Airfleet #2, 2011

AN-148:OPERATOR’S VERDICT

№ 2. 2011

An-158 wins type certification 4

AN-148:OPERATOR’S VERDICT

China and Russia:strategic partners 24

A I R F L E E T · 2 . 2 0 0 7 · ( 6 3 )

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China's gates become world's

aerospace center

CONTENTS

Aircraft04 AN-158 wins type certification

06 Leasing firm favors TU-204SM

14 AN-148: operator’s verdict

Interview24 China and Russia: strategic partners Interview with Alexander Fomin

Exhibitions28 Russia eyes Indian civil markets

Airport32 An airport for sale!

Airlines38 Hong Kong Airlines — 2010–2011: high ranking, new schedueld services, IATA membership

40 Per aspera ad... Alliances There are already two Russian airlines in global alliances, who is next?

China's gates become world's

aerospace center

№ 2. 2011

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More than five hundred companies have expressed their intent to exhibit at the Asian Aerospace 2011, one of the most popular airshows in the Asia-Pacific

Russia will show her most advanced airliner, the Sukhoi Superjet 100 regional airplane created by the Sukhoi Civil Aircraft Company (SCAC), a joint venture of the world-famous fighter house and its European partner — Alenia Aeronautica of Italy. SCAC will be accompanied by the Russian Helicopters, a large holding structure in control of all key rotorcraft companies in the country. It will be present with a wide products line including most recent rotorcraft models and derivatives. Russian Helicopter is a phenomenon of the modern aviation for its unrivaled ability to operate safety and efficiently in very harsh environments. Mil and Kamov helicopters are in service with many Asian nations, and quite popular in the People's Republic of China.

Late 2010 and early 2011 were marked with a number of achievements for the Russian aerospace industry. The Tupolev Tu-204SM jetliner took to the air for the first time on 29 December 2010. Its certification is expected at the end of this year. Then, on 3 February 2011, the Air Register of the Interstate Aviation Committee issued type certification for the Sukhoi Superjet 100. Finally, on the eve of this show opening, another promising design, the Antonov An-158 large regional jet, won type certification, too.

The Sukhoi Superjet 100 (its current 95B version) has maximum takeoff weight of 101,150lb, nominal seating capacity of 98 passengers and maximum payload of 21,600lb. Its operational range with full payload is up to 1,333 nautical miles. With this airplane Sukhoi Civil Aircraft is challenging the world's leading regional aircraft manufacturers: Embraer of Brazil and Bombardier of Canada.

The An-158 represents a stretched 99-seat variant of the baseline An-148-100 regional jet developed by the Antonov state enterprise of Ukraine, and mastered in production by VASO plant in Voronezh, Russia. The An-148-100 has won a good reputation with Aerosvit and GTK Rossiya airlines: read our comprehensive report about the type's performance in revenue service.

Arguably, the Tu-204SM is the world's most advanced narrow body jetliner ever flown. It can take in 176 to 210 passengers, depending on cabin layout. This new, refined version was created on the base of the current production Tu-204-100. The latter has proved one of the safest series narrow body jets in the world airline inventory. On one occasion, a Tu-204-100's fuel tanks got completely depleted in flight, causing both PS-90A turbofans to flameout, and yet the airplane permitted the crew to perform safe landing in an airport, and thus save nearly two hundred lives onboard.

Sincerely yours, Alexander Gudko

Director GeneralEvgeny OsipovDeputy Director GeneralAlexander Kiryanov

Commercial Director Denis Kostin

Deputy Commercial DirectorsVitaliy GaluschakNatalia Chizh

Marketing Director Leonid Belyaev

Marketing Manager Elena Bebneva

Creative DirectorAlexander Strelyaev

Editor-in-Chief of A4 Press PublishingViсtor Murakhovskiy

Editor-in-Chief of AirFleetAlexander Gudko

EditorsMikhail Nayden

Art DirectorAl'vina Kirillova

DesignersAlexander ShipilovNadezhda FadinaElena Shishova

REPRESENTATIVE OFFICE IN SAINT-PETERSBURG

Deputy Director GeneralRoman Moshnin

Commercial DirectorSergey Baydak

Advertising Sales DirectorMilana Nikolaeva

Marketing DirectorGrigoriy Zubok

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© AIR FLEET, 2011ADDRESSP.O. Box 77, Moscow, 125057, RussiaTel.: + 7 495 626-52-11Fax.: + 7 499 151-61-50E-mail: [email protected]

Editorial

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Type certification for the An-158 large regional jet was awarded on 25 February 2011. The respective air worthienss cer-tificate is issued by the Air Register of In-ternational Aviation Committee (ARMAK), which serves as civil aviation authori-ty in the territory of the Commonwealth of Independent States (CIS).

The certificate was handed over to the Antonov state enterprise, the air-craft developer, on 28 February 2011. The ceremony took place in Kiev, the cap-ital of Ukraine. MAK chairwoman Tatya-na Anodina handed the certificate over to Antonov general designer Dmitry Kiva.

Tatyana Anodina stated that the An-158 meets “highest international stan-dards for regional jets”. She especial-ly mentioned the airplane’s capability to operate in harsh environments and ad-verse weather conditions. Anodina add-ed that the new airplane meets current Eu-ropean regulations to noise and emission levels. In particular, the An-158 meets

ICAO Chapter IV noise requirements with a comfortable margin of several dB.

The prime-minister of Ukraine Nikolai Azarov took part in the ceremony of 28 February 2011. He said the An-158 certi-fication “opens the way for further devel-opment of this airplane and its production for many years to come”. He added that

“Ukraine makes its return to the very tiny club of the aviation nations with the abili-ty to develop and manufacture advanced aeronautic designs”.

The An-158, previously known as the An-148-200, is further refined and advanced version of the baseline An-148. It is offered in two factory standard cab-ins. One seats 99 economy class passen-gers in a five-abreast arrangement with seat rows spaced at 30 pitch. Another cabin has 86 seats in two class compart-ments, one for 12 business class passen-gers and other for 74 economy class pas-sengers.

Outwardly, the An-158 differs from the original An-148-100 in having two cylindrical extensions in the fuselage ex-tending it by 1,700mm. Besides, the An-158 features improved avionics and interi-or. In particular, the hand baggage over-

head beans are refined. The rear section of the fuselage has been reworked so as to cater for the longer fuselage at takeoffs and landings.

The An-158 has maximum takeoff weight of 43.7tons, maximum payload of 9.8tons, maximum cruising Mach num-ber M=0.79 and maximum cruise altitude of 12,200m. It can transport 99 passen-gers 2,500km or 86 passengers 3,100km or 62 passengers 4,230km.

The An-158 carries 87 onboard com-puters in 58 computing systems, which helps the airplane’s flight control and sys-tem management complex control over 4,000 parameters.

Under agreement with Russia, the An-158 will be built at Antonov’s “Aviant” plant in Kiev, while Russia’s VASO in Vo-ronezh focuses on An-148. The two en-terprises supply each other with airframe components so as to streamline manufac-turing process. First deliverable An-158 shall enter operational service by the end of 2011, Dmitry Kiva says. He gives An-158 list-price at US dollar 27 to 30 mil-lion, depending on options. Kiva further says that Antonov is going to assemble eight aircraft in 2011.

AN-158 WINS TYPE CERTIFICATION

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The decision to continue with the Tu-204SM was made in January 2011, af-ter a thorough revision of the current state of this project launched in 2008. The move was much influenced by the first successful flight of the first airframe, registration RA-64050, from the aerodrome of Aviastar-SP aviation plant in Ulianovsk. It happened

in Christmas time, on the eve of the New Year 2011. With the airplane behaving up to expectation and delivering its promis-es on fuel burn in typical regimes, the deci-sion in favor of the program was, therefore, well-founded and logical.

The sector of the narrow body twinjets is the largest one in the world’s commer-

cial aviation. According to the most recent market forecast prepared by a respectable governmental organization, in the next twenty years the sales of narrow body air-liners will comprise 3,840 120-seaters, 13,723 160-seaters and 2,358 200-seat-ers. In dollar values, these will respectively came to 251 billion, 1.111 trillion and 281

After a hot discussion at the top political level and among the local aeronautics industry elite, the Russian government has issued approval for continuation of the Tu-204SM effort. Russia’s leading aircraft leasing company, Ilyushin Finance Co. (IFC) has been a keen supporter of this decision and will play a major role in its practical implementation. A vastly improved version of the current production Tu-204-100/300 series of the Tupolev narrow body twin jets, the Tu-204SM shall enable Russia to keep her hard-won positions in the biggest sector of the world’s commercial aircraft market in fierce competition with the European and US manufacturers. Today, only Airbus, Boeing and Tupolev are present in the given market sector, with A320, 737 and Tu-204 respectively.

LEASING FIRM FAVORSTU-204SM

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billion respectively. Together, this makes 19,921 sales valued at US dollar 1.643 bil-lion — a huge business by any standards. China alone needs nearly 3,000 new nar-row body jets worth US dollar 237 billion. These figures come from the Market Fore-cast 2010–2029 released in November 2010 by the Commercial Aircraft Corpo-ration of China (COMAC). Russia is aiming at a place in this market with the Tu-204 series (including its newest Tu-204SM de-rivative) and, later, the next-generation MS-21 (currently at the design phase).

Finding a launch customer is always a key thing for any aeronautical proj-

ect and of enormous significance for suc-cess of the whole effort. At first, Iran Air-tour was considered for the role, with initial order for five airframes plus fifteen op-tions. However, the United States’ Depart-ment of State threatened sanctions against US firms involved in the propulsion sys-tem. This prevented the Persian aviators from becoming Tu-204SM launch custom-er. Red Wings, the currently the largest Tu-204 user, took over. Also known as the Air-lines 400, this Russian operator runs a fleet of nine Tu-204-100/-100V jets on sched-uled services and charters to popular holi-day destinations.

Contract with Red Wings is of com-plex nature; and will take some time to be arranged. The airline and its back-er, the National Reserve Corporation run by Russian entrepreneur Alexander Lebedev, are seeking a larger deal with the Russian government, aeronautics in-dustry, financial and leasing structures, with its central idea being that of a better arrangement of assets, financial and in-dustrial resources in the interests of both the nation and the local business com-munity. This larger deal has been agreed in general, but negotiations on detailing it are still ongoing.

The Tupolev-204SM shall enable Russia to keep her hard-won positions

in the biggest sector of the world’s commercial aircraft market in fierce

competition with the European and US manufacturers

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Red Wings is looking to acquire a batch of 44 Tu-204SM aircraft at a good price. Through this deal, the airline wants to get a higher place in the Russian air transport industry, upgrade from a second-class to the top five of Russian airlines. Furthermore, Red Wings wants deliveries and after sales support for these Tupolevs to be arranged by IFC, the largest Russian aviation leasing company with National Reserve Corpora-tion among its shareholders. In addition to the structured financial package for the ac-quisition of above-mentioned 44 jetliners

on financial lease terms, Red Wings wants the industry and the lessor to guarantee re-sidual values of these aircraft and provide smooth operations of them via an effec-tive after sales support system. From its side, IFC is ready to arrange all this and raise 90% of the requisite funding, provided Tu-polev, Aviastar-SP and their vendors take obligations on pricing of the aircraft and its components, as well on related product support issues.

“We are ready to arrange all this, in ap-prehension that such a deal is going to be

the biggest and most complex we have ev-er attempted. If happens, the deal will be the largest in history of the Russian com-mercial aviation”, says IFC general director Alexander Roubtsov.

There are several key points with ar-ranging this deal. First of all, by placing a large order the airline and the lessor want to get considerable discounts, up to 30% to the list-price. Most of the discount shall be on the account of vendor items. Roubtsov explains: “The vendors are given a choice: take it or leave it. Either they trim up and agree to such discount in exchange for a decently large order, or the air-line, the lessor and the government pull out.” In its turn, the Russian government says it is ready to support the local indus-try and the airlines but only if this support helps them recover and attain competitive-ness. In plain words, the Kremlin can afford wasting money for no outcome.

So far, orders placed for Tu-204 air-planes have been relatively small: one-two, up to five aircraft at a time. In this situation, airframe production lines have been run-ning at low speeds, and hence the price per a unit of production was high. In the past few years the Tu-204 list-price has risen to US dollar 45–50 million per airplane, depend-ing on options. The industry asks US dollar 50 million for a brand-new Tu-204SM. Red Wings and IFC say they cannot afford more than US dollar 36 million, but will buy 44 aircraft at once, provided their price is ac-cepted. Deliveries would proceed at a pace of 8–10 aircraft annually over the period of five years, 2012–2016.

Alexander Roubtsov:

the Tu-204SM will have

larger payload capability

and longer range, which

makes it very interesting

for the holiday charter

market

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For Aviastar-SP such a large order prom-ises sufficient backlog until 2016, when the factory plans to commence production of the Il-476 next-generation air lifter for the Russian air force and commercial op-erators of large ramp freighters. Meantime, the Tu-204SM project promises not only to bridge the gap until the Il-476 becomes available, but also create a suitable prod-uct in the distinct market niche for passen-ger airliners. Roubtsov thus speaks about it: “The new version of the Tu-204 will have larger payload capability and longer range, while the baseline airframe’s max-imum cabin capacity of up to 216 econo-my class passengers makes it very interest-ing for the holiday charter market. In my view, the Tu-204SM is a good solution for the charters”.

Marketologists see three other distinct niches for the improved Tu-204. In addition to tourist charters, this airplane can be ef-fectively used on scheduled passenger ser-vices between city-pairs with rather long flight distances, five thousand kilometers or more. Placing smaller and lighter Airbus and Boeing narrow bodies on such servic-es are not economically viable. At the same time, wide bodies from these makers of-ten appears over capacious for the existing passenger flows on some city-pairs.

Vladivostok Avia’s decision to acquire six Tu-204-300s was because these airplanes can support daily flights between Vladivo-

stok and Moscow with maximum passenger loading factor while larger Airbus A330-200 and Boeing 767-300ER cannot always be loaded to capacity on this given route. The Far East Airlines, Dalavia, gave another example of effective employment of the Tu-polev narrow bodies, in this case the Tu-204-200 (Tu-214, a version with higher gross weight), on long-and-thin routes, like that linking Khabarovsk and Moscow. One more Russian airline, KMV, has been suc-cessful in using Tu-204-100s on the route connecting Caucasus Mineral Waters with Moscow and other large Russian cities.

Next niche is the certain foreign cus-tomers who have traditionally been ori-ented on the Soviet and Russian products and unable to buy in the West for politi-cal reasons. North Korea, Syria and Cu-ba already operate Tu-204 series aircraft. Iran hired Tu-204-120C freighters and has been seeking to buy Tupolev twin jets and even produce them locally under li-cense. This particular niche is not limited to so-called pariah states. Rather, it also in-cludes other traditional users of Soviet and Russian airplanes, such as CIS countries and other Russia’s allies. Egypt, with five

Russian government supports Tu-204 programIn January 2010 the Russian government decided to support the Tupolev

Tu-204 jetliner and provide additional Rouble 9.9 billion. This amount of money is needed to keep Tu-204 production line running. And is an estimation of the United Aircraft Corporation (UAC). The Russian press pictures the situation as though it is less expensive for the Kremlin to keep the Tu-204 manufacturing line busy rather than stop it and by doing this render thousands of machinists out of work. The money is needed not only to support production, but also for certification of the Tu-204SM, the recent mutation of the ailing aircraft family. First such airplane flew at the end of the past year from the aerodrome of Aviastar-SP factory that does assembly of the Tu-204 airplanes. The Russian press speculates that it is less expensive for the Kremlin to keep Aviastar-SP working rather than to close down this huge enterprise. Out of 9.9 billion Roubles required, some 5 billion will go for clearing the balance of Aviastar-SP in 2011–2013.

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Tu-204-120 passenger and freighter air-planes, gives a good example of the na-tion that can buy from the West, but none-theless selected Russian products for some good reasons.

The last, but not least, is the freighter market, where the Tu-204C (“cargo”) ver-sions have had some effective employ-ment. There is a sufficient number of ded-icated general cargo airlines. Some of them see newly-built Tu-204C freight-

ers as a viable alternative to the Boeing 727, 737 or 757 converted from passen-ger jets into freighters at the end of their lifetimes. TNT, AirRep and other western companies hired Tu-204C series aircraft and make their cost-effective use on Eu-ropean cargo services. More recently, Tu-polev freighters have found new custom-ers in the form of Cubana de Aviacion and Air China Cargo.

The existence of four distinct niches for the Tupolev narrow body jets in the huge global market for this class of aircraft gives certain airlines and aircraft leasing com-panies hope that their financial resources will be well-spent on respective programs on improvement of the baseline Tu-204, its cost-effective production in worthwhile quantities and subsequent leasing.

Vladimir Karnozov

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Maiden fl ightOn 29 December 2010 the first operable Tu-204SM registration RA-64050 performed its maiden flight

from the aerodrome of Ulyanovsk aviation plant with Victor Minashkin and Denis Vyazankin at the controls. Chief engineers Vladimir Salatov and Vladimir Filimoshkin were also aboard the airplane, to see to the test equipment. All systems were functioning normally during the flight. The Tu-204SM features advanced Perm PS-90A2 turbofans, improved navigation and radio communication set, and crew of two pilots. “Creation of the Tu-204SM resulted from the huge and persistent work done by Tupolev together with its industrial partners and state establishments. It is a milestone for Russian aircraft makers”, said Alexander Bobryshev, Tupolev President and Senior Vice President with United Aircraft Corporation. He expressed satisfaction with the work that has been done on the Tu-204SM project. “I am sure that the Tu-204SM will provide a reliable platform for development of new passenger, cargo and special mission aircraft”, Bobryshev said.

Earlier in December 2010, the Interstate Aviation Committee (MAK) issued approvals for improvements of the Tu-204-100C that permit increase in the maximum takeoff weight up to 110.5 tons. The Tu-204-100C is a dedicated side-door freighter version powered by two Perm Motors PS-90A turbofans. This airplane can now be offered to airline customers in two variants. One features maximum takeoff weight of 107.5 tons, maximum payload of 30 tons and maximum landing weight of up to 91.5 tons. Second version (reference Tu-204-100C-03) has 110.5, 30 and 93 tons respectively. Cargo version of the Tu-204 is given permission for 17,500 flight hours, 8,000 cycles and a calendar lifetime of 15 years, according to complimentary type certificate 233-Tu-204-120CE/D08 dated 15 December 2010. Besides, the certification authority has also issued certificate for the auxiliary power unit (APU) of the TA18-200 type, which is meant for installation on the Tu-204SM and other modern versions of the baseline jetliner. The APU maker, Aerosila scientific and industrial association, was awarded Certificate no. ST321-VD dated 16 December 2010. Separately, the certification authority approved changes in the TA12-60 APU that allow its operations up to 8,700 cycles and increase in the permitted altitude for idle and working modes up to 10,000m. In-flight starting is now permitted at the altitude of 7,500m. The respective complimentary certification document reference is 101-vD/D03 dated 16 December 2010.

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The aviation industries of Russia and Ukraine seek a new place in the global market for passenger jetliners with the Antonov An-148 regional jet family. A handful of initial-production An-148-100s have been in revenue service with Ukraine’s Aerosvit for a year-and-a-half and with Russia’s State Transport Company “Rossiya” (GTK Rossiya) for over a year. This year will mark commencement of overseas deliveries. What can the international customers expect of the new Russo-Ukrainian product?

AN-148:OPERATOR’S VERDICT

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The An-148 had its maiden flight on 17 December 2004, when the UR-NTA got airborne. Revenue flights with Ukraine’s Aerosvit airline has been lasting for a year and a half, during which the UR-NTA air-frame amassed nearly six thousand flight hours and the UR-NTC, delivered in May 2010, amassed three thousand flight hours.

In the first year of revenue operations in Ukraine, the airplane demonstrated fuel burn of 1,760kg (3,880lb) per block hour, and block speed of 700kmh (378kt). Aver-age flight duration was 1 hour 20 minutes. Initially, services were flown to six desti-nations within Ukraine, but later a dozen of international destinations were added.

In addition to four airframes assembled in Kiev (two in service, one being hand-ed over to airline customer and one un-dergoing certification trials), eight more have been made in Russia at VASO plant. Of the Russian examples, six went to GTK Rossiya and two more being flight-tested before delivery.

By now, the St. Petersburg-based carrier has amassed considerable operational ex-perience and decided to make the An-148 a backbone of its regional airliner fleet. In the fall of 2010, the airline signed follow-on order for nine additional An-148-100s. The decision was made upon a thorough analysis of the operational data and air-

craft performance during operational tri-als. As of mid-February 2011, the number of passengers carried on Russian-made An-148s exceeded 223 thousands.

On 21 December 2010 GTK Rossiya celebrated a whole year since the new type commenced revenue passenger ser-vices. In its first calendar year, GTK Rossi-ya An-148s performed 1,875 scheduled flights in the central timetable to 26 desti-nations. The first Russian-built An-148, reg-istration RA-61701, transported about nine hundred passengers on nine round services in the second half of December 2009. In the whole of 2010, during which the strength of the fleet gradually rose to six, the airline carried 192,240 passen-gers on nearly 2,000 city-pair flights. In January 2011, the carrier added over 22 thousand passengers, flying to twelve des-tinations in Russia and CIS.

All six An-148-100s in the GTK Rossiya’s fleet are on lease from Ilyushin Finance Co. (IFC). The lessor believes the current monthly utilization rate of 270 flight hours (FH) per a serviceable airframe can be in-creased up to 330 FH and even more. In terms of utilization rate, the RA-61704 has demonstrated the highest level so far, by amassing 296 FH on a single month. This means this aircraft routinely spent ten hours on a single day! It is a very good figure for an aircraft type that just entered revenue service.

A brand-new An-148 full flight simula-tor shall help further improve the utiliza-tion rates. Its installation has been complet-ed at the S7 Group training center in Mos-cow Domodedovo airport. The device was shipped in December last year, and be-gan operations after final tuning in Feb-ruary 2011. The simulator corresponds to Flight Training Device Level D. It is the first such unit to have been designed and built in Russia. It comes with an advanced mo-tion and visualization systems. The simu-lator was developed and built by Trans-as company based in St. Petersburg un-der Rouble 600million-plus contract (roughly Euro 15million) with IFC signed at MAKS’2007.

The involvement of the S7 Group was a major victory for the An-148 team

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in 2010. IFC and S7 Group signed re-spective agreement at Farnborough’2010. The S7’s involvement in the project is ex-pected to expand, to such an extent that the group may choose to acquire a quanti-ty of such aircraft for the airline of its own.

The S7 Group has invested its own funds into outfitting its training center at Domod-edovo with a comprehensive set of An-148 simulators for training of pilots, cabin and ground crews. One of those is a proce-dural training device for training of cabin crews. This device is provided by Moscow-based AKKO. This company supplies busi-ness and economy class seats, as well as interior items to the An-148 manufacturers.

The whole set of the An-148 training de-vices is promised to be in place and ful-ly operational in March 2011. This shall ease the current situation for GTK Ros-siya, which is short of type-rated pi-

lots. The shortage of qualified crews was a cause for relatively low aircraft utilization rate at the beginning of the revenue pas-senger operations.

Addressing participants of an An-148 operators’ conference, GTK Rossiya gen-eral director Sergei Belov thus spoke about his fleet renewal strategy: “the aircraft we buy must pay back our investment in rev-enue operations, they must justify our ex-penses”. The airline rejected a factory stan-dard model and instead ordered a cus-tomized An-148 version with dozens of changes to the production specimen, in-cluding avionics set (a US-made weath-er radar and collision-avoidance system) and interior (allows quick-conversion from 68-seat two-class layout to 75-seat tourist cabin at 32 degree pitch seat row spacing). Customization took a year, and, as Belov put it, “we got what we wanted”.

The airline accepted RA-61701 with 150 deviations from the specification un-der promise these would later be eliminat-ed. The number was down to 38 when RA-61703 was delivering three months lat-er. Most of the deviations and shortcomings were caused by the system crisis in the Rus-sian aviation industry, but GTK Rossiya be-lieved in the ability of the manufacturer to overcome those. “We know VASO as a first class production site from our Ilyushin Il-86 experience”, Sergei Belov explained.

Practical interaction between Antonov, VASO, IFC and GTK Rossiya has allowed effective rectification of the An-148 teeth-ing problems. Working together with oth-er Russian and Ukrainian enterprises, they introduced about 60 improvements and modifications into the original design. These improvements were implemented on the RA-61701 when this airframe was undergoing maintenance and repair at VA-SO in the second half of 2010. In Decem-ber the RA-61702 visited the factory to un-dergo similar work.

The improvement work VASO carries out on first production airframes includes main-tenance bulletins and changes to avionics to enable ICAO Cat.IIIa landings, to which Antonov certified its airplane in early 2010. The recent maintenance bulletin helps elim-inate problems GTK Rossiya experienced

Alexander Roubtsov:

“We continue working

hand in hand with

the developer and

manufacturer and GTK

Rossiya in order to make

the An-148 a mature

product able to compete

successfully in the global

market”

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in the unusually cold weather of December 2009, when the ambient temperature kept well below –20 degree Celsius, causing freezing of water pipes in the rear fuselage.

From its side, Antonov acknowledg-es teething problems with the new aircraft, but points out the An-148 comes equipped with a very modern Onboard technical servicing system (OTSS) for better fault tracing level. The developer insists that troubleshooting is naturally faster using OTSS. Antonov further says that the Aeros-vit and GTK Rossiya raised 35 technical is-sues. They have been answered by the An-tonov designers and engineers through issuance of technical solutions and bulle-tins. Besides, the company provided train-ing servicing for airlines customers, and improved their quality upon airlines’ rec-ommendations. Over 200 airline employ-ees have undergone training in the An-148 at Antonov bases.

IFC general director Alexander Roubt-sov puts the matter his way: “We are fair-ly close to the target with the recently made aircraft which have most of the ear-lier discovered design and manufacturing flaws rectified. We continue working hand in hand with the developer and manufac-turer and GTK Rossiya in order to make the An-148 a mature product able to com-pete successfully in the global market”.

The An-148 brings about a major de-parture from the Soviet-style sched-

uled calendar maintenance to pro-West-ern “on-condition” approach to keeping passenger jets airworthy. The MRO pro-gram being implemented by GTK Ros-siya is based on the airline’s experi-ence of operating the Airbus A320 and Boeing 737 aircraft families, as well as the 767-300ER. The intervals in this MRO program are broadly similar to that for the Airbus narrow bodies (for instance, A-check is performed after 750 FH). To help keeping the An-148 in operable condition, VASO keeps eleven employees at Pulkovo airport of St. Petersburg, and engine mak-er Motor-Sich two.

Work continues on improving mainte-nance procedures, so as to reduce number of man-hours required by the MRO pro-gram, and also to extend Manufacturer’s Minimum Equipment List (MMEL). Antonov admits that the An-148 currently requires more labor than the latest Boeing designs, but the gap is narrowing as the newer jet amasses real-life data on the airplane’s operations in commercial service.

AN-148-100 VITAL DATAMaximum takeoff weight 41.5tonsMaximum cruise Much number 0.79Seating capacity

single class, 30in pitch 80 passengerssingle class, 32in pitch 75 passengerstwo-class 8 business and 60 economy

Hourly fuel burn in typical cruise 1,500–1,600 kg

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The lion’s share of passengers transport-ed by Russian-made An-148s were carried between St. Petersburg and Moscow: this route was selected as most convenient from viewpoint of fixing would-be malfunctions discovered in flight, flight preparations or post-flight checks. But this put the An-148 into head-on competition with larger jets on the same route.

Six other airlines fly between the two cit-ies using Boeing 737 and Airbus A320 family jets. GTK Rossiya itself operates Airbus A319/320 and Boeing 737-500 on the same route, making a total of 15 daily return flights between the two cities in winter time. This makes it easy to com-pare the performance of different aircraft.

Having analyzed first three month of win-ter operations, GTK Rossiya found the An-148 to be a more effective money-making machine. “The An-148 offers lower operat-ing costs than the 737-500 per flight basis”, Sergei Belov said.

According to his founding, the costs for a round trip appeared to be 23% less. Al-though the 737-500 is somewhat larger, its excessive capacity was only occasionally helpful, whereas the An-148 flew with av-erage seat loading factor at 75%. On lon-ger routes, such as those connecting St. Pe-tersburg and Samara, the An-148’s direct trip costs were 46% less than the Boe-ing’s. This makes Belov able to assert: “The An-148 is not only in demand today, it is

essential to increasing frequencies on our route network”.

The other important observation the airline made was that the An-148 is most efficient on flight legs exceed-ing 1,200km (650nm). The wide seats (18.5inches/470mm for business class and 17.3inches/440mm for economy), similar to those on commercial airliners, high ceil-ing (2,000mm) and large hand baggage bins (0.056 cubic meters per passenger) provide comfort conditions for the travel-ers, at the level comparable to the Airbus narrow bodies. This makes it reasonable to place the new jet on services to various remote provincial cities inside the country (taking account of the vast Russian lands) and also to small airports in the Western Europe where the traffic is not big enough to justify use of the narrow bodies.

GTK Rossiya general director draws a conclusion: “For us there is no ques-tion of whether the aircraft is good or bad: the An-148 is very much a good air-craft. It has proved worthy of airline ser-vice. At the same time, as any brand-new type, it has teething problems that need to be cured by concerted actions of the air-lines, industry, financiers and government bodies”.

The airline says it wants to decrease downtime and maintenance costs. This is possible through streamlining An-148 pro-duction at VASO, and raising the strength of the airline’s fleet from six to fifteen units.

Alexander Neradko: The An-148 may become

the most popular jet in service with the airlines

operating in the territory of the Russian Federation.

This aircraft is the one we have been longing to see

in revenue service

Aircraft

19A I R F L E E T · 2 · 2 0 1 1 ( 8 7 )

September 14 – 16

2011www.jetexpo.ru

INTERNATIONAL BUSINESS AVIATION EXHIBITION

WE DEVELOP THE SHOW.WE THINK ABOUT OUR CUSTOMERS.WE DON’T STOP.

WELCOME ONBOARD

For the fi rst time EVER! Jet Expo 2011 will be held at a unifi ed site – Vnukovo-3 airport

Aircraft

20

Operational revenue can be enlarged through an increase in frequencies and use of the aircraft with the right capacity on GTK Rossiya’s network of routes.

As a further sign of confidence in the An-148, GTK Rossiya general director has ap-plied to the Russian government with a let-ter in which he asks for additional state support to the program. In this letter he Sergei Belov writes that this aircraft can help the airline and the manufacturer re-gain their positions in the competitive envi-ronment of the aviation market.

Alexander Neradko, head of Russia’s Federal Air Transportation Agency (acro-nym FSVT, effectively Russian civil aviation authority), believes in good prospects for the new Antonov. He says: “The An-148 may become the most popular jet in ser-vice with the airlines operating in the terri-tory of the Russian Federation. This aircraft is the one we have been longing to see in revenue service. It meets the expecta-tions of Russian airlines to a robust region-al jet able to operate from most of the Rus-sian provincial airports. Initial operations confirmed most of our expectations, but al-so highlighted some teething problems with the type. I am sure we can overcome those by concerted actions of all parties interest-ed in the success of the program”.

A number of Russian carriers have signed for the An-148 or expressed an in-terest in it. A word of encouragement to the An-148 team came from Aeroflot

Aircraft

21A I R F L E E T · 2 · 2 0 1 1 ( 8 7 )

general director Vitaly Saveliev. He said the Russian flag carrier considers plac-ing orders for fifteen An-148s along with purchases of other indigenous designs, the MS-21, An-140 and SSJ100, from local manufacturers. Aeroflot’s interest in the An-148 comes from the fact that GTK Rossiya is one of the members in Aeroflot Group. Another member, Vladivostok Avia,

has already ordered two An-148s via IFC, for delivery in 2011–2012.

IFC intends to stay the main supplier of newly made An-148s coming off the as-sembly lines at the aviation plants in Vo-ronezh and Kiev. The lessor says this year it will place with its airline customers five more Russian-made An-148-100s and two Ukrainian-made An-148-200s (An-158s).

In February 2011 Alexander Roubtsov said IFC will acquire 80 An-148s in the next six years, and place them with airlines.

IFC general director believes the techni-cal problems discovered during initial reve-nue operations are resolvable and can be dealt with in the conditions of unprecedent-ed publicity for the Russian aerospace sec-tor. “We never hide anything. The An-148 is a very open project to anyone interested. In fact, it is the most widely discussed civ-il aeronautical project of all ever attempt-ed by the local manufacturers. If you try to obtain real figures on other new airplanes in the marketplace, you will never get more

Vitaly Saveliev: the Russian flag carrier considers

placing orders for fifteen An-148s along with

purchases of other indigenous designs

Aircraft

22

detailed and trustworthy information than that available on the An-148. That’s be-cause we and our partners are confident in the success of this program. We feel comfortable when sharing data on An-148 operations with the community”.

Today, the An-148 is arguably the new-est and most efficient regional jet available elsewhere, designed from scratch on com-puter screen using modern CAD/CAM/CAE technologies (computer-aided design, manufacturing and engineering). Antonov and its partners believe they can provide competition to Embraer and Bombardier.

According to China’s COMAC market forecast 2010–2019, the global market for regional jets is worth US dollar 130bil-lion, and will see 807 deliveries of air-craft in the 70-seat class and 2,445 more in the 90-seat class. Russia’s largest air-craft lessor has a prognosis of its own. In next twenty years Ilyushin Finance Co. predicts 350–400 sales for the An-148 and 200–250 more for the An-148-200 (An-158), a stretched version seating 99 passengers compared to 75 for the base-line model.

Vladimir Karnozov

English-cockpit certifi ed for An-148On 22 February 2011 the Air Register of the Interstate Aviation

Committee (ARMAC), effectively the CIS civil aviation authority, awarded Antonov of Ukraine a complimentary type certification (CTC) for English-language cockpit of the An-148-100E twinjet. Here, the E suffix pointing at the customized version of the 75-seatrer for the Myanmar government.

Meantime, two An-148-100Es assembled at VASO factory in Voronezh, are being prepared for delivery to the customer after having flown several dozens of test missions to achieve the CTC. Deliveries are scheduled for March 2011, upon completion of the hot-and-high trials and issuing of another CTC.

The Myanmar government placed order for two An-148-100Es along with twenty Mikoyan MiG-29 fighters in November 2009. The respective contracts are of government-to-government nature. Thus, Myanmar is set to become the first non-CIS operator of the new regional jet.

Meantime, Antonov has performed all necessary flights in the program of hot-and-high trials in the Islamic Republic of Iran, another possible customer for the type, using one An-148-100B and one An-158 (also known as the An-148-200, and is a stretched version seating up to 99 passengers). According to the Ukrainian manufacturer, all providing documentation has been submitted to ARMAC, so that hot-and-high CTC is now expected in March. The CTC shall allow field operations for 3,000-meters-high runways at ambient temperatures up to +40 degree Celsius.

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23A I R F L E E T · 2 · 2 0 1 1 ( 8 7 )

Interview

24

China and Russia have had a long and eventful history of collaboration in the spheres of defense and heavy in-dustries. Alexander Fomin, first depu-ty director at Russia’s Federal Service for Military-technical Cooperation (FSVTS), has kindly agreed to answer some ques-tions about the current situation in that field and the future prospects for Sino-Russian relations. The interviewer is Vladi-mir Karnozov.

■ Question: How can you estimate cur-rent state of military-technical cooperation between China and Russia?

■ Answer: The state of our relations is that of strategic partners.

■ Q: What does the future bring in the sphere of our military-technical co-operation?

■ A: In my view, we have had a histo-ry of relationship rich with many events and milestones. This relationship is being developed further by concerted actions of both sides. Such a relationship certain-ly has future prospects. The Chinese avia-tion industry came into being largely due to the massive Soviet aid. There are quite a few of spheres and directions for further continuation of our cooperation, where we can be partners and work hand-in-hand for mutual benefits.

■ Q: There were no Russian-made air-craft on display at Airshow China 2010 in November. But the previous events, in 2008, 2006 and before, saw rather large presence of Russian airplanes and helicopters. Why is that change?

■ A: Whatever the reason was, it is by no means an indicator of where we go. The nature of our relationship with Chi-na has not changed. Chinese government structures operate a large arsenal of Rus-sian and Soviet combat systems, includ-ing copies of those systems assembled lo-cally under license. Many of the local-

ly designed and made systems exhibited at Airshow China are, in one way or oth-er, represent derivatives or improved ver-sions of our original designs including those supplied directly by Russia and Sovi-et Union or their further developments. Ma-ny of the contemporary Chinese flying ve-hicles on display at the above mentioned show use our components, vendor item or technical solutions.

■ Q: Perhaps the most interesting exhibits at Airshow China 2010 were the J-10 fighters brought by the People Liberation Army Air Force (PLAAF) and

the JF-17 by the Pakistan Air Force. The J-10 and JF-17 are the most recent Chinese aeronautic designs, and both are powered by Russian-made engines. Will it continue to be like this?

■ A: Your question touches a very sensitive matter of military-technical cooperation which I do not want to explain or comment.

■ Q: From one show to another, it is clear to see the ways Chinese industry has been developing. One of the ways is that of creating and developing joint ventures. It seems to be a good for increasing

CHINA AND RUSSIA: STRATEGIC PARTNERS

Interview

25A I R F L E E T · 2 · 2 0 1 1 ( 8 7 )

production localization and drawing foreign partners into big projects led by Chinese state corporations. But this mostly applies to western partners. Is this also possible with Russia?

■ A: Yes, quite.■ Q: But why does this trend is not yet

common between Russia and China?■ A: Perhaps that is so because we

are yet to get mature enough for such cooperation. A joint venture is a good way of industrial collaboration, as far as technology transfer and production localization are concerned. If our relationship has not yet reached enough maturity so as to permit materialization

of various projects between Russia and China by means of creating joint ventures, then it only means we have a lot ahead of us on our way.

So far, we have been doing rather well without it, by making use of other forms of interaction. For instance, government-to-government agreements. Creating a joint venture is not the only way of doing things. We can materialize a project of mutual interest using other means. Having no joint ventures have not restricted our nations during all these years we have been working together.

The history of military-technical and industrial cooperation between the People’s Republic of China (PRC) and my country has been going on for over sixty years. Back in the fifties, when the massive Soviet aid was available, PRC commenced construction of manufacturing plans and factories in large numbers — not dozens, but hundreds and thousands of them! These new industrial enterprises springing up all over China had various specializations. They were receiving and mastering Soviet military, double-use and general purpose technologies. Since that time we have been collaborating, sharing our knowledge and experience.

Seemingly, no other nation can boast relations with PRC on the scale and level of mutual trust present in the long and successful history of the Sino-Russian relationship. This is especially true in the high-tech sphere. Who else has given China advanced technologies on that scale?! No-one else in the world can possibly challenge Russia in that.

Broadly speaking, there are few nations in the world that manufacture

AL-31FN

J-10

Interview

26

the whole spectrum of armament and military equipment. One can count them with his fingers. If we leave in consideration only those who willingly share their technologies with other nations, the number will be even less. Again, I do not find many examples in the world’s history that could be compared with the Sino-Russian relationship by the scale of military technical cooperation.

■ Q: Which topics currently on the agenda you would like to highlight?

■ A: There are many topics for discussion in various fields, including deliveries, technology transfer and after sales support. They are many simply because there is quite a few programs PRC and Russia have been materializing. Most of these programs have been widely featured by the media, and became well known to the international community. On the eve of Airshow China 2010, took place the fifteenth session of the Chinese-Russian interstate commission for military technical cooperation. During this session, important decisions were made. We are set to continue our steady work with our Chinese partners. We do not only talk, — we deliver.

■ Q: PRC is one of few countries manufacturing the Kalashnikov assault rifle under license. Why do you think the Chinese agreed to procure the license from Russia after long years they produced these rifles without one?

■ A: The fact you have mentioned is very illustrative. It reflects the current state of Sino-Russian relationship. There is no space for clever hand practices between old good friends.

Sadly, some countries chose another approach in case with the Kalashnikov assault rifle. Dozens of them (fifty in total) continue making copies of this rifle and other Russian arms without license from the Original Equipment Manufacturers (OEMs). They even try selling their illegal copies in the global marketplace!

Some of those countries try to picture themselves as devoted fighters for democracy and the rule of the law. But, at the same time, they continue making illegal copies of our product using purposely built factories for their purposes. By so doing they ruin the image of Russia on the market for arms. They cram the market with forgeries, illegally use the Russian trademark and pay no

royalties to OEM. It is worth to notice that very same countries behave in quite another manner when dealing with other leading nations in arms design and manufacturing.

The very fact that PRC has chosen for itself the civilized way of doing things is an illustration of our exceptionally good level of relationship. This relationship between PRC and my country is full of trust and mutual understanding. Let me stress again: relationship between China and Russia is that of strategic partners. We understand very well how we must behave in relation to each other. We make our choice in favor of honest and trustful relationship.

■ Q: After this story with the Kalashnikov assault rifle, can we expect PRC to arrange proper license production rights to do with other Russian designs?

■ A: Yes, we can.

No other nation can boast relations with PRC

on the scale and level of mutual trust present

in the long and successful history of the Sino-

Russian relationship. This is especially true

in the high-tech sphere

Tu-204Cargo

Interview

27A I R F L E E T · 2 · 2 0 1 1 ( 8 7 )

targeting your audience

since 1997

Exhibitions

28

The Indian market for commercial jet-liners have been developing fast, reflect-ing the strong growth of the Indian econo-my. Roughly, the Indian passenger and car-go aircraft market is roughly estimated as one-third of that for China. Indian civil air-lines once operated a number of Ilyushin Il-62 long-range jetliners, Tupolev Tu-154M narrow-body tri-jets and Mi-8/17 series helicopters. Besides, the Indian government and the air force operated a number of So-viet civilian aircraft on VVIP and transpor-tation duties, including the Tu-124 twinjet (with the Air Headquarters Communications Squadron based at Palam air force station) and Il-14 twin piston (same operator).

The focus of the Russian marketing ef-forts on was firmly on the MS-21 next-gen-eration narrow body jetliner, the most am-bitious and expensive civilian aeronautical project Russian ever attempted. This proj-ect is the key one among all other civilian aeronautical efforts being undertaken by Russia’s United Aircraft Corporation (UAC). Irkut Corporation, a member in UAC, has been acting MS-21 project leader.

Presenting this new product to the show participants, Oleg Demchenko, presi-dent of Irkut Corporation, broke out a big news: the launch customer for the MS-21, Crecom Burj Resources Limited of Ma-laysia, agreed to make advance payment

in March. By doing so, the Malaysian fi-nancial group will make the most crucial commitment to the MS-21 project and en-able the launch of the program in honest.

Crecom Burj Resources Limited signed firm order for fifty MS-21 jetliners at Farn-borough 2010 past summer, in presence of the top Malaysian government officials and military leaders, including the minis-ter for defense Dato’ Seri Dr. Ahmad Zahid Hamidi, and commander of the Malaysian armed forces General Tan Sri Dato’ Sri Azizan bin Ariffin.

Touching on orders for the MS-21, Dem-chenko said that by the time of the Indian airshow, the number of commitments had

RUSSIA EYES INDIANCIVIL MARKETSDuring the main press briefing of the Russian official delegation at Aero India 2011, the key speakers spoke a lot about their plans for cooperation with the local industrial companies on civilian programs and sales to Indian airlines of modern Russian jetliners.

Exhibitions

29A I R F L E E T · 2 · 2 0 1 1 ( 8 7 )

reached 150. However, at that time Cre-com was the only customer with a firm or-der. Demchenko expects another major or-der, from Russian Technologies (Rostech-nologii) state corporation for another fifty jets to be firmed up in March, after ongo-ing “technical negotiations” are completed. Rostechnologii want to place their MS-21 with Aeroflot.

For half-a-year Irkut has been talking to Hindustan Aeronautics Limited (HAL), urg-ing it to take part in the MS-21 project. Ear-lier attempts to draw Airbus and the Chi-nese airframes proved fruitless. Demchen-ko assesses HAL involvement in the project as “probable”. Promoting Irkut’s first-ever commercial jetliner into international mar-ket proves difficult, Demchenko confessed, and added: “we are new-comers, it feels hard, but we will continue our efforts”.

In November 2010 the MS-21 passed airframe mockup inspection with Russian aviation authority ARMAK, the Air Regis-ter of Interstate Aviation Committee. Same month, Perm-based Aviadvigatel design house, a member in the United Engine Cor-poration, submitted first PD-14 core engine to bench testing. The PD-14 is a Russian al-ternative to the Pratt&Whitney PW1400G of the PurePower family Geared Turbo-fan engines. At the same time, in 2010 Ir-kut selected the PW1400G as the main powerplant for the MS-21. “I believe we

do the right thing by offering our aircraft to customers with a choice of two engines”, Demchenko explained.

Aerocomposite startup firm found-ed by United Aircraft Corporation (UAC) has submitted first parts of MS-21 car-bon wing to bench testing. “All this give me the ground to assert the MS-21 has moved from the virtual reality into practical work with hardware”, Demchenko commented.

The MS-21 is expected to pass Gate 4 of the Boeing “seven gates” aircraft de-velopment and screening system in April — May timeframe. Demchenko describes the Gate 4 as the most important phase of the aircraft shaping process. “It involves

final selection of all vendors and freezing of the airframe concept. Besides, it enables the next phase, that of issuing documenta-tion for manufacturing”, the Irkut president said. He claims the project is “on track” for maiden flight in 2014 and European Avi-ation Safety Agency (EASA) certification in 2016.

Speaking of the competition, Dem-chenko ruled out Boeing on the ground that the US maker has not yet present-ed a re-engined 737. He leaves on-ly two competitors in consideration: Air-bus with the A320NEO and COMAC with the C919 under consideration. COMAC is Commercial Aircraft Corporation of Chi-na based in Shanghai that was founded to promote the C919 project.

Demchenko described the C919 as “an aircraft broadly similar in advertized per-formance to the A320NEO, they are

МS-21 model

Oleg Demchenko:

“The launch customer

for the MS-21, Crecom

Burj Resources Limited

of Malaysia, agreed to

make advance payment

in March”

Exhibitions

30

roughly the same level of performance”. The advent of the A320NEO only proves the right choice Irkut made earlier for the PurePower PW1400G powerplant, he added. While the new European jet-liner also relies on the Pratt&Whitney en-gines, the C919 is instead taking chances on the LEAP-X turbofan from CFM Interna-tional company. The latter is a joint venture between Snecma of France and General Electric of the United States of America.

Since the MS-21 is a clean-sheet design, “I believe we win in flight performance against the A320NEO”, Demchenko in-sisted. Compared to the current production A320, the MS-21 wins by 15% in opera-tional economics. “Hence, we know where we go and why we do so”, the Irkut presi-dent concluded.

In his turn, the newly appointed UAC president Mikhail Pogosayn says he do not see reason in revising the current UAC strategy that “positions the MS-21

as the commercial narrow body liner of the future, aiming at creation of compet-itive product for the respective very large segment of the global market for commer-cial jetliners”.

Mikhail Pogosyan further said that “UAC plans to attain competitiveness by a wide scale use of composite materials, open ar-chitecture onboard systems, and a whole set of other innovative solutions”. The ad-vertized performance of the MS-21 shall be achieved through getting most of the Russian industry and involving west-ern firms into the project.

Giving Russia’s point of view on the ways to expand cooperation with her client states, the new head of UAC said the fol-lowing. In his view, the scope of Indo-Rus-sian cooperation “must not be limited to military systems alone”. Instead, it should also grow in the direction of commercial aviation. Creation of modern commercial airplanes is the key priority for UAC now.

At AeroIndia 2011 the Russian corpo-ration exhibited the Sukhoi Superjet 100 (SSJ100), a 98-seat small commercial jet sized in between the narrow body com-mercial jetliners and the regional jets. This aircraft was the only full-scale flying ve-hicle brought from Russia for this airshow. The airplane was ARMAK type certifica-tion on 3 February 2011. “We consider Asia-Pacific as the most important region to promote the SSJ100 into the global market. I believe we soon be able to sign agree-ments with Indian airlines and also airlines of the region, on this airplane”, UAC pres-ident said.

Besides, Mikhail Pogosyan sees some sales prospects in the region for the Rus-sian-made Antonov An-148 jetliner with nominal seating capacity of 68–80 pas-sengers. “We connect our plans for future with promotion of the An-148 into the Asia-Pacific, another new airplane that is a joint product of UAC and our Ukrainian part-ners”, he said. Promotion of the MS-21, SSJ100 and An-148 into the Indian mar-ket will take advantage of the heavy pres-ence the Russian companies enjoy in India through their air lift business.

The Indian air force has long been oper-ating the Ilyushin Il-76 quad jet family air-craft that comprises the Il-76MD air lift-ers, the Il-78MKI air tankers and the EI airborne early warning and control sys-tem on the refurbished Il-76 platform. It is

Mikhail Pogosyan: “We

believe that the facts

of the Indian air force

operating a large fleet of

Ilyushin quads and good

chances for the Il-476

give us strong grounds to

believe in the long term

future for this platform”

Exhibitions

31A I R F L E E T · 2 · 2 0 1 1 ( 8 7 )

worth to notice that the Il-76M/T and Il-78 series aircraft powered by the Saturn D-30KP engines are also in service with Chi-na’s People Liberation Army (PLA) and her air force, the PLAAF. At the same time, the EI flying radar uses improved platform featuring advanced Russian and Israeli avi-onics and on-board systems and, impor-tantly, the more advanced Perm PS-90A76 high-bypass turbofans. The PS-90A series are currently the main source of power for Russian passenger jetliners, the Il-96 wide body quad and the Tupolev Tu-204 nar-row body twinjet.

Russia hopes for victory in the ongo-ing Indian defense ministry’s tender for additional quantity of air tanker aircraft. In the tender, the improved Il-78MKI, in the form of the Il-476 tanker variant, is competing against the Airbus A330-based tanker aircraft. Production of the Il-476 is being prepared by Ilyushin and Avia-star at the Ulianovsk plant. “We believe that the facts of the Indian air force oper-ating a large fleet of Ilyushin quads and good chances for the Il-476 give us strong grounds to believe in the long term future for this platform”, Pogosyan said.

Meantime, Indo-Russian cooperation in the field of airlifters enters a quality new level with commencement of the Multi-

role Transport Aircraft (MTA) project. Ac-cording to Pogosyan, “together with FGFA, the Fifth-Generation Fighter Aircraft, these two programs are the most important for the future of cooperation between Russia and India in the aeronautical field”.

United Aircraft Corporation of Russia and Hindustan Aeronautics Limited of India have commenced first phase of the MTA project execution. In December 2010 the two partners registered a joint venture to undertake this project.

At AeroIndia’2011 the Russian and Indi-an officials told the media that a joint work-ing group has been formed to look at ways the MTA should be developed. “I think, in frame of preliminary studies, the group will consider different ideas”, Pogosyan said.

Mikhail Pogosyan has not ruled out the possibility of using the An-148 as a platform for development of the MTA. At the same time, the resulting design shall meet specifications of the Russian and Indi-an customers to this new airplane. “I think that the specification to the An-148 and that to MTA are somewhat different, natu-rally. Yet, the working group may find this idea [usage of An-148 platform] worth considering”, he added.

Wrapping up the Russian press confer-ence at Aero India 2011, Mikhail Pogo-syan drew attention to the recently re-vised UAC strategy. “We will speed up our work in the direction of innovations, as the Russian government instructs us. But, on the whole, I found the current UAC strat-egy as a good one as it focuses our re-sources on key high-tech programs that shall result in a competitive product, such as the Sukhoi Superjet 100, MS-21 and fifth-generation fighter. The current strate-gy creates a high concentration of our re-sources on perspective directions.

Vladimir KarnozovМS-21 cockpit

Airport

32

AN AIRPORTFOR SALE!

Airport

33A I R F L E E T · 2 · 2 0 1 1 ( 8 7 )

Loss-making SaleOn 3 February 2011 the aviation in-

dustry found itself in the grips of a serious scandal. A certain rather competent peri-odical publicised the data from a presenta-tion by the Troika-Dialog investment com-pany, as of December 2010. The presen-tation had the results of several valuations, including that of Vnukovo Airport. The rep-resentatives of the JSC Vnukovo Airport ex-pressed incredulity at this valuation. ‘That brings up the following question, what da-ta are these conclusions regarding the cost of the airport based on? It needs to be re-minded that Vnukovo includes several en-terprises, such as the JSC Vnukovo Air-port, the JSC International Vnukovo Airport, the JSC VARZ-400, the JSC Avia-Business-Terminal and others. All the three passen-ger terminals are in different forms of own-ership. The shareholders own different shares in the enterprises of the Vnukovo Airport Complex’, said the spokespeople for the company. Later on another compa-ny mentioned in the presentation, Sherem-etievo, denied any involvement in it, and then the Troika-Dialog company itself fol-lowed suit. As a result, it was decided to take as a point of reference the valuation of 27 billion roubles, proposed by an au-diting company affiliated with the council of Moscow, which remains unnamed.

The largest official private share-holder of Vnukovo, Vnukovo-Invest, ac-cepts the possibility that the starting point at the auction will be 27 billion roubles, the amount quoted with references to unof-ficial sources. The company is determined to participate in the auction and use their own funds and hedge their bet by having recourse to reserves of certain financial

It was announced at the end of February that private shareholders can expect the municipal stock of shares of Vnukovo Airport in Moscow to be privatised in the second half of the year. And, according to one of the owners of Vnukovo, Vitaly Vantsev, the auction for the 75% share of the airport that belongs to the government of Moscow will take place in the second half of 2011. It has earlier been made public that there have been two valuations of the airport. The first one was done by an auditing company affiliated with the Moscow authorities, which was not named. According to them, Moscow’s share is approximately $1 billion. But the valuation by another auditing company called Troika Dialog turned out to be as little as $0.5 billion, but Troika Dialog refuted this information later on.

Airport

34

structures in order to buy the Moscow stock of shares. According to estimations by Vnu-kovo-Invest, 27 billion roubles is more or less equal to the amount invested in the air-port by the city of Moscow.

Apart from Vnukovo-Invest, such larg-est Russian holdings as Basel and Reno-va are interested in acquiring the Moscow share of Vnukovo Airport. The former ex-pressed willingness to develop the domes-tic lines terminal and turn it into a base for low-cost flights. There have been rumours that the JSFC Systema is going to bid for

the airport as well, but it has been denied by the company itself.

Moscow can, therefore, earn 27 billion roubles through the sale of its share in Vnu-

kovo Airport, thus recovering its invest-ments into the airport itself. But, according to unofficial sources, Moscow spent sev-eral times as much in developing the in-

According to estimations by Vnukovo-Invest, the

largest official private shareholder of Vnukovo,

27 billion roubles is equal to the amount

invested in the airport by the city of Moscow

Airport

35A I R F L E E T · 2 · 2 0 1 1 ( 8 7 )

frastructure around Vnukovo, investing 60 billion roubles from the municipal budget. The airport complex is currently integrat-ed in the infrastructure of the city by means of three motorways (Kiev, Minsk and Boro-vsk motorways). Besides, a 2,5-kilome-ter-long two-level flyover was erected along the front of the terminal as a part of the modernisation project. First class trains running from Kiev Station without in-termediate stops arrive at the underground train station of Vnukovo Airport which has a direct exit to the new Terminal A. But, ac-cording to experts, it is impossible to recov-er these investments now through selling

the airport. They note that in a few years time the city would be able to sell Vnuko-vo with a higher profit. Besides, according to certain sources, the most valuable as-sets of the airport actually do not belong to the Moscow authorities but to private in-vestors.

Excuse me, but this is not yours!According to the spokespeople for Vnu-

kovo Airport, the government of Mos-cow currently owns 75% minus one share of the JSC Vnukovo Airport, 25% plus one share of the JSC International Vnukovo Air-port, 26% of the JSC Avia-Business-Termi-

nal and 25% minus one share of the JSC VARZ-400. It has also been found out that one of the most attractive assets, the new cargo terminal, does not belong to Mos-cow. Our sources in Vnukovo claim that businessmen Alisher Usmanov and Lev Kvetnoy invested substantially in the cargo terminal. As a result, we got ‘a postal and cargo complex, stunning in its scale, which by technical and economical parameters is one of the largest air-cargo logistical centres in Russia. The special advantage of the project is that the building of the car-go complex is close to the aircraft parking area, which considerably reduces the time

Airport

36

needed to load and unload cargos’, said one of the press-releases. This is all good, but what has Moscow to do with it?

The situation with another attractive as-set of Vnukovo Airport, the new Terminal A, is not very clear either. But the new ter-minal seems to be the main sheet anchor for the airport. ‘It will mean new possibili-ties and will enable us to increase the traf-fic capacity of Vnukovo up to the level of 20 million passengers a year by 2015’, said one of the press-releases of the air-port. According to the general manag-er of Vnukovo, around 40 billion roubles was spent on the construction. The to-tal cost of the project is 65 billion roubles. There is a clear understanding of the way the project was funded regarding the €120 million provided by the Bank of Moscow as a loan to the airport at the beginning of 2010. The money was allocated for five years at a 10.5% annual interest rate. The bank also received a 3% non-recurrent commission of the credited amount. But however hard you try to con-vert €120 million into roubles at the rate of Moscow Central Stock Exchange, you still will not succeed in getting 40 billion. The press service of Vnukovo did not man-age to say where the rest of the invest-ments came from, noting that this is clas-sified information. It was only found out that the money was provided mostly by private investors. The co-owner of Vnuko-vo, Vitaly Vantsev did not deny it, though. The rest of the funds were officially trans-ferred to Vnukovo through buyback of ad-ditional share issue in lots in proportion to the parts of property: Vnukovo-Invest around 25% of the amount, the govern-ment of Moscow — 75%. But the sourc-es in the airport claim that payments were actually organised in a different way and investments came from private structures. But now it is practically impossible to re-store this chain and find out what condi-tions the private investors set for paying for the share of Moscow.

‘I would like to emphasise that the new terminal is officially registered as proper-ty of the JSC Vnukovo Airport, where Mos-cow has 75% minus one share. The rest of the property of the airport is a rath-

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er modest hotel, a part of a preventorium, a boiler-house and the old terminal for do-mestic flights’, says one of the high officials of Vnukovo, ‘and although the Terminal A is assigned for the JSC Vnukovo Airport, it should actually be considered a manage-ment company rather than a sole propri-etor company’.

In light of this, the return of Lev Kvet-noy to the board of directors of Vnuko-vo is quite understandable. As they say at the market, he did not confine himself to investments in the cargo terminal. Ac-cording to the official information pub-lished at the website of the National Stan-dard Bank, Mr. Kvetnoy controls at least

1.7% of shares of the JSC Vnukovo Airport. According to unofficial sources, he owns a considerable share practically in all en-terprises around the Vnukovo air complex.

We should not, however, forget about another aspect. The new Terminal A will pass into the ownership of the Bank of Moscow for five years after its con-struction has been finished. The guaran-tee by the JSC International Vnukovo Air-port, the JSC Vnukovo-Invest, the JSC Air and Oil Company and the JSC Vnukovo Handling, which are all controlled by Vit-aly Vantsev, will act as a loan security. By the way, he pledged his own word for this loan. Some experts note that the scheme

is rather strange, it is absolutely unclear why he needed to pledge if the bank has the terminal as security.

This combination might have been creat-ed so that even if Vnukovo Airport turned bankrupt or it was no longer possible to pay back the loan, the Vantsev fami-ly could keep control over the new termi-nal. If they pay the debts of the airport they can easily claim a bigger share of the Ter-minal A. According to the official version, however, Vitaly Vantsev just really believes in Vnukovo, and this is the reason why he pledged all his assets.

According to some experts, the company that buys out the Moscow share of the air-port for 27 billion roubles is the real inves-tor, and not the government of Moscow. They do not exclude the possibility, how-ever, that the new mayor of Moscow, Ser-gey Sobyanin, will reconsider the unoffi-cial agreements regarding Vnukovo which have been reached so far.

Irina Dorogan

According to some experts, the company that

buys out the Moscow share of the airport for

27 billion roubles is the real investor, and not

the government of Moscow

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Airlines

This year one of most large China carri-ers — Hong Kong Airlines — have official-ly received a Four-Star Ranking of “Prod-uct and Service Quality” by Skytrax — one of the world’s major rating agencies. The President of Skytrax, Mr. Edward Plaist-ed presented the Four-Star Airlines cer-tificate to Mr. Yang Jian Hong, President of Hong Kong Airlines at the Asia World Expo Hong Kong on 14th January 2011.

The official Skytrax Airlines Star rank-ing is universally recognized as an inde-pendent and creditable measure of ser-vice quality of an airline. The star rank-ings of Skytrax are rated according to the ground and inflight services of an air-line’s Business class and Economy class, as well as the general aspects including the quality of lounge service, in-flight enter-tainment, website, and more other criteria.

Hong Kong Airlines was established in 2001 and its allied company Hong Kong Express Airways in 2004 (both com-panies are affiliated with the Hainan (HNA) Group, one of the largest Chinese hold-ings). Since that time they turned into carri-ers with full scale of services providing pas-senger and cargo transportation to more than 20 cities of China and Asia. Air fleet

of the companies increased to 55 aircrafts such as Boeing-737, Airbus-330, Air-bus-320, with mean age of only 3 years. And this is not the limit. Air fleet will be suffi-ciently increased in the next few years due to confirmed order for 58 modern aircrafts.

If during its maiden years Hong Kong Air-lines operated only with interregional traf-fic in China and neighbor countries such as Japan, Indonesia, Philippines and Vietnam, but now the carrier is aiming to expand the routemap as wide as possible. For ex-

ample, the direct thrice weekly scheduled non-stop flight Moscow — Hong Kong was officially launched in Sheremetjevo airport on 30 June 2010, daily scheduled non-stop service from Hong Kong to Singapore have started this year (an inauguration cer-emony was organized at the Hong Kong International Airport on 15 January 2011). The scheduled service Moscow — Hong Kong will be organized fore times a week since April.

It's remarkable, that the Hong Kong Air-lines Business class inflight service lev-el is highly recognized now both with pas-sengers and experts. This became one of the most outstanding achievements for the carrier last year.

Joining to the International Air Trans-port Association (IATA) became the new step in company development. IATA mem-bers include the world’s leading pas-senger and cargo airlines, carrying 93% of the world’s international sched-uled traffic. Hong Kong Airlines become an Active Member of association since 22 October 2010. Ms Yvonne Ho, Gen-eral Manager, Hong Kong, IATA, present-ed the welcome certificate to Mr Wang Yankun, Commercial Director of Hong Kong Airlines on 20 December at Hong Kong Airlines' Citygate office.

HONG KONG AIRLINES — 2010–2011:HIGH RANKING, NEW SCHEDUELD SERVICES, IATA MEMBERSHIP

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Airlines

A I R F L E E T · 2 · 2 0 1 1 ( 8 7 )

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Before looking at each alliance and its potential on the Russian market more close-ly, let us point out a few aspects that should be taken into account when analysing this issue. The first one is the reason why en-gaging a Russian carrier with a wide do-mestic route network in an alliance means unquestionable competitive advantages. The truth is that unlike in most Western Eu-ropean countries, the Russian Air Code for-bids foreign carriers to provide domestic air services. So, if, for example, some Eu-ropean routes can be replaced by travel-ling by land, in Russia, due to its vast terri-tory, there are no alternatives to flying for transit passengers from remote regions.

Russia’s vast territory is a crucial devel-opment incentive for civil aviation. Most passengers travel with airlines connecting Moscow with eastern regions, St. Peters-burg, resort areas and also with the capi-tals of the CIS and major European coun-

tries. Apart from that, using air service saves a lot of time: it is the air transport that prevails in long-distance carriage of pas-sengers (over a thousand kilometres). Get-ting a Russian player opens a gate for for-eign companies deep into Russia and en-ables them to go beyond the three of four large Russian hubs.

On the other hand, there are positive aspects for Russian companies, too, as they join global partnerships. Alliances make it possible to keep seeming present all around the world, even when there is a decrease in the number of internation-al flights, by means of code sharing, that is a reciprocal agreement to share the air-line codes. Carriers which do not actual-ly operate flights on certain routes, can, nevertheless, offer these destinations to their customers by means of participation in an alliance. Experts note that alliances provide opportunities to create an exten-

sive route network and increase the carri-er’s profits.

Participating in a global partnership allows carriers to attract more passen-gers with the comfort and shortest possi-ble stop-overs in hubs. It is also appealing because accumulated points in common frequent-flyer programmes can be re-deemed with different members of the alli-ance. They are also interesting for the spe-cial rates, a single brand and the stan-dards of service quality. According to members of various alliances around the world, they manage to increase their revenues by 5–7% through this cooper-ation. Although participation in a glob-al partnership does not exclude the dan-ger of bankruptcy, carriers can still hope that the other members will lend a help-ing hand and, if worst comes to worst, will at least help to save the brand. Thus, for example, only the BMI, which joined

Being a part of the global market, Russian air service cannot avoid being in-volved in global processes. The common trend of the last decade is that along actual reduction in number of airlines, major players have been merging into alliances. Creating such partnerships is mainly aimed at a united competitive fight against other alliances, cutting expenses and appealing to more passen-gers through wide route networks. Two Russian companies have already joined such partnerships, “Aeroflot — Russian Airlines” has joined “Skyteam” and “S7 Group” — “Oneworld”. The main mystery now is what company will become partners with Star Alliance which has no outpost in Russia yet. It should be re-minded that this global partnership is unofficially led by Lufthansa, a rather ag-gressive company when it comes to market promotion.

ALLIANCESThere are already two Russian airlines in global alliances, who is next?

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Airlines

the alliance with Lufthansa, managed to survive on the British market under the pressure of British Airways. The carri-er did, however, lose its actual indepen-dence and the bulk of its assets now be-longs to the Lufthansa Group. A similar story happened to SWISS, Brussels Air-lines and Austrian Airlines. Prime exam-ples in other alliances include the merg-er of British Airways and Iberia, and that of Air France and KLM. A few years ago experts unanimously claimed that there might be only three traditional carriers left in the near future (low-cost airlines do not normally merge). Figuratively speaking, Lufthansa (Star Alliance), Air France (Sky-Team) and British Airways (Oneworld). For Russian carriers joining an alliance in time is an opportunity not only to sur-vive when Russia joins the WTO, but also to overcome more complicated global dif-ficulties.

Sky Team. Friends and enemies.There are currently three global alliances,

which serve around a billion passengers a year. These are SkyTeam, Star Alliance and Oneworld.

The first Russian carrier to join a glob-al partnership was Aeroflot. It became a member of SkyTeam.

The participants of this alliance, which was founded in 2000 and is unofficial-

ly led by Air France, fly to 898 airports in 169 countries. Around 13 000 flights depart daily under the brand and the an-nual passenger flow comes up to 383 mil-lion people.

116 million people participate in its fre-quent-flyer programme, and 447 loung-es around the world serve its premium-lev-el customers. The fleet consists of 1,940 mainline aircraft plus 1,120 from related carriers. The alliance’s current members are Aeroflot, Aeromexico, Air Europe, Air France, Alitalia, China Southern, Czech Airlines, Delta Air Lines, Kenya Airways, KLM, Korean Air, TAROM and Vietnam Airlines. Its future members include China Eastern, Shanghai Airlines, China Airlines, Garuda Indonesia and Aerolineas Argen-tinas.

Russia in the frame of SkyTeamAccording to the plan by the Russian

National carrier, it will be the Termi-nal D of Sheremetievo International Air-port in Moscow that will act as the base for development of SkyTeam in Russia. The Managing Director of SkyTeam, Mr. Marie-Joseph Malé, says that the Moscow hub has strategic importance for the al-liance. It is not for nothing that there has even been a meeting of SkyTeam mem-bers there. Both domestic and interna-tional Aeroflot flights have already been transferred to the Terminal D, as well as flights operated by SkyTeam carriers. (The unofficial leader of the alliance, Air France, is still at the Terminal E of Sherem-etievo). The terminal will be able to serve 12 million passengers a year, which will

practically double the potential capacity. It is possible that the other parts of the air-port complex will also work for the bene-fit of SkyTeam. And though several mem-bers of the alliance are still opposed to the transit from other Moscow airports to Sheremetievo (such as Vietnam Airlines), this will inevitably happen.

Join Oneworld to become number one

In mid-November, 2010, four years after Aeroflot entered SkyTeam, anoth-er agreement was signed. It provided for

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a second Russian carrier to join a glob-al alliance. S7 Airlines became a member of Oneworld.

Through S7 Airlines, Oneworld added 55 new destinations to its map across Rus-sia and the CIS, as well as nine new coun-tries: Azerbaijan, Armenia, Georgia, Ka-zakstan, Kyrgyzstan, Moldova, Tajiki-

stan, Turkmenistan and Uzbekistan. This nearly tripled the number of Oneworld flight destinations in Russia, the CIS coun-tries and Eastern Europe, so the total num-ber of the alliance destinations in these re-gions now comes up to 84 in 26 coun-tries. Together with S7 Airlines, the route network of Oneworld reached 750 des-

tinations in 150 countries, and operates nearly 8500 daily flights, carrying over 300 million passengers per year on a fleet of 2250 aircraft. And the total annual gains reached 85 billion US dollar, ac-cording to S7.

The following entry of Air Berlin, the fifth largest carrier in Europe, and Kingfisher Airlines, the leading Indian car-rier, which will take place within the next eighteen months, will increase the num-ber of destinations offered by Oneworld up to 900, and the fleet up to 2500 air-craft. The company will then operate over 9500 daily flights and carry 340 million passengers per year. The alliance will in-clude fourteen leading airlines and twen-ty affiliates. The annual profit of the al-liance will reach 90 billion US dollars. Being a full member of Oneworld partner-ship, S7 combined its frequent-flyer pro-gramme with that of Oneworld and of-fered the participants of S7 Priority pro-gramme a possibility to travel and use the benefits provided by all alliance car-riers around the world. S7 Priority card-holders can accumulate and redeem bo-nuses on all routes of Oneworld network. Platinum and Gold Card holders receive Oneworld Emerald and Oneworld Ruby statuses respectively. The benefits of these

44

Airlines

cards include access to over 550 airport lounges all around the world. S7 Prior-ity Silver Card holders are now award-ed with Oneworld Ruby status. Apart from the mentioned carriers the alliance now includes American Airlines, British Air-ways, Cathay Pacific, Finnair, Iberia, Ja-pan Airlines, LAN, Malev, Qantas and Royal Jordanian. And 100 million cus-tomers participating in the alliance’s fre-quent flyer programmes can now accumu-late and redeem bonus and status miles and enjoy all the benefits when flying with S7 Airlines.

S7 Group Chief Executive Vladislav Filev said, ‘The Company is entering a new era. By joining Oneworld, we made a big step forward. The alliance will allow us to move on to an absolutely different level, provid-ing our customers with access to an exten-sive route network all around the world and a wide range of services and bene-fits. Getting to this position has required a great deal of hard work’. Willie Walsh, the CEO of British Airways (a company which supported S7 in realisation of the in-tegration programme), says, ‘Our aim has always been to establish Oneworld

as the world's pre-eminent and most suc-cessful global airline alliance, with an un-rivalled collection of quality carriers. To-day, Oneworld has added another great airline, the best, we firmly believe, in Rus-sia and the Commonwealth of Independent States — S7’.

According to Mr. Filev, S7 Group was guided by two principles when choosing an alliance, ‘First of all, economical rea-sons. We ordered a consulting research which showed that it would be timely and profitable to join Oneworld. Secondly, there’s the emotional aspect. Traditional-

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ly, we’ve have the best relations with One-world members’. Mr. Filev also pointed out that the whole S7 Group is going to join the partnership, that is both S7 Airlines and Globus.

By the way, Oneworld passengers will be welcomed at Domodedovo, the largest airport in Russia. Its management is quite positive about the new status of the airport as the base of the alliance. The only problem is the recent transi-tion of Star Alliance and its most com-panies to Domode-dovo. Being neigh-

bours with Oneworld is hardly beneficial for this rival partnership. And as regards acquiring partners on the Russian mar-ket, Star Alliance is lagging behind its ri-vals, which must upset the management of the group. The key people of the alli-ance may smile at reporters and say that

they have executed agreements with leading airlines. But

two out of four will pre-fer SkyTeam or One-

world, optimizing connections, estab-lishing cooperation and combining their loyalty pro-grammes...

The Fast British and Careful Germans

Star Alliance, founded on 14 May 1997, is the world’s first and largest exist-ing airline alliance. It includes 27 carri-ers, which is more than any other partner-ship. The fleet consists of over 4000 air-craft with an annual passenger number of nearly 604 million. Their flights reach 181 countries and 1160 airports with 970 lounges. And yet, Star Alliance has not found a partner in Russia so far. Although it was one of the first to try to do it. A couple

of years ago several Russian carriers com-bined under AiRUnion were considered to be a potential partner. But AiRUnion went bankrupt in 2008, and the careful Ger-mans started having second thoughts and stopped the negotiations with the other two potential partners, Transaero and UTair. Although Transaero is based in Domod-edovo, where most members of the star group are concentrated, Transaero most-ly flies abroad, while, as it has been men-tioned before, the alliance needs a partner with an extensive domestic route network.

This is the reason why UTair, which of-fers more destinations across Russia, be-comes the main candidate for entry de-spite its location in Vnukovo. On the other

hand, the company might have to move to Domodedovo...

This seems to be the most intriguing is-sue for today. Transferring airlines to a dif-ferent airport is undoubtedly rather diffi-cult, but if it does happen, Star Alliance has, probably, been waiting for a reason. It means the company will make a dash and will easily leave its rivals behind. This was not for nothing that the top-manag-er of Vnukovo casually mentioned that Luf-thansa is taking a closer look at the airport. Why not indeed? Star Alliance will obtain

new

.

with letw

f

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Airlines

a brand-new hub, which is also the near-est one to Moscow. Cooperation process-es have already been tested by a Lufthan-sa affiliate, Germanwings. Besides, it has recently been announced that UTair might acquire Moskva, which opens the gate to Asia. Could this be the reason why the con-flict between Vnukovo and Domodedo-vo has remained unresolved for so long? And was it not an interesting passing move to move the potential partner of Star Al-liance to Vnukovo? Analysing these facts gives an impression that a solution to rather a difficult mathematical problem has been found.

Ekaterina Sobol

Alliances as an unequal marriageLet us pause and think why the largest Russian carriers are so eager to join one of the alliances. There are quite

a few examples in the industry that show airlines which are not in any of the global partnerships and yet they serve numerous passengers, especially in the US. Russian air carriage business has everything required, the country is vast in territory, is populated by millions of people and its geographical location provides possibilities for successful flight operation to Europe, Asia, as well as Americas. But the situation is quite the opposite. According to the top-manager of a Russian carrier which has already joined one of the alliances, some alliances even try to control Russian airlines which essentially provide so many opportunities to these partnerships. And domestic airlines, even the largest ones, generate a rather low passenger flow, compared to their foreign counterparts, therefore they enter alliances as inferiors.

Speaking of the necessity to join a global partnership, the CEO of UTair, Andrei Martirosov, pointed out that if the Russian air space was legalised for Russian carriers and the conditions were more benign, the carriers would hardly be dying to enter international alliances. The Russian government that protects domestic airlines and aviation industry and oil industry and banks (the list is endless), has created so many formalities in the business that full-scale development in such conditions is simply impossible.

The situation with jet fuel and prices for is very illustrative in this respect. ‘Lufthansa, for example, is not a single carrier but a whole conglomerate with huge passenger flow and cheaper credit resources. Being an oil country, everything Russia can offer to its airlines as support is discounts on jet fuel. Otherwise, Russian companies would either have to resort to dumping and incur losses or passengers would go for the more appealing prices offered by foreign carriers,’ says Vladimir Spiridonov, the CEO of the Aerofuels Group.

One of the most pressing problems is the institute of appointed carriers, where Aeroflot get the majority of appointments. It makes other companies look for partners in the west in order to offer their customers alternative trips (even with stopovers). European and American air space is already open and all carriers can fly wherever they want to.

Russian air companies cannot renew their fleets on the conditions similar to the ones that foreign companies have. Extortionate VAT rate, expensive credit resources, customs duties (though partly cut) are to blame for it.

If they managed to overcome these difficulties, Russian companies would enter global alliances with a sense of pride, rather than steeplechase through bureaucratic barriers in search of a ‘window to Europe’.

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AN-148:OPERATOR’S VERDICT

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China and Russia:strategic partners 24