of 10.3%, from 712 aircraft in 2017 to 1,052 aircraft in 2021. Growth in the active fleet size is largely due to the rise in the number of air passengers, which led airline operators to procure more aircraft.
Increased trade volume to drive growth freight
Freight increased with a rate of 23.1%, from 4,761.0 million ton-km in 2015 to 5,863.2 million ton-km in 2016, and is forecast to increase at a CAGR of 5.4%, from 5,739.9 million ton-km in 2017 to 7,096.0 million ton-km in 2021. This is primarily due to improved air cargo carriage capacity attributed to the development of new cargo terminals and improved infrastructure, along with trade ties between nations.
Capital expenditure to recover owing to increased demand
Capital expenditure on aircraft in Russia declined from US$9,299.0 million in 2015 to US$2,720.0 million in 2016. However, it is forecast to increase at a CAGR of 5.7%, from US$3,119.0 million in 2017 to US$3,894.0 million in 2021. High demand will drive the procurement of aircraft and related equipment in Russia, in turn further driving capital expenditure on aircraft.
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