The Russian airline industry experienced a significant downturn in 2022, with a market value decrease of 56.7% to $10,547 million, attributed to the adverse effects of geopolitical tensions, notably the Ukraine war, and economic challenges. Despite this setback, forecasts remain optimistic, projecting a market value of $40,442.2 million by 2027, marking an impressive 283.4% increase from 2022. This anticipated growth is underpinned by the industry’s recovery efforts and strategic expansions, such as Aeroflot’s launch of new routes, including a service from Moscow to Goa, India, in November 2022.

The industry also saw a 54.4% reduction in the number of seats to 64,788.2 thousand in 2022, with an expected rebound to 183,080.2 thousand by 2027, an increase of 182.6%. Full-service airlines, constituting 70.9% of the industry’s total value, continue to dominate, particularly benefiting from the demand for long-haul flights that offer comprehensive services, including in-flight entertainment and premium lounges.

Despite Russia’s 4.8% share in the European airlines market, the sector faces significant challenges due to Western sanctions, airspace restrictions, severed business ties, and the stoppage of critical aircraft parts from major manufacturers like Boeing and Airbus. These constraints led to the cessation of operations by at least nine Russian airlines in 2022, with some losing their airworthiness certifications from Rosaviatsiya, the country’s aviation authority.

The industry’s competitive landscape is characterized by intense rivalry, high fixed costs, and the difficulty of exiting the market. The largest industry player, Aeroflot, holding almost a 50% market share, illustrates the sector’s competitive dynamics, further intensified by the current geopolitical situation. Nonetheless, the industry’s value is anticipated to accelerate with a compound annual growth rate (CAGR) of 30.8% over 2022-2027, fueled by new airline entrants, route expansions, increased capacity, and investments in sustainable aviation fuels, setting a positive trajectory towards achieving a market value of $40.4 billion by the end of 2027.