American Airlines. British Airways. Cathay Pacific. All three are household names for international travel, and along with ten other airlines serve as integral members of the Oneworld alliance. However, one airline sticks out in Oneworld as being easily forgotten, attributed to its unique location on the map and less extensive route layout. That airline is no other than Novosibirsk, Russia-based S7 Airlines.
A Story of Acquisitions
When started in 1957 as a branch of the Soviet Union government, the “Tolmachevo united squadron” was formed. Following the failure of the nation’s government, efforts were made to privatize the venture, as well as rename it Siberia Airlines.
The airline continued to grow from here, and began its merger with Vnukovo Airlines and Baikal Airlines in 2001. This was followed by acquiring both Chelyabinsk Airlines and Enkor. While the airline was certainly growing quickly, it was doing so without the use of American or European-made aircraft. This all changed in 2004 when the company’s first Airbus A300 aircraft was acquired.
Finally, in 2006, Siberia Airlines was renamed S7 Airlines, and has been growing its fleet ever since. It is expected to be the first airline in Russia to operate both the Airbus A321 and Boeing 737 MAX 8 aircraft, with the nine aircraft made by Boeing set to be utilized for its charter airline, Globus Airlines. It also formally joined the Oneworld alliance in 2010, a rare feat among airlines in Russia.
Opportunities for Growth
Few can doubt the success the airline has been able to achieve against difficult circumstances. However, S7 appears to be poised for future growth opportunities in numerous ways. In early 2017, ICF Senior Manager, Andras Bognar wrote a unique white paper arguing that S7’s hub in Novosibirsk (OVB) is poised to be a future global hub, or a slightly smaller version of what has been created in cities like Doha and Dubai.
With the airport being in an ideal connecting location, Bognar argues that the airline has an opportunity to grow an extensive route network if it chooses to do so. In many cases it would actually be less travel time for passengers, such as those who normally connect in London on their way from Hong Kong to Chicago.
While plans like this certainly may not go over well with airlines like British Airways, it could spell opportunity for S7 to transit other passengers in Europe and Asia at a lower operating cost.
S7 also has been in the right place at the right time, as following the demise of competitor Transaero Airlines which ceased operations in 2015 was able to take over previously served routes.
For now, Tolmachevo Airport serves just over 4 million passengers a year, however, this number is expected to rise again in 2018 following four new routes which are scheduled to begin by next summer. While S7 Airlines may not be the biggest or fastest growing airline in Oneworld, its opportunity for growth remains evident.
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