Aeroflot History

The official birthday of the Civil Air Fleet of Russia is February 9, 1923.

In the 1920s, after the end of World War, Aviation in the European countries was used for peaceful purposes: to carry passengers, mail and cargo. As the majority of European countries, Russia was also paying attention to establish relations with foreign countries. Civilian flights abroad were carried out mainly in the converted military aircraft.

In the1930s aircraft industry became a large and complex set of industrial enterprises, design bureaus, research institutes, etc.

February 25, 1932 General Directorate of Civil Air Fleet was established and the official abbreviation of the civil aviation sector was adopted as “AEROFLOT”.

 In the pre-war times “Aeroflot” occupied an important place in the economy.

 During World War II “Aeroflot” pilots were defending the Motherland, showing great professionalism and courage. Even during those difficult years airline did not stop operating regular flights on international routes.

After the war, international air travel has been actively renewed and expanded.

 In August 1959, in Moscow, Sheremetyevo airport was opened; its main purpose was the maintenance of international flights.

In 1980, Aeroflot was announced a general carrier for participants of the XXII Olympic Games held in Moscow. A new international airport terminal, Sheremetyevo-2 was specially built to welcome the athletes and guests from all over the world. It was able to accommodate 31 aircrafts of any type at a time. 

In 1991, after the collapse of the Soviet Union, former Soviet republics and Russian regions created their own airline. Our company was the successor to the name Aeroflot and trademark of an international carrier of the former USSR, Industrial and Commercial Association "Aeroflot - Soviet Airlines was established in June 1991. Since July 28, 1992 it became an open joint stock company “Aeroflot - Russian International Airlines”. At the same time the airline began to exploit foreign technology.

 

Nowadays “Aeroflot” is the largest air carrier in Russia. It operates flights to 95 destinations in 48 countries. The airline pays a special attention to its presence in the Russian market, especially Siberia and the Far East. “Aeroflot” is an airline with excellent safety record and a reputation for industry leading customer service.

Introduction

In recent years there has been a gradual replacement of Aeroflot from the international shipping market. In 1970, the proportion of traffic with Aeroflot in the world market was 2.5%, in the present - only 1, 7%. This indicates that the average annual growth rate of international air traffic with Aeroflot below the world average values and demonstrates the need for radical reconstruction of administrative system in international sector.

In terms of radical economic reforms, the Ministry of Civil Aviation should move from a centralized economic management of their departments to the market relations methods between all the participants of purchase and sale of air transportation products and related services.

To bring the company to a new level, management of Aeroflot's foreign trade activities should use scientifically based strategy for Aeroflot in the international air market. Development of this strategy should be followed by comprehensive study of the processes taking place there and the experience of leading world airlines. It’s also required to formulate the optimal organisational structure properly and to prepare professional staff, capable to protect effectively and efficiently company’s interests in the international scene. The success of “Aeroflot” on the international market, fully stocked with competitors, depends on skilful application of the knowledge to compete the concurrence. Marketing department takes responsibility for those actions.

Presentation of the company: “Aeroflot-Russian International Airlines”

Without a doubt, "Aeroflot - Russian International Airlines" is going through extremely difficult times of its more than seventy years of existence. The airline is looking for its own strategy in the difficult process of transformation into the marketing economy.

Despite the political, economic and social changes, the requirements for aviation security remain the highest. Any incident in this area is seen particularly sensitive and critically evaluated. Russian and foreign media have recently given a lot of negative material. This is the fact that civil aviation in Russia is in deep process of renewal. But it’s necessary to say with the confidence that Aeroflot does not compromise. With regard to the technical condition of aircrafts and training pilots, as it may seem strange, there should be no doubt at all!

With its many thousands of employees and 120 of airplanes Aeroflot maintains air service to more than 100 cities abroad. The airline is one of the few Russian enterprises, which opposes to the international competition. It’s well-known that the products of most Russian enterprises are sold only in their own country. Aeroflot sells about 50% of the passenger transportation abroad. Of course, the quality of service must be high enough to match the level of international competition.

As a result of increasing supply of air transportation and the struggle for every passenger, it’s necessary to compete more actively with a wide range of services of other competitors. For example, air traffic between Russia and Germany - the largest volume of all communications between Russia and other countries. Only in the summer schedule 1994 Aeroflot at its 60 flights a week offered 600,000 seats in both directions. Roughly the same capacity provided by the German and American air carriers. Success in this case may reach only the airline which will provide a product of the appropriate quality and cost to its customers.

Today “Aeroflot” has 159 offices abroad. The share of all foreign missions accounts 57% of currency earnings of the company. The effectiveness of the missions proves following figures: Total of 1993, they brought into the Aeroflot’s treasury 555 million U.S. dollars, up 64 million more than the previous year. Here are the following regions gave the largest revenue: 47% - Europe, 15% - America, 15% - South-East Asia. 5% - Africa and the Middle East.

The freight traffic had been increased by 30% compared with the previous year. Also charter cargo transportations had been successfully implemented, which were carried out not only by own “Aeroflot” planes, but also by leased aircrafts from military departments.

Despite the fact that some of the regular flights are unprofitable, Aeroflot doesn’t rush to close it, realizing that it would destroy the existing balance of forces in certain regions. It would have led to the transfer Aeroflot’s passengers to other airlines. Besides many unprofitable flights connect with profitable ones.

4 years ago a number of missions - in Germany, Great Britain, the Benelux countries, Scandinavia, Italy, France, Chile, Japan and Korea  were granted the right  to  plan and manage economic indicators independently. Such financial autonomy justifies itself.

Not long time ago “Aeroflot” was a monopoly in the international airline industry. But today it has become one of many Russian airlines, however, the largest in the market. The company is officially designated as a national air carrier of Russia. “Aeroflot” has to defend its sovereignty and prestige as a carrier not only on the international level. The company has to prove to the Russian government its right to exist as a single national airline. The international practice shows that only large, powerful airline is able to compete successfully in the international market.

Organization of marketing in the airline

Switching to marketing concepts of governance of the airlines in Russia caused the necessity of fundamental change and improvement organisational management of companies. There was an urgent need for redistribution numbers of functions in the control system, reduction of some, and creation of new services and departments. It became necessary to create flexible organisational structure, adaptable to the specifics of the strategic programs.

Marketing Department of “Aeroflot” is headed by a vice-president of marketing. He is a member of the Board of Directors and participates in the development of the target orientation of the airline, the development of long-term strategy for its implementation, preparation of plans for air transport production. Organisationally, he subordinates to the president of the company and co-ordinates all the marketing issues within the company.

 

Main duties of the vice-president in marketing organisation are to integrate the various functional units regardless of the specific organisational schemes adopted in the airline.

The main goal of Marketing is to develop strategies and tactics of market behavior in air transportation area in the light of its objectives, financial and technical capabilities.

Currently, Aeroflot's marketing organisation is characterized by types of air traffic and the types of functions.

At the head of the marketing department of international passenger traffic is vice-president of marketing. Several entities that perform marketing functions, report directly to the control group of international passenger traffic (the customer service department, training, servicing of passengers, advertising and administrative)

Department of Marketing is the main department that determines the marketing activities of the airline. It consists of five groups. Planning Unit is responsible for drawing up marketing plans on the basis of information proposals coming from other groups. In terms of marketing it reflects the characteristics of the main strategic objectives of airline data to predict the development of regional markets, marketing strategies for each region, tariff policies and plans of sales by region and by the airlines and the action plan to improve the quality of service and to plan tactical activities. Planning Unit also advises on sales promotion and publicity work, describes the procedures for monitoring the effectiveness of marketing activities.

Organisation of tactical activities (for the coming year) has several options, which can react flexibly to change market conditions.

There is a special department working on the development of the system. With these systems, the time of booking a ticket on any route is reduced several times. Ticket reservation system is connected with hotel reservation system, which is also very convenient for passengers.

Market development is a unit which receives information from the regional and foreign markets of air transportations. It has paid much attention for the market research. Aeroflot is actively using the system of questioning passengers during flights, over the telephone and within company’s sales agencies.

Summarized results of market research are the basis for forecasting the demand for air travel and develop a strategy and tactics of marketing.

Pricing unit is responsible for collecting all information on international air fares and conditions. Its main duties are: calculation of tariffs on various destinations, the elaboration of the tariff policy of the airline, etc.

Air crew of the aircraft is engaged in the formulation of recommendations to improve the service on board the aircraft.

Not long ago, “Aeroflot” has introduced a new method of direct communication with customers, which has worked well in foreign airlines; - it is communication by telephone .Customers can make suggestions to improve service level. Based on these calls several innovations have been introduced: improvement of musical and video entertainment on board of aircraft. Variety of dishes was entered on the menu, etc.

 The route marketing department consists of six groups. The main objective of this department is to develop proposals for the scheduling, setting tariffs, services, etc. Information from this department is sent to the department of marketing management.

The department of customer care consists of two groups: Legal group which develops a passenger insurance rules, terms of airfare and other legal issues, and a group of transport service which is responsible for developing new rules of service on board the aircraft.

 

Foreign missions and agencies prepare information for travel agencies and representative offices abroad. They distribute the installation of screens on the ground, etc.

The information unit collects information and provides passengers with up to date news and innovations in various countries and cities where flights are carried out.

And finally, the reservation department which is involved in the distribution of seats within the airline, formatting flights, locking (how many seats and on which flight is booked for the year, month; when the booking was withdrawn, etc.).

Control system

The final stage of marketing planning is to develop a control system. This includes the monitoring of sales and profitability of the airline, as well as evaluating the effectiveness of marketing activities in key areas. System of marketing control for “Aeroflot” contains information about how the results of the company reflect with objectives and plans. Therefore its position evaluates in the market of air transportation at the specific moment of time.

Prospects, proposals, conclusions

As an example of how “Aeroflot” is planning to develop in the future, it’s appropriate to give a quote of the General Director of JSC "Aeroflot - Russian International Airlines" Vladimir Tikhonov: “Among the strategic objectives Aeroflot absolute improvement of safety and regularity - Passenger Service and, hence, competitiveness, the return ranking positions in a number of world airlines, expanding forms of activity to extract additional revenue, increase financial independence”.

The fleet of Aeroflot is strong enough, however, until the park corresponds  to world standards. The next task of the company is to update it. So far, the aircraft fleet is updated mainly due to the aircraft of foreign manufacture. And it marked the beginning of the conflict between Aeroflot and Russian producers. This conflict affects and the fact that Aeroflot was appointed the official carrier. Here is one of the main tasks of marketing - help to solve the problem. My vision of this problem is in the fact that while our new planes cannot compete with foreign models, mostly because of manufacturing defects, we need to use foreign ships in order not to lose their positions in the airline industry. Once the aircraft manufacturing defects will be corrected, will come the moment to purchase domestic aircrafts. Many prototypes of our civilian airliners surpass foreign analogues, and only eternal deficiencies and marriage don’t allow our aircrafts to compete with the West. Generally, it is very hard to offer something specific for “Aeroflot”, because it is a huge company with lots of branches, subsidiaries, divisions. But undoubtedly, one area that could serve as a starting point for Aeroflot's exit from the crisis is to cope with competition. First of all, company has to work really hard to deserve customers’ appreciation and recognition in the world air transportation market.

Customer service has to be always on the highest level. Flexibility and accessibility also play an important role for the airline success. “Aeroflot” should take a revision on the fares and its rules and restrictions, to make it more profitable for customers. Due to growing amount of low cost airlines “Aeroflot” has to find and follow its own politics of maintaining business and attracting more clients. Also I would recommend the company to work towards opening new flight routes within Russia and around the world. Based on the following proposals company can get through crisis without financial loss and get an authority in the international air transportation market.