After several years of rapid growth, Russian airlines are facing falling traffic and revenues and with some teetering on the edge of bankruptcy as the effects of the global economic downturn and credit crunch begin to be felt.

In 2008, Russian cargo volumes grew by 5.8 per cent to 703,068 tonnes while passenger traffic increased 11 per cent year-on-year, to 50.1 million passengers. However, the final months of the year showed a definite downward trend that has accelerated in the first weeks of 2009, according to a preliminary report issued by the Russian aviation authority.

January 2009 saw air cargo volumes plummeting 36 per cent, to 35,352 metric tonnes compared with a year earlier, while overall seat load factor slipped to 66.6 per cent from 67.3 per cent.

The January results shocked the industry, which had forecast a January 2009 month-on-month traffic drop of no more than 8-10 per cent.

Industry leaders are also feeling the pressure with state-owned GTK Rossiya, the fourth-largest Russian carrier in passenger terms, reportedly accumulating more than 3 billion rubles (US$84 million) in debt by the beginning of February, and number two Russian carrier, S7 Airlines forced to cancel an order for 15 Boeing 787s it placed in May 2007 and due for delivery in 2014.

In late February, the privately owned airline defaulted on 2.2 billion rubles worth of bonds, which forced it to turn to the government for a credit guarantee.

The Russian government late last year promised financial support for airlines considered critical to the country’s economic viability, drawing on a 30 billion ruble stimulus package. The list includes six carriers – Aeroflot, S7, Transaero, UTair, Ural Airlines and a new Russian mega-carrier, Rosavia, currently being put together by governmentowned Russian Technologies and the city of Moscow from a number of smaller carriers, including Rossiya.