Russia’s Anti-Monopoly Service and Aeroflot develop joint approach to pricing of Economy Class fares

20 December 2019

Moscow, 20 December 2019 – Russia’s Federal Anti-Monopoly Service (FAS) and Aeroflot have worked together to develop a unified approach to pricing of Economy Class airfares that adheres to anti-monopoly legislation. The new commercial policy will rely on algorithms that set prices based solely on market terms – first and foremost, demand – without regard to the cost to the airline of operating flights.

At any given time all passengers have an equal opportunity to purchase tickets at the same price. And passengers can select the fare type that includes the service and terms that they require and not pay for services they do not require. Airline ticket pricing is a dynamic enterprise, changing over time depending on demand; on average, 70-80% of tickets are sold at prices below the cost incurred by the airline to fly the passenger. This ensures that air travel is accessible to passengers with a range of incomes. The sale of the remaining seats at higher prices closer to the flight date ensures accessibility to flights for business travelers as well as for passengers who need to fly at a specific time/date but did not purchase tickets well in advance. The combination of 70-80% lower cost tickets and 20-30% more expensive tickets allows the airline to recoup its costs to operate flights as well as offer competitive services.

In instances where demand is lower and there is a risk that seats will not be filled, prices may be reduced, even close to the flight date. This measure allows for increases in the seat load factor – from the actual achieved level of 80% (average for the year) to an even higher level, which thus increases economic efficiency of fleet usage.

Adoption by Aeroflot of the commercial policy, along with supplying FAS’s Unified Information-Analytical System with comprehensive data for monitoring ticket prices, will ensure transparency of the airline’s activities for the regulator, in accordance with documented principles preserving commercial secrets.

FAS’s regional branches will continue to gather feedback from citizens about major changes in ticket prices, taking into account analysis of competition on specific domestic routes and using its database for monitoring prices.