Travel transportation in Eastern Europe returned to growth, influenced by Russia’s recovery. Airlines are driving the increase in sales, but scheduled airlines are strongly challenged by low cost carriers, which are eroding their share. Bus and rail transport sees mixed developments, influenced by a less competitive position and outdated infrastructure. The region is expected to see a positive performance, supported by favourable micro and macro environments.
Eastern Europe is second to last in terms of travel transportation sales when compared to other regions. The category’s positive dynamic over the previous years was influenced by the economic recovery, a growing middle class, or the extending of the visa free regime, Ukraine and Georgia being the latest additions. Leisure and business travel and diaspora movement also supported sales.
Benefiting from its large size and population, Russia generates half of the travel transportation sales in Eastern Europe. As a result, the region’s dynamic is influenced by Russia’s performance, this being very visible over the previous years spent under economic sanctions. The context also leads to Russian airlines being the largest players in travel transportation, however, with concentrated sales in the domestic market.
The airline landscape is seeing changes. Low cost carriers have expanded to reach new markets and new destinations, offering more affordable prices in return for fewer comforts. The popularity of Wizz Air and Ryanair puts them among the few top airlines with a competitive regional presence. As a result, scheduled airlines have had to adapt by improving their service, pricing and overall strategies.
Among other reasons, this is the result of the ongoing positive consolidation, with recovery in countries such as Russia and Ukraine, or continued strong progress elsewhere (Romania, Poland, Hungary, Georgia, Serbia, etc.). The new economic environment will favour the increase in travel spending, while current and future investments in infrastructure show that the region is shifting up a gear to become more competitive and open, offering a solid structure for growth.
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