President of Russia Vladimir Putin: Good afternoon Mr Belozerov. First of all, I want to discuss the current work underway at this summer season. I’d like to look at the passenger traffic situation and how you are dealing with cargo shipments.
CEO of Russian Railways Oleg Belozerov: Mr President, let me start by thanking you for the attention you give to Russian Railways and its activity. We know we have the support of the federal executive authorities and the Government, and we work closely with the regions. We think that the decent results (as we assess them) in the first half of this year are attributable to the good partnership ties we have built.
The main result for the first six months of 2016, as we see it, is that we are operating with a profit. We have not received subsidies this year for infrastructure maintenance, but we have found substitute sources of funding and have even increased funding, drawing on internal funding sources. At the same time, revenue from our main activity has increased slightly, up by 0.4 percent on what we planned. Our cost-cutting efforts have been successful and we paid 134 billion rubles into the budget. I want to add that the increase in the cost price of transport comes to only slightly more than 4 percent, despite the objective increase in the economy in general, which is higher. We are making comprehensive efforts to bring down our costs.
We have met all of our social commitments to our employees in accordance with our collective agreement. Let me add that, as you noted, we are working very hard on raising labour productivity. Our labour productivity was up by 5.5 percent over the first half of 2016.
Vladimir Putin: This is higher than last year’s figure.
Oleg Belozerov: Yes, that’s right. Last year’s figure was 4.8 percent, and this year we have already reached 5.5. We plan to maintain this figure.
Several different components make up the result. First of all, we consider work with passengers our most important area of work. We have declared 2016 the Year of Passengers and have devised a plan for improving service, starting with facilities on the platforms and at railway stations, Wi-Fi, for example, what passengers want most of all, and also made trains more passenger-friendly. These efforts have already yielded results. There is no negative trend. We had growth overall in passenger traffic over the first half-year. In some areas the growth was quite substantial.
First of all, overall passenger traffic has increased by nearly 2 percent, and by nearly 3 percent on long-distance routes. We have achieved these results by improving inter-city and suburban traffic. Our results in this area have improved compared to last year. We have been asked if the company will manage to consolidate this positive trend. We will succeed. This is our goal and by the end of the year we will have a programme drawn up until 2020 that sets the objective of working more and more actively on customer services to make things even more convenient for the passengers.
As far as daytime express trains go, we have an increase of 27 percent in this area this year so far. This covers 25 routes.
We completed extra work on the infrastructure on the Moscow-St Petersburg Sapsan route last year and this has produced an increase of 31 percent. We have even set records in some areas: Sapsan trains transported a total of more than 17,000 passengers in a single day.
Online ticket sales were up by 6 percent. We have equipped 80 railway stations with Wi-Fi, and are in the process of equipping another 20.
I want to note though that there is demand for the old services as well as for our new services. We have, for example, the legendary overnight Red Arrow train [between Moscow and St Petersburg], which marked its 85th anniversary on July 9. It is running at full capacity, has transported more than 15 million people, and we are improving this service too.
Regarding transport services for children, we plan to transport around 500,000 organised groups of children this year. The preparations have all been carried out in this area and all the work is strictly monitored. We have a dedicated programme and monitoring system for this area. The decision to transport children aged 10–17 at a 50-percent discount subsidised by our company’s funds have proven effective, as the figure for tickets sold and children transported is up 18 percent to date.
We have a new record in traffic to the Black Sea coast. The figure for this route is up 29 percent, and we will work on keeping up this pace.
Vladimir Putin: This is attributable to the increase in domestic tourism, of course.
Oleg Belozerov: Yes, and we are cooperating closely with our own travel agency and other tour operators , offering new products and creating a favourable environment in general.
On the freight side, shipments were up 1.8 percent, with a volume of nearly 600 million tonnes. The railways were traditionally considered a mirror of the economy as a whole. We see the positive trends before they become visible elsewhere. We had growth of more than 3 percent in May and 4.2 percent in June. Freight for the construction sector is primarily fuelling the growth. This means that the economy is working, construction projects are underway and this is what is contributing to these good results. Freight volumes are growing, and this is good to see, both on internal lines and export routes with higher growth rates in domestic shipments.
We have also been working on other quality indicators. We have improved delivery speed and reliability. Speed on each stretch of the route and the average weight of trains have increased. This is also important. The economy reflects the internal efforts we make, and in this sense the results we see show that we are on the right track.
In terms of the services we provide, previously, you had to fill out 14 forms if you wanted to send a cargo by rail. Now, we have reduced this to 3 forms, and the volume of traffic immediately increased.
We are making big efforts to make our technical equipment more reliable. The number of breakdowns has dropped by nearly 20 percent, from 33,000 to 26,000 in absolute figures. This means that there are fewer cases of trains being delayed and it improves our other economic indicators.
We are carrying out timely track maintenance and repairs. As I said, we have added an extra 15 billion in funding. This year, we have placed very big orders for gravel and tracks.
Vladimir Putin: Are you keeping to your repair plan timetable?
Oleg Belozerov: Yes, we are even slightly ahead of schedule, by more than 2.8 percent.
We have brought down the number of traffic incidents by 25 percent and will continue working on improving this figure.
Vladimir Putin: What is the situation with wages in the sector?
Oleg Belozerov: We raised wages by nearly 3 percent in the first half of this year and have already planned for further adjusting wages for inflation in the second half. We understand very well in the company that wages depend on labour efficiency, and with the entire Russian Railways team achieving results together, we will certainly raise wages. We have the funds to do this.