Demand for Air Transportation in Russia Will Grow

10 july 2019 | Rossiyskaya Gazeta

Alexander Martinyuk, leading adviser of the Department for Fuel and Energy Sector and Housing and Utilities of the Analytical Center, told Rossiyskaya Gazeta that the demand for air transportation in Russia would grow in the long term, thus increasing the demand for jet fuel.

Aleхander Martynyuk
Aleхander Martynyuk
Department for Strategic Studies in Energy

According to the expert, the demand for jet fuel in Russia, as in the world, has grown recently due to the increase in air traffic. Thus, in 2018 relative to 2015, the consumption of jet fuel in Russia increased by 12%. However, in previous years, the demand for jet fuel in Russia was unstable. Mr. Martinyuk notes that this was negatively affected by economic problems, the ruble's decline, bans on flights to Turkey and Egypt, and positively by major sporting events in Russia.

The expert adds that the demand for air transportation in Russia will grow in the long term, thus boosting the demand for jet fuel. "The growth rates will mainly depend on the increase in real disposable incomes of the population, the exchange rate of the Russian ruble against other currencies and the growth rate of the country's economy," he lists.

At the same time, from August 1, the government plans to increase compensation to airlines for the cost of jet fuel from oil and gas budget revenues. If the price of jet fuel rises above 48.3 thousand rubles per ton, then the current negative excise tax will be increased. The government expects to restrain prices for air tickets in such a way.

In addition, according to Mr. Martinyuk, the abrogation of the agreement with the oil companies will stimulate airlines to keep prices down for their services and support the demand for air transportation.

For more details on the prospects of the air transport market in Russia and in the world, see the June Energy Bulletin.

Source: Rossiyskaya Gazeta