Strategic Goal:

To be among the leading international carriers on the global air transport market, including a dominant position in carrying between Europe and Asia, and to achieve profitable growth through consistent improvement of operating efficiency by use of the latest technologies and innovations.

Aeroflot’s development strategy, approved by the Board of Directors in 2011, targets inclusion of the Company in the Top 20 largest global airlines by passenger turnover and revenue before 2025, by when Aeroflot should be carrying at least 74.2 million passengers per year. A key element of the strategy is to provide a premium service to passengers, in line with the best international standards.

Our Mission:
Aeroflot is Russia’s calling card; we use innovative technologies to provide our passengers with a top-class service, matching international standards and making the time spent from departure to arrival into an unforgettable experience.

Directions for strategic development:

• Increase of carrying volumes and market share
• Development of the route network
• Constant improvement of the product quality and standards of passenger service
• Expansion and modernization of the aircraft fleet
• Greater use of the latest information technologies and pursuit of innovative development
• Improving management of Aeroflot Group
• Training and raising of the level of qualification of Company personnel

Strategy-2025

1. To be one of the TOP 5 European airlines by revenue and passenger turnover
2. To be one of the TOP 20 global airlines by revenue and passenger turnover
3. To carry more than 70 million passengers per year, including 30 million on domestic flights
4. To develop a main hub in Moscow where connecting passengers represent at least 60% of total passengers
5. To achieve broad market penetration and development through implementation of a multi-brand strategy

Transformation of Aeroflot Group into a global airline involves: building a multi-brand platform, which successfully addresses a broad segment of demand for air transport services; creation of Aeroflot’s own global route network; development of strategic partnerships with other airlines; and successful M&A operations.

Strategic priorities

Since 2012 Aeroflot has been operating in a new capacity — that of an airline group. At the end of 2011, pursuing its group development strategy, OJSC Aeroflot carried out the largest-ever M&A transaction in Russian civil aviation and began the integration of newly acquired airline companies as new members of Aeroflot Group.

Positioning on the market

Customer demand will be met more fully by the division of airlines within the Group across market segments, based on the following definition of main “platforms”:

• JSC Aeroflot serves the premium passenger segment, offering high-quality service, a high-frequency route network, access to the route network of partners in the SkyTeam Alliance, and convenient connections for international transit passengers.
• Russian regional subsidiary airlines mainly provide services to passengers in the regions where they are based, with adjustable flight frequency and prospects for serving transit flows to match growth in demand.
• The low-cost carrier model is focused on short- and medium-haul routes with large passenger flows, serving passengers who are relatively price-sensitive.
• A tourist airline provides carriage for holidaymakers traveling to the largest international resorts mainly in association with tourist agencies.

Route network

The Group has set the strategic goal of building a global route network. The priorities in development of the route network are as follows:

• Increasing the number and frequency of flights, and available connections between flights at Sheremetyevo Airport.
• Major expansion of the geography of long-haul flights provided by the head Company, including long-haul routes to Asia and America.
• Improving the quality of the route network by strengthening the role of the SkyTeam Alliance and building strategic joint ventures.
• Development in the tourist segment, creation of a vertically integrated tourist airline.
• Development of feeder hubs (based on regional airlines).

Marketing and sales

Aeroflot Group will undertake a number of marketing and sales initiatives to help meet the challenges of substantial increase of passenger traffic, increase in the share of transit carrying and segmentation of service types within the Group. These initiatives include:

• Increasing the share of direct sales.
• Strengthening positions in international points of sale.
• Raising the level of qualification of personnel.
• Changing the brand development strategy in order to attract more international passengers.
• Significant investments in advertising and marketing abroad.
• Closer cooperation with members of the SkyTeam Alliance in order to optimize sales.

Innovative development

Innovative development is a key condition for the success of the Group’s efforts to become one of the leading global airlines. The Company’s initiatives in this field include:

• Further development of service quality.
• Reducing the costs of service provision.
• Raising operating efficiency.
• Reduction of fuel and energy spending.
• Making operations more environmentally friendly.
• Raising labour productivity.

Non-organic growth

Non-organic growth is designed to help increase passenger numbers while minimizing business risks. The Group has differing policies for different geographical areas, as follows:

• In Russia: completing integration of the airline assets, which were acquired from State Corporation Rostec, and developing sales cooperation with other carriers on the domestic market.
• In the CIS: developing sales cooperation with airlines, whose business objectives do not conflict with those of Aeroflot.
• On foreign markets: expanding Company presence on the international market, development of sales cooperation with European airlines.

Strategy in action

Progress during Aeroflot’s first year as an airline group included the launch of centralized planning and coordination throughout Group operations, as well as the optimization of route networks and integration of sales systems. Work began to build a unified marketing strategy, financial policy and set of tax accounting rules. Measures were successfully implemented in 2012 to improve the efficiency of subsidiaries and integrate them with Aeroflot Group in order to maximize synergies. The integration of Donavia airline was completed, including the transfer of all its sales functions to Aeroflot Group, introduction of the “region” service standard for Donavia operations, and application of a unified system of financial policy, tax accounting and sales accounting, as well as comprehensive restructuring of the Donavia fleet. Actions at Vladivostok Air included the optimization of the route network and transfer of sales functions to Aeroflot Group. At Rossiya Airlines the network timetable was optimized and coordinated within Aeroflot Group, route numbers were reduced from 120 to about 80 (with seasonal variations), and improvements were achieved in operation of the aircraft fleet. Orenburg Airlines implemented the Group’s unified fiscal policy and tax accounting rules, and improved its operating indicators. And SAT Airlines completed the transfer of sales functions to Aeroflot Group and introduced a unified financial policy and tax accounting rules.