Tulpar Air: record-breaking result in anniversary year

A gentle rise in air traffic volumes

In the past 2021, the pandemic of the new coronavirus infection continued to hit the pockets of the world's air carriers. The ICAO analysts noted the improvement of indicators in comparison with 2020, but they recognised that this is a gentle rise and it is still very far from gaining the previous height — the indicators of 2019. The global seat utilisation rate of passenger air vessels was only 68% against the pre-pandemic 82%. The total losses of airlines in 2021 reached $324 billion (in 2020, losses reached $372 billion (ICAO data).

“In general, the year 2021 was much more successful for the global aviation industry than 2020, but it is very far from restoring to pre-Covid-19 passenger traffic. Demand has strengthened due to vaccination and the easing of restrictions, while the new wave of the Omicron strain no longer had such a significant impact on reducing demand for air transportation," Natalia Pyryeva, an analyst at Finam, said in response to the request from Realnoe Vremya.

In the first quarter of 2021, airlines in the mass segment of passenger transportation had no special illusions and hopes. A number of airlines turned out to be weaker than the circumstances provoked by the coronavirus: Swedish regional airline Air Leap, which entered the market only in 2018, announced the termination of operations, leaving eight routes in Sweden, Norway and Finland without an operator. Georgia's largest air transport company, Georgian Airways, was declared financially insolvent and offered for sale.

In the second and third quarters of the year, the gradual easing of restrictions on travel to other countries and regions revived tourist flows. But... the overall recovery rate of international traffic by the results of 2021 was only 28%. The situation with the restoration of domestic air traffic is better: 68% to the pre-pandemic level.

The process of restoring the industry as a whole in the countries of the world is proceeding at different rates: among the outsiders, there are the countries of the Asia-Pacific region and the African continent, in Europe the growth of air traffic occurred mainly at the height of the tourist season. Things are better in the Caribbean, Latin America and North America. Russia turned out to be the world leader in terms of the pace of air transportation recovery in 2021, despite the existing lag from the indicators of 2019.

In the business aviation segment, the situation is more favourable. The pandemic, which at first also hit business jet operators with the closure of borders and a lot of restrictions, eventually spurred the activity of individual flights:

“The number of flights was growing, which is quite simply explained. Firstly, the desire of people to fly after a prolonged “non-flying Covid-19 period”. Secondly, the risk of infection in crowded places pushed people to choose in favour of charter transportation. Passengers who flew first class on regular flights began to choose personal flights more often, especially since the price difference when recalculated taking into account additional amenities is not that big," Azat Khakim, the founder and chairman of the board of directors of Tulpar Air, explained to Realnoe Vremya the reasons for the surge in interest in business aviation services.

In North America, by the results of 2021, the activity of business segment of civil aviation industry increased by 6%, in the USA — by 10%, on average in Europe, the popularity of business air travel increased by 5%. The greatest traffic growth was recorded in the Middle East. For example, in the UAE, business jets made by 73% more flights than in 2019.

“Business aviation flourished in 2021. From the second quarter, there has been a very strong recovery, mainly due to the demand for recreation, which developed as travel restrictions eased," industry publication bizavnews.ru quotes WINGX Managing Director Richard Koe.

Historical record of domestic air transportation

“It is worth noting that Russian air carriers demonstrated the best results in the world in restoring domestic passenger traffic in 2021. Passenger traffic of Russian airlines in 2021 increased by 60% (YoY), to 111 million people, which is only by 13,3% lower than in 2019. The growth was primarily due to an increase in the number of passengers on domestic flights — airlines relied on expanding the route network within the country, while increasing the share of interregional regular passenger air routes, bypassing Moscow and St. Petersburg," Natalia Pyryeva, an analyst at Finam, emphasised in her comment to Realnoe Vremya.

If by international routes (within and outside the CIS — ed.) only 23,5 million people flew in 2021 (against more than 55 million in 2019), then a historical maximum was marked for domestic airlines: 87,5 million. For comparison, in the pre-pandemic 2019, the figure was only a little more than 73 million," it is noted in the analytical report of AviaStat agency.

The companies representing the niche of business air transportation in Russia also added significantly. According to the data published in the WINGX Business Aviation Bulletin review, the overall growth of business jet traffic in the country amounted to almost a quarter compared to the level of 2019.

Another important point is how actively a relatively small number of Russian airlines belonging to the business direction of civil aviation strengthened the material and technical base last year. By the results of the year, their total fleet was replenished with 40 new cars (for comparison, in 2020, Russia purchased only 10 business jets). Two aircraft — acquisition of Tatarstan airline Tulpar Air.

Tulpar Air almost doubles its revenue and income

According to the accounting report by Russian Accounting Standards, Tulpar Air ended 2021 by updating its personal record.

So sales revenues in 2021 reached 1,33 billion rubles, which is 75%, or 571 million rubles, more than 2020, which was also very successful for the company and exceeds the airline’s target figure of the year by 66% (532 million rubles).

The prime cost of the services provided was 1,1 billion rubles. Net profit was above 112 million rubles against 72 million rubles a year earlier. The growth compared to 2020 totalled 55%. The company notes that considering all external factors, it hoped to get just a bit more than 14 million rubles of net profit. The results achieved during the year are almost seven times better than the forecast.

“Last year, the airline purchased two planes: Bombardier Challenger 300 и Challenger 850. This significantly increases the speed of the organisation of flights and possibilities for our clients. We also expanded the fleet of external clients’ aircraft and raised the number of commercial flights for third parties,” Azat Khakim explained the reasons that led to such considerable economic results.

Sales profitability was almost 12%, while the profitability of the airline’s net profit was about 8,5%.

2022: operation in new conditions

As early as 2022, civil aviation analysts made cautious forecasts for the continuation of the graduation recovery of the sector. By the end of the year, according to an optimistic scenario of ICAO experts, global passenger traffic was to approach 86% compared to the pre-pandemic level. Moreover, international flights could recover by almost ¾ compared to 2019 whereas domestic ones could up to 95%.

According to the forecast made by Bain & Company in late December 2021, the total passenger traffic of airlines in Russia in 2022 was to grow by almost 10% and amount to 120 million people (Editor’s note: against 111 million in 2021), with a gradual reduction in domestic traffic and growth in international traffic.

However, tightening anti-Russian sanctions that seriously hit the air transport sector too made them reconsider their outlooks. So general passenger traffic, according to Russian Transport Minister Vitaly Savelyev, won’t be more than 100 million people in 2022. International flights will account for just about 10% of this number. Moreover, as the head of the Ministry of Transport noted, this forecast can turn out too optimistic because one in two of 1,367 planes used in Russia are leased by foreign companies that are ready to revoke agreements and demand to return the aircraft. Finam’s expert Natalya Pyryeva also considers this problem as key for the sector.

“The issue of foreign planes some of which will have to be returned to European lessors, while some of them will be impossible to service and extended certificates will globally impact Russia’s aviation sector throughout 2022. At the same time Russian aircraft engineering is just gaining speed and cannot replace foreign equipment for ours soon. A more optimistic version of the scenario is based on the fact that the sanctions imposed against Russia aren’t economically profitable for Western colleagues (representatives of the aviation sector and tourism industry),” the expert assumes.

While there are political ambitions and sound mind and economic feasibility are on different sides of the scales of the West when looking for the right decision, Russia is planning to go to the rest of open destinations more: to Turkey, Egypt, the UAE and Sri Lanka where all quarantine-related restrictions have been recently cancelled and some of other destinations to friendly countries. Also, air traffic inside the country will increase too. This is one of the tasks set by the country’s president during a meeting on the development of air travel and aircraft engineering on 31 March.

“The amount of flights performed in Russia this year should grow of course, compared to the previous year. The number of passengers is due to be at least 100 million people. Therefore in addition to the existing measures of state support, including preferential tickets to the Far East and other regions, I am asking the government to launch a large-scale programme a part of tickets to domestic flights is compensated during the most active period of flights, from April to October this year,” Vladimir Putin addressed the government at the recent meeting.

Representatives of business aviation aren’t going to become less active either.

“All the aircraft we use are property and registered in Russia. This has always been this way, since the foundation in 1991. Tulpar’s own independent provider of technical maintenance and repair of aircraft Tulpar Technic is another advantage. It was created in 2010 by making the aviation and technical infrastructure of the company a separate enterprise. In the last 12 years, Tulpar Technic has improved its competence so much that today we provide complicated technical maintenance of foreign aircraft in Kazan, not transporting the planes abroad,” stressed Azat Khakim. Of course, the problem of the closed sky will have to be solved, of course, by making the routes longer via Russia’s friendly states. On the other hand, the clients perfectly realise this when ordering the company’s service.

Time will show how the events will be unfolding. One shouldn’t forget that the anti-Russian sanctions politics is a double-edged sword, and foreign plane manufacturers, companies leasing aircraft and those who deal with air travel are also suffering from losses. Russian Transport Minister Vitaly Savelyev said this in his speech in front of senators in the Federation Council. Foreign airlines will lose up to $3 billion only by changing the routes and avoiding the territory of Russia. Lost income of the world tourism industry from Russians can reach another $7 billion. And these are just two clauses from a long list of possible losses of the global economy from the aggressive sanctions politics. Compromises will have to be looked for sooner or later.