Price dynamics in the Russian airline market

A sharp rise in the cost of passenger air transportation services in Russia in 2024 led to an increased discussion of flight accessibility for Russian consumers. According to industry experts, the trend of significant growth in air travel prices will continue in the coming years. The key research objective is to determine the dynamics of the affordability of passenger air transportation in Russia, identify the key factors (objective economic, market, consumer) and the nature of their impact on the cost of this service. The study is based on a statistical and econometric analysis of data from the FSGS and the largest airlines on the average cost of flights in 2004-2022 and ticket prices in 2023. Considerable attention is paid to reviewing the results of earlier studies of the problem. The authors argue that, despite a steady annual growth of air transportation in the last decade, the dynamics of Russian airlines' production performance since 2020 has been determined by various exogenous shocks (the pandemic crisis and aggravation of geopolitical tensions). The time-delayed nature of the impact of macroeconomic and geopolitical factors on the cost of flights has been established, smoothed out by measures of government regulation and support for the aviation industry. It is proved that, despite the trend of annual growth in nominal value, passenger air transportation services are becoming more accessible to the Russian consumer in real terms. The work concludes that objective economic conditions can have an impact on the cost of passenger air transportation services in the long term, however, the current short-term significant volatility in airline ticket prices is mainly determined by market conditions and consumer choice. In the near future, the price dynamics in the passenger air transportation sector will be influenced primarily by the pace of development of tourist destinations within the country and the growth of company costs, as well as government regulation and support measures for the industry.

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