Russia/CIS Observer, 27

Russia & CIS ObserverRussia & CIS ObserverQUARTERLY

SUBSCRIBE

TODAY!

see p. 24

№ 4 (27) november 2009

www.cis.ato.ru

RUSSIA/CIS OBSERVER № 4 (27) NOVEMBER 2009 1

1919

1414

2222

1010

1

• AEROSPACE INDUSTRY

The Russian aircraft industry completes

state-controlled consolidation ..............2

Irkut is choosing suppliers for

MS-21 airliner ....................................4

The Kamov Ka-32 gets EASA type

approval ..............................................6

Superjet 100 needs more money to

complete the certification ....................8

Antonov-148 jet enters

in service in Russia ............................10

• DEFENSE

The Russian government supports

the re-armament of the national

Armed Forces ....................................12

Russia and India move to joint

weapon development ..........................14

Russian military tested new

unmanned systems ............................15

• AIR TRANSPORT

Russian airlines face strong foreign

competition ......................................16

• BUSINESS AVIATION

Waiting for takeoff ............................19

New training tool

for Russian pilots ..............................20

• SPACE BUSINESS

The Russian ISS segment is to be

completed by 2016 ............................22

Russia/CIS Observer Quarterly is produced by:

PublisherEvgeny Semenov

Editior-in-ChiefMaxim Pyadushkin

Art DirectorAndrey Khorkov

Director, Marketing & AdvertisingKonstantin Rogov

Commercial DirectorSergey Belyaev

Translated By:Pavel Pushkin

All rights reserved. No part of this publication may be

reproduced in whole or in part without the written permission of

A.B.E. Media.

© № 4 (27), November 2009Tel./Fax: +7 (495) 933 0297

Correspondence: P.O. Box 127, Moscow, 119048, Russia

To subscribee-mail to [email protected]

or contact «MK-Periodica» agency:e-mail: [email protected]://www.periodicals.ru

or one of its partners in your country.

77

Russia & CIS Observerfrom the publisher of № 4 (27) november 2009

Visit our website at www.cis.ato.ru

AEROSPACE INDUSTRY

Maxim Pyadushkin

Russia’s United AircraftCorporation (UAC) iscompleting a large-scaleeffort to consolidate the

national aviation industry. At the end ofOctober the corporation received theremaining government-owned stakes inseveral aerospace assets it already con-trols. The stakes have been exchangedfor the UAC shares from the additionalissue worth 16 billion rubles ($538 mil-lion). As an added bonus for the on-lookers, the move has given industryobservers an opportunity to have a de-cent guess at the real market value ofRussia’s aerospace industry.

In late October UAC reported that itreceived the share packages of the na-tional lessors Finance Leasing Compa-ny (FLC) and Ilyushin Finance Co.,the Sukhoi holding company and theVoronezh-based VASO aviation plant.All these companies are already con-trolled by UAC after the first phase of

consolidation that took place in 2007.More important is that during the addi-tional share issue the corporationgained total control over two more crit-ical aerospace assets — MiG militaryjet maker and Kazan’s KAPO aviationplant. These two companies appear tobe totally incomparable in terms oftheir market price.

Fair priceIndependent auditor Ernts & Youngwas contracted before the share issue toaudit both MiG Corp. and KAPO. Thebottom line on MiG was that the enter-prise’s market value equaled just 1.05rubles ($0.035) due to its colossal debtsamounting to 44 billion rubles. In theeyes of the auditor, the hefty indebted-ness far outweighed MiG’s current or-der book worth $4 billion, along with15 billion rubles in funding extended bythe Russian government in April. UACpress secretary Konstantin Lantratovexplained for the Russia & CIS Obser-ver that, based on the auditor’s find-

ings, 100% of the MiG shares havebeen exchanged for a single UAC share.

KAPO’s market value turned out tobe much higher in the eyes of Ernst &Young, which believes the companycosts 6.7 billion rubles. Lantratov com-ments that, despite KAPO’s insuffi-cient workloads in the past few years,which have primarily consisted inbuilding several Tupolev Tu-214 jetlin-ers a year and upgrading the Russian airforce’s strategic bombers, the enter-prise has virtually no outstanding debtsat the moment. This, in his words, ex-plains the favorable audit report.

The audit conducted by Ernst &Young indirectly sheds some light of themarket price of other assets whosestate-controlled shares are to be hand-ed over to the UAC. Now that we knowhow much a single share is worth, it iseasy to work out that the market valueof Sukhoi, for instance, stands at 51 bil-lion rubles and that for Ilyushin Fi-nance is 18 billion. The figure appearsto be 1.7 billion for FLC and 1.2 billionrubles for VASO. Thus, the overall costof the state-owned assets that weretransferred to the UAC approaches 11billion rubles.

Lantratov explained that the addi-tional shares were also used for buyingout — or, to be more exact, exchangingfor UAC stock – the remaining private-ly owned interests in those enterpriseswhich have already come under thecorporation’s control. These enterpris-es include the Ilyushin company, theSukhoi and Yakovlev design bureaus,Irkut Corporation, Beriev, Tagavia,Tupolev, the Aviastar-SP and Sokol avi-ation plants, and also the business divi-sion of the UAC - Transport Aircraftcorporation. Ernst & Young valuedIrkut at 23.6 billion rubles; Ilyushin, at13 billion; Tupolev, at 3.5 billion; theNizhniy Novgorod-based Sokol plant,

Runway in sightThe Russian aircraft industry completes state-controlled consolidation

Sukhoi with estimated market valueof $1.7 billion remains the mostexpensive asset within the UAC

Mar

ina

Lyst

seva

RUSSIA/CIS OBSERVER № 4 (27) NOVEMBER 20092


AEROSPACE INDUSTRY

at 2.5 billion; and Yakovlev, at 1.4 bil-lion rubles.

Interestingly, the results of the inde-pendent audit do not differ much fromthe figures quoted by the Russia’s Fed-eral Property Management Agency inlate 2006, when the UAC was just be-ginning to consolidate the industry.The market price of the corporation’stwo largest assets — the Sukhoi hold-ing company and Irkut Corporation —has remained virtually unchangedfrom two years ago, when they werevalued at 52 and 25 billion rubles, re-spectively. The market value ofIlyushin Finance, on the other hand,has grown significantly from the origi-nal 11 billion rubles. As for FLC, itsvalue has shrunken more than fourfoldfrom the original 8 billion rubles, ap-parently owing to the lessor’s currentfinancial problems.

Defining the futureThe UAC’s transaction signals the lastmajor stage in the consolidation ofRussia’s aviation industry. The corpo-ration president Alexey Fedorov has re-cently named two more assets proposedfor inclusion in the corporation’s struc-ture — the Myasishchev design bureauand Gromov Flight Research Institute.For this plan to become a reality,though, both enterprises must first beturned into joint-stock companies —and that will take some time.

Now the UAC plans to complete theindustrial reorganization stage andmove on to the development of majorprojects. The corporation is not plan-ning to revise its strategic developmentplans even despite the economic reces-sion. According to Fedorov, “the effectof the crisis on our long-term plans isinsignificant”.

According to the earlier approvedplans the industrial assets of the corpo-ration will be reorganized into severalbusiness units. The first unit, UAC –Transport Aircraft, was set up in 2008on the basis of Ilyushin design bureau.The new division’s programs includeslocalization of Il-76 assembly in Rus-sia, development of light Il-112 trans-port and joint Russo-Indian MTA air-

craft. The other task is restoration ofAn-124 heavy lifter production.

Now three more units are to befounded, explained UAC press secre-tary. KAPO will be included UAC-Spe-cial Aircraft division together withTupolev, Beriev and Tagavia. In futurethe new unit is expected to be expandedwith Myasishchev design bureau.UAC—Special Aircraft will focus atmodernization of Russia’s Air Forcestrategic bombers designed by Tupolevas well as on manufacture of specialmission aircraft, like Beriev amphibianplanes.

Following this strategy KAPO willcease the assembly of Tu-214 narrow-body airliner in favor of the aircraft’sspecial modifications. Now such ver-sions are ordered by the Kremlin’s Spe-cial Air Detachment that, for example,received two Tu-214SR radio relay air-craft in June. Four more aircraft arescheduled for delivery in 2010-2011.

KAPO’s hand-over to Special Air-craft unit also means the cancellationof Tu-334 regional jet that was to be as-sembled in Kazan. According toLantratov, UAC has no orders for thisaircraft from the airlines. The Russianmarket faces the strong competition inthe regional segment with two projects– locally assembled An-148 andSukhoi Superjet 100 aircraft enteringthe production phase. The only chance

for Tu-334 is a potential order from thePresident’s Air Detachment that re-news its regional fleet at the moment.UAC press secretary mentioned thatthe negotiations are under way, but toadapt the aircraft to carry the govern-ment top officials and to launch theproduction the corporation asks for$270 million. “Anyway, if such order isplaced, Tu-334 will be considered aspecial mission aircraft”, concludesKonstantin Lantratov.

The production of passenger airlinerswill be localized at UAC – CommercialAircraft division. It will be headed byIrkut Corporation and will also includetwo assembly facilities – Ulyanovsk-based Aviastar-SP and VoronezhVASO. Aviastar-SP will continue toproduce Tu-204 family narrowbodyairliners and later Tu-204SM modern-ized variant while VASO will assembleAn-148 regional jets and Il-96 wide-body planes. At the first stage Irkut willkeep its military programs, but later itplans to move to the assembly of Rus-sia’s future MS-21 medium range air-liner.

Another civil asset – Sukhoi CivilAircraft, the manufacturer of Superjet100 aircraft, will remain under Sukhoithat will head the UAC—Combat Air-craft Unit. The defense division will al-so include MiG and Nizhny NovgorodSokol assembly plant.

UAC-Special Aircraft division will focus at mod-ernization of Russia’s Air Force strategic bombersand manufacture of special mission aircraft

Fyo

do

rB

ori

sov


AEROSPACE INDUSTRY

Alexei Sinitsky

The final choice of suppliersof components and finishedparts for Russia’s future150-210 seats medium-range

MS-21 airliner is expected to be madeby the end of 2009. Creating this air-craft, Russia is going to intervene intothe most demanded segment of theglobal market. In the next 20-25 yearsdemand for commercial airliners of suchsize is forecasted on a level of 10,000 air-craft. So far, duopoly of Boeing and Air-bus reigns in this segment of the marketbut China has already announced itsambitions having started working onComac C919 program. In Russia MS-21 is being developed by a team of de-signers headed by Irkut corporation.Russian designers plan to conquer 12-15% of the international market that isto sell 1,200-1,500 aircraft.

The project can succeed only if it isdeveloped quickly. It is expected thatAirbus and Boeing will start sellingtheir new narrowbody airliners approx-imately in 2020. They will replace cur-rent Airbus A320 and Boeing 737NGfamilies. It is clear that MS-21 will beunable to compete against the new gen-erations of Airbus and Boeing air-planes. The task for designers is to

achieve 15% lower operational costscompared to the current narrow-bodyaircraft and to outrun the competitorsin the time of new product’s release onthe market. The maiden flight of MS-21-200 with capacity of 150 passengersis planned for 2014 while the deliveriesare to start in 2016. Certification of the180-seat MS-21-300 is expected in2018 and certification of the 210-seatMS-21-400 is expected in 2020.

China has set practically the sametimeframe for Comac C919 coming tothe market. But, according to well-in-formed representatives of the Russianaircraft industry, direct competition be-tween MS-21 and C919 is hardly possi-ble because China aims to satisfy thedemand on the huge domestic marketwhile Russia’s task in MS-21 project isto revive the national designer schooland production facilities in the sectorof civil aviation. Hence, MS-21 pro-ject, together with Sukhoi Superjet 100regional jet, is one of the priority pro-grams for Russia’s United Aircraft Cor-poration (UAC).

According to Irkut’s president OlegDemchenko, MS-21 project is devel-oping according to the schedule andactive detailed designing of the aircraftwill begin in January of 2010. Tendersfor 11 out of the 14 key systems have al-

ready been conducted and two best bidshave been chosen for three systems ofthe first level. Negotiations with suppli-ers of these systems continue now.

Conceptual choiceChoice of the power plant will be themost interesting. Designers of MS-21decided to propose two options of en-gines to the future customers of the air-plane, namely a Russian engine and anengine produced abroad (although witha Russian partner). With regard to theRussian designer and manufacturer ev-erything is more or less clear. These arePerm-based Aviadvigatel and PermEngines (both are controlled by UnitedEngine Corporation). At MAKS-2009air show the Perm engine-buildingcluster demonstrated samples of fanblades, combustion chamber, elementsof the cooling system and nozzle bladesof the future PD-14 engine for MS-21.

Among the foreign contestants Pratt& Whitney (US) and Rolls-Royce(UK) made it to the second round.CFM International and a team ofMoscow-based Salyut and Za-porozhye-based Progress and MotorSich were not put on the short list. Inany case, it is impossible to rule out thatSalyut will participate in the program asa partner of Rolls-Royce because in

Drawing the contoursIrkut is choosing suppliers for MS-21 airliner


AEROSPACE INDUSTRY

such case the company will receive abig civil project and will diversify pro-duction facilities. If Pratt & Whitneywins the tender the Perm engine-build-ing cluster will be its partner.

For the tender Pratt & Whitney pro-posed PW1000G engine with the fandrive through the reduction gear (GTFtechnology). Certification of PW1000Gis planned for the end of 2011 and from2013 the engines will be mounted onMitsubishi Regional Jet (modificationwith thrust of about 8 tons) and Bom-bardier CSeries aircraft (thrust of ap-proximately 11 tons). An engine withthrust of about 14 tons will be created forMS-21. In principle, representatives ofPratt & Whitney do not deny this,mounting of their engine with the fandrive through reduction gear on MS-21will increase the company’s chances forvictory in much more important tendersfor choice of power plants for the newgenerations of Airbus and Boeing nar-row-body aircraft.

For the MS-21 tender Rolls-Roycepresented a more traditional concept ofan engine made according to a three-shaft configuration. The company pro-posed a project of brand new engineRB285, which used the technologiesimplemented in the newest Trent 1000engine designed for Boeing 787 airliner.Representatives of Rolls-Royce statethat for the engines of an MS-21-sizeaircraft the three-shaft configuration isclose to the reduction gear one in effi-ciency but from the technical stand-point this option is simpler. In general,the Irkut’s tender commission will facea tough choice and results are not obvi-ous. Moreover, because Rolls-Royceand Pratt & Whitney have a good expe-rience of interaction in the frameworkof International Aero Engines (IAE)consortium that produces V2500 en-gines for narrow-body airliners it is im-possible to fully rule out a possibility ofalliance between them for creation of anew engine with a prospect to mount iton future Airbus and Boeing aircraft.

Competition or cooperationBids of Rockwell Collins (US) andCorporation Avionika (Russia) made it

to the second round with regard to theavionics system and bids of Aviapribor-Holding (Russia) in cooperation withGoodrich AS (France) and Moog(US), as well as Liebherr Aerospace(Germany) were chosen for the inte-grated flight control system.

The final results of these tenders arenot summed up yet but it is necessary tosay that in this case the competing con-testants also can form an alliance inprinciple and offer a joint solution thatcombines the strong points of the op-tions that are alternative now. It is im-possible to rule out that during furthernegotiations with the tender commis-sion the parties may come to this verydecision because it may be not onlymutually beneficial for participants of

the tender but may also supply MS-21with more advanced systems.

The indisputable favorites in the ten-der for the right to supply 11 systems forwhich the final decision has been madeare American Hamilton Sundstrandand French Zodiac Aerospace. Ameri-can Hamilton Sundstrand will supplythe auxiliary power plant, a wing de-froster system and, in cooperation withresearch and production associationNauka and Hamilton Standard – Nau-ka JV, an integrated air conditioningsystem. For supply of the electric sys-tem the commission chose the joint bidof Hamilton Sundstrand and Frenchcompany ECE, a part of Zodiac

Aerospace corporation. Members ofZodiac Aerospace corporation were al-so chosen as suppliers of the interior(American C&D) and fuel and oxygensystems (French Intertechnique). Theneutral gas system will be made in co-operation by Intertechnique andHamilton Sundstrand. The fire protec-tion system will be supplied in cooper-ation by Hamilton Sundstrand andFrench L’Hotellier (a part of Americancorporation Kidde Technologies).Nizhny Novgorod-based Gidromashwas chosen as designer and manufac-turer of the landing gear system forMS-21.

With regard to the hydraulic systemthe commission chose the bid of Amer-ican Eaton Corporation. Yury Lebedev,

marketing manager of Eaton for MS-21 program, has told Russia & CISObserver that an absolutely new hy-draulic system will be designed for theRussian airplane. It will be lighter andmore efficient than the existing models.The representative of Eaton does notrule out that this system may be offeredfor new airplanes of Boeing and Airbusin the future. Along with this, Eaton isready to buy up to 50% of parts andcomponents for production of the newsystem in Russia. Now the Americancompany organizes a tender amongRussian suppliers and plans to choosethe Russian partner for participation inMS-21 program by the mid-2010.

While waiting for the choice of suppliers and beginning ofdetail designing MS-21 passes tests in the wind tunnels

TsA

GI


AEROSPACE INDUSTRY

Maxim Pyadushkin

The European Aviation SafetyAgency (EASA) in lateSeptember issued type cer-tificate EASA.IM.R.133 for

the Kamov Ka-32A11BC helicopter.Previously, European operations of thistype were governed by a Specific Air-worthiness Specification and restrictedto the territory of several countries. TheEASA certification makes it possiblefor any EU-based operator to use theKa-32 commercially. This design be-came the first Russian-built helicopterto receive European certification. Infact, the EASA validation was just an-other milestone on the Ka-32’s way toworldwide recognition.

Kamov chief designer Shamil Suley-manov told the Russia & CIS Observerthat the international promotion of theKa-32 started in the early 1990s, whenthese helicopters first came to Canadaand Europe. Already at that point themanufacturer began thinking of inter-national certification. For this to be-come possible, new Russian certifica-tion requirements had to be developedon the basis of the US FAR 29 airwor-thiness standards. These requirements,which would later provide the founda-tion for Russia’s AP-29 national avia-tion regulations, were used in 1993 tocertify the Ka-32 at home.

After that, Suleymanov continues,the Russian certificate was validated bya number of foreign countries whichrecognized the FAR 29 standards. Alsoin 1993, Kamov launched validationcampaigns in Canada and Europe. Anumber of modifications were intro-duced to the original helicopter designat the request of Transport Canada,eventuating in the Ka-32A11BC ver-sion (the BC designator standing for

“British Columbia”). The improve-ments included a new flight controlsystem and updated avionics. In addi-tion, specifically for Canadian certifi-cation, the helicopter’s service life wasincreased to 16,000 hours from the ear-lier Ka-32T version’s 4,000 hours. Ka-32A11BC rotorcraft are currently usedby Canadian company VIH Heli-copters in logging operations.

The Ka-32 was certified in Switzer-land to FAR 29 in 1996. The first Swissoperator for the type was the Heliswisstransport and installation specialist. Itwas for Heliswiss that Kamov devel-oped the single-pilot Ka-32A12 ver-sion.

Kamov realized, however, that theKa-32 had even more to offer. “We un-derstood that the helicopter was muchmore versatile,” says Suleymanov. Inthe late 1990s, the Ka-32 debuted as a

firefighting aircraft with the Spanishfirm Helicopteros del Sureste, whichlater became part of the INAER avia-tion holding company. According toSuleymanov, Spanish firefighters foundthe Ka-32 to be more efficient in thisrole than the traditional CanadairCL215 fixed-wing amphibian. The ro-torcraft demonstrated the ability to flymore frequent water-dropping runs be-cause, unlike an airplane, it could refillits water tanks from virtually any reser-voirs, including private swimmingpools.

The Ka-32A11BC received a Span-ish type certificate in 2004, but it hadyet to be certified to EASA standards.That process was launched in 2006 andwill be formally completed in Novem-ber 2009, when EASA representativescome to Moscow to present Kamovwith an official certificate.

Joining the clubThe Kamov Ka-32 has become the first ever Russian helicopter to get EASAtype approval

Due to its trademark coaxial rotor design Ka-32 helicoptersbecame especially popular in the firefighting and externalcargo transportation roles

Kam

ov


AEROSPACE INDUSTRY

At present, the only other Russian-designed aircraft type that holds aEuropean airworthiness certificate isthe Tupolev Tu-204-120CE freighter.“We view the EASA certification as thesignal of our having been accepted intothe world club [of aircraft manufactur-ers],” Suleymanov says. “No other[Russian helicopter specialist] hasmanaged to achieve this over the past50 years.” According to AndreyShibitov, general director of the Rus-sian Helicopters holding company,“EASA’s certification of the Ka-32A11BC opens up new opportunitiesfor the operation of this multirole heli-copter, which has already demonstratedits efficiency in many EU countries.”

The EASA certificate is sure to ex-pand the list of Ka-32 operators inEurope, where it has been used untilnow exclusively by INAER of Spainand the Portuguese state-owned com-pany EMA. INAER Technical Direc-tor Aurelio Martinez Pillet says the cer-tificate will make it possible for hiscompany to operate the Ka-32 in anyof EASA’s 22 member nations, whereaspreviously operations of the type wererestricted to Spain. INAER currentlyhas 10 Ka-32A11BS helicopters, butMartinez Pillet believes that fur-ther expansion of the type’s oper-ational capabilities may move hiscompany to boost its fleet.

In its current wording, however,the EASA certificate only permitsKa-32A11BS operations in twocategories: firefighting and exter-nal cargo transportation. It pro-hibits commercial passenger ser-vices, although transportation ofpersonnel and mission specialists,such as smokejumpers and res-cuers, is allowed. Martinez Pilletsays the helicopter’s external car-go lifting capability is its key ad-vantage, whereas in other roles —passenger transportation or medi-cal evacuation, for example — theKa-32 does not measure up tocomparable Western types.

The manufacturer disagrees.According to Suleymanov, the Ka-32s for Portugal are configured as

multirole helicopters. The local com-pany EMA, which specializes in emer-gency relief, operates six such heli-copters in the search-and-rescue, med-ical evacuation and aerial patrol roles.Thanks to a range of interchangeable,mission-specific payload modules thehelicopters can be reequipped for a dif-ferent mission within one hour. ThePortuguese Ka-32s also have analog in-strumentation replaced with digitalequivalents.

Suleymanov says the company willproceed with international certificationof the Ka-32. Currently, apart fromCanada and Europe, the helicopterholds national type certificates in sever-al countries that recognize the FAR 29standards: in Chile, China, Indonesia,Japan, Mexico, South Korea and Tai-wan. In all these countries Ka-32s havebeen operated successfully for sometime. The largest Ka-32 fleet is in SouthKorea, where over 60 of the type areused by the national air force and coastguard for aerial patrols and search-and-rescue operations, by the forestry ser-vice in the firefighting role, and also byprivate companies.

“So far our certification plans ex-cluded Papua New Guinea and Aus-

tralia,” says Suleymanov. One Ka-32 isalready operated in PNG, so Kamovwill eventually direct its certification ef-forts on that country. The manufactur-er also plans to have the Ka-32A11BCcertified in the Middle East.

Work is ongoing to obtain certificatesfor other Ka-32 modifications. Accord-ing to Suleymanov, talks are under waywith Heliswiss on EASA certification ofthe Ka-32A12 version. Kamov pro-ceeds from the premise that, being aderivative of the Ka-32A11BC, thisvariant should be easier to validate.However, it still has to agree with theSwiss operator on delineating areas ofresponsibility and define who willspend how much on the certificationprocess.

In the meantime, Kamov continueswork to further improve the Ka-32,with a view of introducing a fully digitalcockpit and advanced mission equip-ment, including a new firefighting sys-tem. Suleymanov says the use of ad-vanced systems will reduce the all-upweight and increase the helicopter'sthrust-to-weight ratio. Kamov does ad-mit, though, that digital avionics mayprove superfluous for some of the Ka-32's current roles, such as logging oper-

ations. Consequently, the digitalcockpit will most likely be offeredas an option. The manufacturer isalso planning to replace the Ka-32's two Ivchenko-Progress TV3-117VMA engines with more pow-erful, FADEC-equipped KlimovVK-2500s.A more distant goal is to develop along-range Ka-32-10 civiliantransport capable of carrying up to20 passengers. Suleymanov ex-plains that the projected modelwould retain the original power-plant and transmission, but wouldget a substantially redesigned fuse-lage. Demand for the Ka-32-10 isexpected to come from oil- andgas-producing companies, whichmight need it for offshore opera-tions. Kamov insists that its trade-mark coaxial rotor design ensuressafe operations in gusty winds andadverse weather.

EMA of Portugal became the first to use theKa-32A11VS as a multirole search-and-rescue,medevac and patrol helicopter

Kam

ov


AEROSPACE INDUSTRY

Maxim Pyadushkin

The Russian governmentplans to support the devel-opment of Sukhoi Superjet100 regional jet with another

portion of subsidies from the state bud-get. So far the new aircraft that is in thestage of the certification trials wasbacked by government guarantees andloans from the state-owned banks.Now the Ministry of Industry andTrade suggests to allocate additional 3.6billion rubles ($124 million) for Super-jet 100 certification in 2009-2010through amendment of the federal pro-gram for development of Russia’s com-mercial aircraft through 2015.

The Ministry’s report states that theadditional funding will not require in-

creasing the overall budget and will beallocated through redistribution of theexpenditures within the federal pro-gram. As the Ministry’s representativesexplained to the Russia & CIS Obser-ver, this year the program’s expendi-tures were cut down by 15% while thesaved 2,258 million rubles have beenre-directed for the Superjet 100 pro-gram. In 2010 the increase of fundingfor the development of the new region-al jet is to be achieved through the re-

duction of the government investmentsinto the R&D and the reduction of thebudget expenditures for marketing andcertification of other Russia’s futureaircraft – MS-21 narrowbody airliner,being developed by Irkut Corporation.As a result the Superjet 100 is to get an-other 1,342 million rubles.

The Ministry explains that additionalfunding is needed to help the designersfrom Sukhoi Civil Aircraft Company(SCAC) to overcome the financial dif-ficulties caused by the economic crisis.Another goal is to increase the Superjet100 competitive advantages over theforeign counterparts, especially theChinese ARJ-21 regional jet. The Min-istry’s effort means that Superjet 100program remains a top priority for theRussian government that is ready to

support the new regional jet even at theexpense of other projects.

Nevertheless the development of theSuperjet 100 is being delayed – underearlier plans the first aircraft should behanded over to the customers at the endof this year. Now the three prototypesare passing intensive certification trials.According to SCAC, as of October 31they all logged 454 flights with a totaltime of more than 1200 hours. In Octo-ber the aircraft completed the high alti-

tude flight tests in the mountains of Ar-menia. The trials included continuedtake-offs as well as OEI missed ap-proach flights. The majority of thetake-offs were performed with one en-gine failure imitation at maximumtake-off weight.

Italy’s Alenia Aeronautica that offi-cially purchased 25% plus 1 share stakein SCAC earlier this year will be re-sponsible for the EASA certification. Itwill conduct some of the trials in Italy,including community noise, ILS, R-NAV and high-intensity radiated fieldtests.

One of the first customers – Armeni-an Armavia airlines confessed in Octo-ber that the delivery is slipped from De-cember 2009 to spring 2010. InNovember Sukhoi CEO Mikhail Po-gosyan also admitted that there wouldbe no deliveries in 2009. Under earlierplans the aircraft’s launch customer –Russia’s largest carrier Aeroflot shouldhave received the first out of 30 orderedjets by the end of the year. According toPogosyan, in 2010 SCAC plans to startdeliveries to the Italian air carrier ItAlithat placed an order for 10 Superjet100s in 2007. As for now Sukhoi’s orderbacklog for the new regional jetamounts to 122 aircraft.

Pogosyan told about the plan to sup-plement the Superjet 100 family nowconsisting of 75 and 95 seat modifica-tions with a stretched 115-seat version.SCAC representatives explained thatthe 130-seat variant is also being dis-cussed at the moment. The decision tomove forward with the development ofthe stretched variants might be taken bythe end of 2009, suggested the source inthe Russian aircraft industry. Anotherdiscussed development is VIP versionbased on 95-seat variant that will havean interior designed by Italian Pininfa-rina.

Right up thereSuperjet 100 program needs more money to complete the certification

Superjet 100 prototypes have already logged 454 testflights with a total time of more than 1200 hours

Mar

ina

Lyst

seva


AEROSPACE INDUSTRY

Alexey Sinitsky

On November 6 the first An-148 regional jet, ordered byRossiya airlines, flew fromthe factory airfield of

Voronezh VASO facility to the airline’shome airport in St. Petersburg. The air-craft is expected to start commercial op-erations on domestic routes from St.Petersburg in the beginning of December.

This very aircraft in Rossiya liverywas for the first time presented atMoscow MAKS 2009 air show in Au-gust. It was officially handed over to theairline in October, but stayed inVoronezh. The delay was reportedlycaused by the necessity to complete theaircraft’s service documentation.

Nevertheless the first operational ex-perience for An-148 has already beengained by Ukrainian carrier Aerosvit. Itoperates only one aircraft that flies ondomestic routes between Kiev andOdessa, Simferopol and Lviv. Accord-ing to the airline, the aircraft makes twoflights a day with the average flight timeof 4-5 hours. In the nearest futureAerosvit plans to increase the intensityof operations up to 4 daily flights.

Due to its technical parameters the re-gional An-148 became quite popular onthe market. As for now Russia’s IlyushinFinance (IFC) leasing company that ismarketing the new jet, has about 70 firmorders for An-148. Rossiya should re-ceive 6 aircraft during 2009-2010. Ini-tially it was expected to get 4 jets thisyear, but later these plans have been re-duced to 3 aircraft. The second and thethird An-148s are to be delivered to theRussian carrier in November and De-cember, correspondingly.

To finance the An-148 purchasesfrom United Aircraft Corporation,VASO’s parent company, IFC opened a

3 billion rubles (about $100 million)credit line at VEB bank for a period of7-10 years. The parties didn’t reporthow many aircraft have already beenpurchased. The An-148’s list price forairline amounts to $24-30 million.

But despite the firm orders and se-cured financing, the main problem forAn-148 program is to ensure the re-quired production rate. As the initialmanufacturer – Kiev-based Aviantplant failed to respond the growing or-ders; it was decided to move the fuse-lage assembly from Ukraine toVoronezh. According to the source inthe Ukrainian aerospace industry, Rus-sia and Ukraine finally realized that po-litical tensions and aspirations to keep50 to 50 parity in the An-148 produc-tion could kill this rather successfulprogram, so now all efforts are focusedto ensure high aircraft’s assembly rate.

In the cabin layout, ordered by Ros-siya, An-148 can carry 8 passengers inthe business class and 60 persons in theeconomy class at the range of 3.5 thou-sand km with a cruise speed of 800-870km. The aircraft has a high-wing mono-plane design, so the highly mounted en-gines enable to operate An-148 from lo-cal unimproved airfields. The other ad-

vantages of An-148 are the high fuel ef-ficiency of Motor Sich D-436-148 en-gines and the entrance stairs that en-ables to board and deplane passengerswithout special ground equipment.

Despite the unpretentious takeoffand landing parameters, another rea-son for delay with the start of An-148commercial operations is that the Rus-sian airports are still not certified to ac-cept this type. The head of Aerosvitcarrier Konstantin Botev expects thatMoscow’s Sheremetyevo airport will beready to accept the aircraft in Decem-ber. After that the Ukrainian airline willstart to operate An-148 on its flights be-tween Kiev and Moscow. According toBotev, the An-148 flights to Europecould start as early as in mid-2010.

An-148 can hardly compete with theexisting regional aircraft by the world’sleading manufacturers on the marketswith the highly developed ground infras-tructure, but it has quite good chances inRussia, the CIS and developing coun-tries. In June Russia, Ukraine and Iransigned a trilateral memorandum for de-livery of 50 An-148s. Nevertheless theseplans will be realized as soon as themanufacturers reach the required pro-duction rate.

Antonov-148 jet entersin service in Russia

Rossiya airline became with firstcustomer for Russian-built An-148jet with the order for 6 aircraft

Fyo

do

rB

ori

sov

Direct Connections to Growth in Russia/CIS

Industry leaders turn to Air Transport Observer for:

• Local language market analysis

• Industry updates

• Breaking news

• Business Aviation Bi-monthlySupplement – produced inpartnership with Business &Commercial Aviation

• Professional conferences andexhibitions for Russian andinternational aviation community

Air Transport Observeris uniquely integrated into local

markets with numerous projectsconducted jointly with Russia’s

Air Transport OperatorsAssociation.

Supported by AW&ST, Business& Commercial Aviation and

Overhaul & Maintenance,ATO is the most powerfulaviation trade publication

in Russia/CIS.

For essential planning tools including• Editorial Calendars • Rates • Research • Material Specifications •

contact us at: [email protected]; www.ato.ru


DEFENSE

Maxim Pyadushkin

Russia is defining its militarybudget for 2010. At the endof October the State Du-ma, a lower chamber of the

Russian parliament, approved in thefirst reading the federal budget for thenext year. According to the draft bud-get, the spending for the national de-fense will amount to 1,253 billion rubles(about $43 billion under the current ex-change rate). This figure in rubles showsa slight increase by 3.4% compared to2009, but it’s much smaller than a yearago when the national defense expensesgrew by 16% compared to the previousyear. Nevertheless the share of militaryexpenses of the overall budget spendingwill increase from 12% to 18%. It shows

that despite the efforts to cut the budgetexpenses in the hard times of the eco-nomic crisis the Russian government iskeen to support and strengthen the na-tional armed forces.

But the parliament members criti-cized the draft budget, saying that takeninto account the forecasted inflation

rate for the next year the real volume ofthe defense expenses will be by 2.3%smaller than in 2008. The Duma’s De-fense Committee also mentioned thatthe share of the national defense expen-ditures in the country’s GDP will de-crease from 3.1% in 2009 to 2.9% in2010. According to the lawmakers, thisfigure is below the level of the defenseexpenditures set up by Russia’s Securi-ty Council – 3.21% of GDP.

More than 75% of all defense expendi-tures in 2010 – 946 billion rubles will gofor the armed forces. This article shows a5% increase while the most of the otherexpenditures such as defense researchesand the development of the nuclearweapons have been cut down. The largestgrowth is planned for the spending forthe peacekeeping and collective security

missions. They will skyrocket from 0.6billion ruble in 2009 to 11.1 billion rublein the next year. The most of this money– 10.5 billion rubles will be spent for theconstruction of the Russian militarybases in Abkhazia and South Ossetia.

The Defense Committee also pointsout that the draft budget for 2010 calls

for 10% decrease in the defense pro-curement. As the result the share of theprocurement in the Defense Ministryexpenditures will amount to just 44.8%compared to more than 47% in 2009.The committee stresses that it goesagainst the earlier plans to reach 50:50balance between the Armed Forces’ re-armaments programs and operationalexpenditures by 2011. By 2015 the bal-ance should be 30 to 70 in favor of theprocurement, mention the lawmakers.

But on the other side, the procure-ment budget for 2010 will give morepriorities to the purchase of newweapons and military equipment. Theweapons purchases will amount to 65%of the procurement budget comparedto 56% in 2009. The expenses for therepair of the existing equipment willcontrary will be decreased from 18% to15% of the procurement spending.

New procurement prioritiesEarlier this year the government dis-cussed the new defense procurementstrategy that will be reflected in the de-fense budget for 2010. During his meet-ing with the country’s President Dmit-ry Medvedev in July the deputy primeminister Sergey Ivanov announced thatthe defense procurement budget for2010 will be based on seven priorities.

The main priority, however, will re-main quite traditional – the develop-ment of the strategic nuclear forces.Besides, the 2010 budget will focus onspace systems and ballistic missile de-fense; purchase of new weapons andequipment for conventional forces aswell as repair of their existing hardwareat minimally required level. As the fifthpriority Ivanov pointed out the imple-mentation of long-term contract for so-phisticated weapons signed by the De-fense Ministry and other security agen-cies in 2008-2009. He explained that

Re-arming the arsenalsThe Russian government supports the re-armament of the national Armed Forces

In the last two years the Russian militarymanaged to switch from repair to theprocurement of new armaments

Leo

nid

Faer

berg


DEFENSE

the backlog of such contracts amount-ed to 178 billion rubles (about $5.7 bil-lion).

The last two priorities are evidentlythe response to the results of the lastyear war in the Caucasus. The Russianmilitary will reinforce their forces in theSouthern Russia and The Black Seafleet. Following the earlier decisionstaken by the Russian president and theprime minister the Armed Forces willalso increase the procurement of newcombat aircraft.

“These priorities will enable us tofulfill the government defense procure-ment program and to maintain thecombat effectiveness of the ArmedForces and other security services at therequired level”, explained SergeyIvanov. In September the vice premierannounced that the government de-fense order that includes the purchaseand repair of armaments for the mili-tary and law-enforcement agencies,will grow by 8% in 2010 to reach 1.1trillion rubles.

From repair to new weaponsThe procurement strategy allows theRussian military to increase the pur-chase of new equipment. As the deputydefense minister and chief of arma-ments of the Russian Armed ForcesVladimir Popovkin has recently men-tioned, “for the last two year we man-aged to change the defense procure-ment situation – in fact, from the re-pair orders we began to switch to the

purchases of weapons in batches suit-able to re-arm a company, battalionand squadron”.

The results of such shift are alreadyvisible this year. According toPopovkin, in 2009 the Russian ArmedForces are to receive 9 strategic mis-siles, 6 spacecraft, 43 combat aircraft,41 helicopter, one corvette, threeIskander tactical missile launchers and13 missiles for them.

Among other services, the significantshare of the procurement expenses –up to 40% goes to the development ofthe naval strategic nuclear forces. Nev-ertheless, the plans for this year provethat the military are keen to strengthentheir air power – for the fist time overthe more than a decade the Air Forceare receive large numbers of new air-craft. Partly it became possible due tothe refusal of Algeria to take 34 MiG-29SMT and MiG-29UBT fighters. Atthe end of 2008 the Russian Air Forceagreed to take the rejected aircraft. Thefirst 12 aircraft were handed over to theRussian military in the beginning of theyear. Besides, the Air Force should havereceived modernized Su-27SM fighterand Su-25 ground attack aircraft, a pairof Su-24 tactical reconnaissance air-craft and a first Yak-130 advanced jettrainer.

Moreover, in 2009 the Air Forceplaced some new orders. In August itsigned contracts for delivery of 64 air-craft in 2010-2015, including 12 single-seat Su-27SM and 4 Su-30M2 double-

seat fighters and 48 new Su-35 multi-role combat jets. These contracts weresupplemented by large order of air-launched weapons for Su-35 and MiG-31BM aircraft.

So taken into account the new or-ders, the Air Force will continue tomodernize its fleet – in 2010 the ser-vice is expected to purchase 17 combataircraft and 48 helicopters. Besides,next year the Russian military plan topurchase one mobile strategic missilesystem, 5 battalions of S-400 long rangeSAM system and to launch 11 militarysatellites, told Popovkin. The Navyshould receive two new submarines,one corvette and will launch the con-struction of five more ships.

Nevertheless, the deputy defenseminister stated the further re-arma-ment plans may be delayed due to thelimited production capacity of the na-tional defense industry. This problemhas been recently discussed at the spe-cial meeting on development of the de-fense industrial complex headed by theRussian president Dmitry Medvedev.He pointed out the necessity to speedup the modernization of the defenseproduction capacities and called to thelocal manufacturers to improve thequality of the produced weapons and tocut down the production costs. Ac-cording to Medvedev, this will allow theindustry to reduce the price for the de-fense products and will enable the mil-itary to expand their procurement pro-grams.

The first MiG-29SMT rejected by Algeria havealready been naded over to the Russian Air Force

AT

O


DEFENSE

Maxim Pyadushkin

Russia and India continuetheir defense cooperationdespite the certain prob-lems. New Delhi turned in-

to the major importer of the Russian ar-maments, but future plans call for jointdevelopment of new weapon systems. Inmid-October the defense ministers of theRussia and India, Anatoly Serdyukovand A.K. Anthony met in Moscow todiscuss defense-industrial collaboration.The parties planned to agree a final pricefor the aircraft carrier Vikramaditya, be-ing converted by Russia from the Admi-ral Gorshkov, and signed a new programof defense cooperation for 2010-2020.

Despite the certain expectation, thesigning of both agreements has beendelayed. According to the Russia’sCommittee for Military Technical Co-operation, the parties agreed to find anacceptable solution on Vikramaditya’sissue “in the nearest future”. In 2004India agreed to take the 44,500-tonsaircraft carrier for free. It should havepaid only $800 million to equip the shipwith an extended deck and a ski-jumpenabling it to operate MiG-29KSTOBAR aircraft. Later the Russianside insisted on increasing the price to$2 billion saying the cost of moderniza-

tion was underestimated at the time thecontract was signed. Now the carrier isexpected to be ready only in 2012.

The Vikramaditya’s deal also includ-ed the $700 million purchase of 16MiG-29K ship-based fighters. The firstaircraft were assembled in 2008 and theIndian pilots have already trained onthem in Russia. At the end of Septem-ber MiG-29K made their first sea trialson Russia’s only aircraft carrier AdmiralKuznetzov. According to MiG Corp.,two aircraft – MiG-29K single seaterand two-seat MiG-29KUB made sever-al take-offs and landings from the carri-er’s deck in the Barents Sea.

MiG-29Ks have an upgraded air-frame with high degree of composites,digital fly-by-wire system, in-flight re-fueling capabilities and new avionics in-cluding fully glass cockpit and Zhuk-ME slot array radar. The aircraft alsohas reduced signature and increasedcombat load that includes air-to-air andair-to-ground weapons. Representativesby MiG confirmed to Russia & CISObserver that the first fighters will bedelivered to India by the end of the year.

The program for bilateral defensecollaboration from 2011-2020 shouldbe finally agreed by the end of the year.The Russian defense industry sourcetold that compared to previous pro-

gram through 2010 it will become lessdetailed and will be a more of a frame-work. Nevertheless the parties noticedjoint development of fifth generationfighter, 10-12 ton helicopters and newinfantry fighting vehicle among futureprograms. The defense ministers alsodiscussed the licensed assembly Su-30MKI fighters and T-90 tanks in Indiaas well as joint development ofBrahMos supersonic cruise missile.

This anti-ship missile developed byBrahMos joint venture, set up by In-dia’s DRDO and Russia’s NPO Mash,is already taken into service by the In-dian Navy. As the JV co-directorAlexander Baskakov explained toRussia & CIS Observer, the missile isnow being installed at several ships be-ing constructed or modernized for theIndian Navy. The company is alsoworking on an air launched modifica-tion that should be carried by Su-30MKI fighters. Baskakov said that thecontract for the development of the airlaunched version has been prepared byRussia’s Rosoboronexport arms tradingagency, but is not signed yet.

“The next decade is likely to be thetime of joint programs with India”, saidKonstantin Makienko, deputy head ofthe Center for analysis of strategies andtechnologies (CAST), Moscow-baseddefense think-tank. “This is good forRussia because it gives a new market toits defense products while India is thebest possible partner for joint projects”,he said.

According to CAST estimations, since2007 India became the leading importerof Russian weapons replacing China. Itsshare in total deliveries and orders forRussian weapons is about 30%. “TheIndian defense market rapidly grows,but other exporters – USA, Europe andIsrael take advantage of this growth”,mentioned Makienko.

Defense FriendshipRussia and India move to joint weapon development

MiG representatives say that trials at AdmiralKuznetzov completes the development of MiG-29Kship based fighter

MiG


DEFENSE

Training checkRussian military tested new unmanned systems during a military exercise

Denis Fedutinov

The last year’s conflict withGeorgia demonstrated thatthe Russian troops don’thave modern unmanned sys-

tems. Now the Russian Defense Min-istry tries to improve this situation. It hasalready purchased 14 unmanned sys-tems from Israel Aerospace Industries,including middle class Searcher МК IIUAVs and portable Bird Eye 400 sys-tems. However, according to DeputyDefense Minister Vladimir Popovkin,purchase of foreign UAVs does not meangiving up the domestic developments.«We do not say that we stop all work inthis area in our country,» says Popovkin.

The Defense Ministry also keepsstudying products of Russian designers.Thus, several domestically developedunmanned systems were tested inSeptember 2009, during the Zapad-2009 military exercise – the largest ma-neuvers since the Soviet era.

Dozor-100 UAV developed by St.Petersburg Tranzas company in theclass of tactical unmanned systems wastested by the Defense Ministry for thefirst time. This new system was unveiledthis summer at International MaritimeDefense Show in St. Petersburg. Do-zor-100 represents an aircraft designedaccording to a normal airplane configu-ration with V-shaped tail assembly andpushing propeller. The maximum take-off weight of the UAV is 95 kilograms,the wingspan is 5.4 meters. The systemincludes three UAVs and a ground con-trol post. The UAV can perform bothautonomous flights and remotely-con-trolled flights with duration of up to tenhours. The optical and thermal imagingsystem of the UAV includes a high-res-olution video camera and a thermal im-ager of the middle infrared bandmounted on a moving platform.

During the military exercise Dozor-100 UAV performed two flights for de-tection and identification of ships ofthe opposed enemy in the area of theexercise in neutral waters of the BalticSea. During the flights the UAV trans-mitted images from a distance of 50kilometers.

The first flight lasted for about twohours. This time Dozor-100 flew 300kilometers. The UAV took off from theairfield located 20 kilometers from themain control station and was guided bythe temporary control post. As the air-craft was approaching the mission area,the flight control was handed over to themain control post. Thus the designersdemonstrated a possibility to transmitthe information from the UAV to theground equipment located at a signifi-cant distance from the takeoff-landingsite. In the future this feature will allowtransmitting the information from theUAV to a portable computer of any unitcommander located in the coverage area.

The second flight with a similar mis-sion was performed on the next day.The only difference was that the loweredge of clouds was at an altitude of 600meters, so the flight was performed at500 meters altitude.

Another UAV tested during Zapad-2009 was Strekoza mini-UAV devel-oped by Izhevsk-based ZALA AeroSystems. This is a portable compact

system that includes two UAVs and acompact control station with a spare setof batteries for the UAV. The StrekozaUAV is designed according to «flyingwing» configuration and has awingspan of just 80 centimeters andtakeoff weight of 2.1 kilograms. Therange of the UAV is 15 kilometers. Bat-teries of the UAV enable it to performflights with duration of up to 100 min-utes. Payload may include video andphoto cameras and a thermal imager.

Strekoza system is designed to beused in the first line of reconnaissance.Twenty flights were performed duringZapad-2009 exercise in KaliningradRegion and 45 flights were performedin Belarus.

Practically all flights of both Dozor-100 and Strekoza UAVs were performedin adverse meteorological conditionswith low clouds and wind speed of 10-11 m/s with gusts of up to 15 m/s,which confirmed a high level of relia-bility of the offered systems.

Interestingly, the UAV systems, test-ed by the military, were developed atexpense of the designers and not fi-nanced by the Russian Defense Min-istry. This evidently confirms the recenttrend when in some areas the DefenseMinistry moves from financing of R&Dprograms to procurement of the ready-to-purchase systems available on themarket.

During Zapad-2009 military exercise Dozor-100 UAV wassearching for ships of the opposing enemy in the Baltic Sea

Tra

nsa

s


AIR TRANSPORT

Polina Zvereva

The recent decline in passen-ger traffic figures has inten-sified competition both onRussia’s domestic routes

and internationally. In the latter caseRussian carriers often have to face offagainst much stronger rivals. Althoughthe level playing field on most interna-tional routes is enforced by intergov-ernmental agreements, this does notautomatically guarantee equality ofmarket standings. As if this weren’tenough of a setback, the Russian avia-tion authorities are unwittingly playinginto the hands of foreign airlines.

The list of foreign carriers operatingto Russia has been growing over the

past eight years, prompted by a consis-tent increase in passenger numbers. Amajority of the newcomers — Emirates,Thai Airways, Etihad, Niki, United,Singapore Airlines, Iberia, bmi andTAP Portugal — chose Moscow’s air-ports as their destinations. Others, suchas Air Berlin and Germanwings, optedfor both the capital and St. Petersburg.Those already well established on theRussian market carried on with theirexpansion plans. Valery Okulov, cur-rently a deputy transport minister, re-peatedly stressed during his previouscareer as the head of Aeroflot airlinesthat Russia’s fastest growing carrier wasLufthansa. Indeed, Lufthansa regionaldirector for Russia and the CIS RonaldSchulz admitted in August 2009 that his

airline’s passenger traffic to and fromRussia had dropped by just 6%, com-pared to the average decrease of 15%across the Russian air transport scene.

The ever-growing popularity of for-eign airlines in Russia owes much totheir aggressive use of web-based ser-vices, and also to the progressive avail-ability of the Internet in Russia. Eventhough the penetration of bankingcards in Russian households remainsrelatively insignificant, online ticketsales have considerably expanded theairlines’ reach.

The economic crisis has forced someinternational carriers to revise their ex-pansion plans for Russia. AmericanAirlines, for example, stopped flyingbetween Chicago and Moscow. Norwe-gian has cancelled its service from Osloto Moscow, although the airline’sflights to St. Petersburg continue. Otherplayers, however, have carried on re-gardless. El Al last winter introduced aMoscow-Elat route, while SingaporeAirlines has launched an additionalSingapore-Moscow-Houston service.

As for demonstrating the Russian flagabroad, the country’s largest carrierAeroflot remains the only significantplayer on the international market. Thecurrent stern regulations allow otherRussian companies, such as Transaero,S7 Airlines or UTair, to launch sched-uled international services, but theycertainly do not guarantee the most lu-crative city pairs for new entrants.Aeroflot, for its part, constantly facescompetition from the strongest foreigncarriers on each of its foreign routes,which does not make the airline’s mar-ket position any more secure.

The number of foreign airlines operating to Russia has been growing over the past eight years,prompted by a consistent increase in passenger numbers

Leo

nid

Faer

berg

LosingoutRussian airlines facestrong foreigncompetition


AIR TRANSPORT

International flights from St Peters-burg are operated by Rossiya Airlines.Although this market segment has seenlesser foreign presence, competitionfrom abroad is nevertheless giving theRussian airline a hard time. Sources atRossiya name the German market as anexample, where there is no parity be-tween the Russian and foreign carriers.«The German airlines, which possessmuch greater resources, control theroutes to Russia,» they say, quoting me-dia reports which assert that Lufthansacarried 430,000 passengers from StPetersburg to German destinations in2008 — compared to just 155,000 forRossiya. The sources say the Russianaviation authorities are not doingenough to protect the interests of na-tional airlines flying to Germany.

Kaliningrad-based KD Avia also at-tempted to strengthen Russia’s footingon international routes. The airlinespent two years evolving its base atKhrabrovo airport into a massive hubwith the idea that passenger from acrossRussia could fly to Europe via Kalin-ingrad. But months of soaring fuelprices, closely followed by the econom-ic downturn, affected the volume ofpassenger traffic and ultimately broughtKD Avia to bankruptcy. The govern-ment pledged financial help but thecarrier never got any and eventuallyfolded. Now, the demise of a powerfulrival might have called for a celebratoryparty at any of the remaining Russianairlines, but the country’s air transportin general lost a share of the interna-tional market as the result. Aeroflotpromptly announced its intention to setup an operation in Kaliningrad andmaybe even move a portion of its fleet

there, but the timeline for this plan hasnot yet been defined. In the meantime,in November LOT Polish Airlines is toresume the Warsaw-Kaliningrad serviceit discontinued in September 2008.LOT does not conceal that its return tothe region has become possible thanksto the death of KD Avia. The Polishairline will fly ATR 42 and 72 turbo-props to Kaliningrad, which appears tobe a sensible decision given the de-creased passenger traffic.

KD Avia’s bankruptcy may also givean extra boost to Latvia’s AirBaltic,which already operates scheduled ser-vices to Kaliningrad. AirBaltic vicepresident Janis Vanags reported a 15%increase in passenger traffic to andfrom the Russian exclave. The airline,which previously performed onlypoint-to-point services between Kalin-ingrad and Riga, has recently startedoffering connection flights with astopover in the Latvian capital.

Kaliningrad and St Petersburg are thetwo most prominent examples of howdomestic airlines have been losing out toforeign competition in western Russia.It has long been an open secret that res-idents of these two particular regionsprefer to catch a coach to the nearestairport in the neighbouring country(Finland for St Petersburg and Polandfor Kaliningrad) and fly low-fare fromthere to anywhere they fancy in Europe.

The bilateral agreements governingcommercial flights between Russia andforeign countries are rather restrictiveon Russian airlines planning to breakinto international markets. Ironically,these same agreements have recentlystarted impacting the international op-erations of Aeroflot, Russia’s designat-

ed carrier on most international routes.More and more often, Russian carriersthat are normally restricted to their do-mestic networks sign interline and pro-rate agreements with foreign carriers.This enables them to offer connectionflights for much less than the sum totalof all the separate sectors of thoseflights. Being unable — for legal and/oreconomic reasons — to fly internation-al routes on their own, these airlinescollect passengers from all over Russiaand pass them on to their foreign part-ners. Transaero, for one, has recentlysupplemented its existing interlineagreement with Lufthansa with a pro-rate agreement, and has also struck acode-sharing deal with Austrian Air-lines. S7 offers connection servicesjointly with several foreign carriers. Inautumn 2009 the airline introduced arange of attractive air fares for one-stopflights from Russian regional airports toforeign destinations. The fares apply ifone of the flight’s legs is operated byS7, and the other one by a partner air-line. Possible routes include the follow-ing combinations: from a Russian re-gional airport to Moscow Domodedovoand on to foreign destinations; fromNovosibirsk to South East Asian coun-tries; and from Domodedovo to desti-nations abroad with a stopover at a for-eign hub. The Russia & CIS Observerhas learnt the details of one such con-nection agreement, between S7 andEtihad airlines. According to Etihadsources, a passenger travelling from aRussian regional destination will fly theMoscow leg almost for free; their onlycharge on that leg will be the applicableairport fee.

One can only praise the enterprisingRussian airlines, which constantly de-vise yet new ways to develop further, buton the whole the current situation doesnot benefit Russian civil aviation at all.Russian airlines cannot hope for anequal dialog with foreign carriers, whoare well aware of their inability to inde-pendently develop international routenetworks. Aeroflot, meanwhile, dissi-pates its resources by taking on everycompetitor in sight, rather than focus-ing on what is really important.

Russia’s largest carrier Aeroflot has to take on every competitorin sight, rather than focusing on strategic destinations

Ser

gey

Ser

gee

v


BUSINESS AVIATION

Anna Nazarova

Despite the economic in-stability and decrease ofdemand in the sector ofbusiness aviation, Russia

still occupies a noticeable part of theEuropean market. According toSwedish aviation charter online systemAvinode that contains about 80% of allavailable European business charterflights, the share of all requests forflights to and from Russia amounts to30% being inferior only to the UK.

Avinode system, which records theactivity of about 900 air carriers andbrokers, has developed several indicesthat indicate condition of the European(Russian) market of business aviation.Thus, according to the quantity of re-quests in the system for flights to/from

Russia, at the beginning of 2009 the lo-cal market of business aviation de-creased significantly. January and Fe-bruary of 2009 turned out to be themost «unsuccessful» months since2006: the quantity of requests did notexceed 8,000 per month then. Thecompany partially explains the low re-sults of January by the end of the sea-son’s holidays. In March, Avinode sys-tem registered a slight revival and inApril the quantity of requests for busi-ness charter flights grew to 13,000.Such a leap was probably related pri-marily to the Easter and May holidays.

The next growth of the index of re-quests was registered in July and wasevidently dictated by the summer sea-son of vacations. In August, the quanti-ty of requests decreased a little relativeto July but still remained bigger than in

the winter months. However, in gener-al the curve of requests for charterflights to Russia grew slowly and unsta-bly between April and August 2009.

For revealing of clearer market trendsthe schedule of requests is, as a rule,compared to such more accurate indi-cators as Avinode Demand Index andAvinode Pricing Index (the main ad-mission in these indices is the fact thatthey offer summarized data and are notoriented at local markets). The PricingIndex that reflected an average price ofa flight hour decreased gradually sinceJanuary until September of 2009 andthis decrease was interrupted by an in-significant growth only in July. It isnecessary to remark that growth of theflight hour price could happen due tothe real increase in demand for businesscharter flights. The Demand Index thatreflected an average price of a charterflight booked through Avinode systemper day demonstrated a spasmodicgrowth in April and July, which was al-so explained by holidays and summervacations.

Thus, despite that Avinode chartersystem registers only requests and notthe actually performed flights, compar-ison of the requests, price and demandindices may indirectly reflect the realmarket trends.

It also seems possible to determinethe classes of aircraft and the arrivaland departure airports most demandedin the interests of Russian users relyingon requests statistics. The categoryuniting heavy jets and business airlinersbecame the most popular in the periodbetween September 2008 and August2009. Historically, this class of long-haul business jets is more stable to fluc-tuations of demand unlike smaller air-craft. This peculiarity characteristic forthe global market of business aviationin general finds indirect confirmationin Avinode base too. The share of busi-ness jets of heavy class in the overall

Waiting for takeoff Drastic consequences of the global financial crisis keep having negative impact onbusiness aviation in Russia. However, at the beginning of the second half of 2009situation in this segment grew slightly better. Some operators of the Russian mar-ket (Air Charter Service and Moscow Sky) said that in the summer period thequantity of business charter flights demonstrated a 20% growth on average andreached the level of 2007. Results of the autumn months will show if the growth offlight intensity in summer of 2009 has become a trend or has been simply a sea-sonal fluctuation.

Vnukovo-3 remains the most demanded business aviationairport not only in Russia, but also in Europe

Leo

nid

Faer

berg


BUSINESS AVIATION

Anna Nazarova

Growth in quantity of foreign-made commercial aircraftthe Russian airlines increasingly prefer pushes the local

educational institutions to change the system of pilots train-ing. It is obvious that the Soviet era training airplanes atwhich students of majority of Russian pilot schools still prac-tice already do not comply with the modern requirementsand after the graduation pilots have to immediately get re-trained to operate modern types of aircraft, which results inadditional expenses and loss of time. Initial training of stu-

dents to operate modern airplanes as an efficient and a lessexpensive method to solve the human resources problem maybecome a trend soon. At least, the first step towards this wasalready taken: the St. Petersburg State University of CivilAviation (GUGA) started to renovate its Soviet fleet of train-ing airplanes with foreign aircraft.

At the end of October, the university received the first sin-gle-engine Cessna 172S airplanes. GUGA and Cessna Air-craft signed a contract purchase-sale on 12 airplanes of thistype and five simulators for initial training of pilots at the be-ginning of September. For operation of Cessna 172S in Rus-sia the American manufacturer agreed to train engineers andtechnicians and to improve qualification of instructor pilotsof the St. Petersburg University.

In the last few decades Cessna 172S earned reputation of areliable and undemanding tool for training. Representativesof Cessna Aircraft presume that Russian higher educationalinstitutions that are usually cash-strapped will also appreci-ate the price aspect of the matter: Cessna airplanes equippedwith the state-of-the-art aviation systems are much cheaperthan aircraft of the same class including the Russian ones.According to Alexander Yevdokimov, representative of Cess-na Aircraft in Russia, «signing of a state contract means thatthe process of pilots training in Russia follows a path of in-ternational standardization of quality.»

New training tool for Russian pilots

St. Petersburg University of CivilAviation will be the first educationalinstitution in Russia to start trainingpilots in Cessna 172

Ces

sna

Air

craf

t

quantity of requests for all business air-planes (business jets of heavy class,midsize and light jets and turboprops)permanently exceeded 50% throughoutthe entire period. May 2009 was the on-ly exception when this share fell almostto 40% and got practically equal withthe quantity of requests for midsizeclass jets. Such stability in requests foraircraft with big capacity and range ispossibly explained by the trend thatRussian players of the business aviationmarket have voiced frequently since thebeginning of the crisis of aviation trans-port: the industry starts getting trans-formed into an independent and indis-pensable kind of transport and even se-rious economic perturbations cannotforce majority of the users to return toregular airlines. Passengers try to coop-erate but not to migrate to businessclasses of regular carriers.

The crisis practically did not influ-ence distribution of flights of business

aviation among Russian airports. In theperiod between September 2008 andAugust 2009, Vnukovo-3 was tradition-ally the most popular among Russianairports according to the quantity of re-quests. This airport is one of the few inRussia that also offers comprehensiveservices for modern business jets. In theaforementioned period Vnukovo ac-counted for 68.5% of the overall quan-tity of requests for departure of charterflights registered by Avinode. Moreover,according to Avinode, as of September2009 Vnukovo remained the most de-manded airport in Europe too where itoutruns such centers of business avia-tion as Nice, Le Bourget in Paris andLuton in London. The other requestsfor flights from Russian cities were dis-tributed mostly among St. Petersburg’sPulkovo (8.7%), Moscow’s Shereme-tyevo (1.4%) and Domodedovo (1.3%),Krasnodar (0.8%), Rostov-on-Don(0.8%) and Samara (0.8%). The quan-

tity of requests for arrival of aircraft ofbusiness aviation to Russian airportsdiffers slightly but Vnukovo remains thefavorite in this aspect too and its shareamounts to 41.6%.

The data revealed by Avinode approx-imately outlines the general markettrends. The limp winter of 2009 changedto certain revival in April and summermonths. Along with this, the low flightactiveness did not have a serious influ-ence on distribution of flights amongRussian airports and the Moscow avia-tion hub retained the priority. Unfortu-nately, it is hardly possible to decide howsoon the cyclic demand of the industrywill end on the basis of Avinode data butthe representative of the company MaxLiebermann remarks that after the de-crease in demand at the beginning of theyear the peak of the crisis on the businessaviation market is evidently over and thequantity of requests for business charterflights starts growing.


SPACE BUSINESS

Igor Afanasyev, Dmitry Vorontsov

The Russian segment of theInternational Space Station(ISS) will further grow withthe addition of the Mini Re-

search Module-2 (MIM-2) that wassuccessfully launched aboard Soyuz-Ulauncher in November. The new com-ponent will provide the docking of asecond Soyuz-TMA spacecraft, whichis critical to maintaining an expandedpermanent crew at the station. Duringthe next few years Russia will keepbuilding up the capabilities of its ISSsegment so that it could eventually con-tinue fully autonomous orbital opera-tions, if so required.

The ISS is the largest space explo-ration project ever. It is a joint effort ofRussia, the USA, Japan, Canada andmember nations of the ESA EuropeanSpace Agency. The initial ISS configu-

ration was agreed in 1996, when it wasdecided that the station would consistof the Russian and US segments (thelatter one with the participation ofCanada, Japan, Italy and the ESAmember nations). The ISS was to orbitthe Earth at an altitude of about 400km, with an inclination of 51.6 degrees.

Compromising for successThe orbit parameters were a substantialcompromise: they cost the USA anability to service its in-orbit satellites —something NASA was initially planningfor, — while simultaneously deprivingRussia of an opportunity to monitor asignificant portion of its own territory(which would have been secured withMoscow’s original plan for an orbit in-clination of 65 degrees). The exactoverall cost of building and operatingthe ISS is unknown, but our estimate isthat the price tag stands at some $150

billion, since the USA alone has so farspent at least $100 billion on the pro-gram – including the cost of sendingthe space shuttles to the station.

As of mid-October 2009, America’sISS segment included the followingmajor modules: the US-made Destiny,Quest, Unity (Node 1) and Harmony(Node 2); ESA’s Columbus, and Ja-pan’s Kibo. At print time, the JapaneseHTV H-II Transfer Vehicle was dockedto the Harmony node. The Russiansegment currently comprises the ZaryaControl Module, Zvezda Service Mod-ule and Pirs Docking Compartment.

Zarya, also known by the name ofFunctional Cargo Block or by its Russianabbreviation FGB, was the first elementof both the Russian segment and the en-tire ISS. Orbited on 20 November 1998,it became the growth point of the station.Zarya was built by the Khrunichev SpaceCenter as a derivative of an earlier can-

Building on sand?The Russian ISS segment is to be completed by 2016

Since the mid-2000s Russia increased the fundingfor ISS program, so the Russian segment shouldbe completed by 2015-2016

NA

SA


SPACE BUSINESS

celled program. Ironically, since Zaryawas built at the US request and the majorportion of the development funding forthe module (some $250 million) camefrom the USA, it is formally referred to asa component of the US ISS segment.And yet Zarya remains part of the Rus-sian segment because of the Russian-made equipment it accommodates. TheFGB’s primary functions were to providefor the station’s initial attitude controland propulsion. Apart from that, prior toits mating with Unity and Zvezda, Zaryaprovided limited power supply to the en-tire installation. Weighing in at over 20tons and measuring 12.55 meters inlength, the module is now also valued forthe all-important storage capacity it pro-vides, as well as for other operational ca-pabilities. Its design service life spans atleast 15 years.

The Zvezda module was launched on12 July 2000 to provide living quartersfor the Russian segment. At the begin-ning of ISS construction, it served asthe life support system for the entirestation and was also available for flightcontrol and propulsion operations.Zvezda was used as the docking port forProgress-type cargo resupply vehicles.It also provided a communications linkwith the Earth and doubled as the ISScomputing center. The module has amass of 19.05 tons, measures 13.1 me-ters in length, and is equipped with fourdocking ports. Like Zarya, it was builtby Khrunichev.

The Pirs Docking Compartment isintended as an additional docking por-tal for Soyuz-TMA and Progress craft.Apart from that, it is also used as an air-lock for Russian cosmonauts’ extrave-hicular activities. The module weighssome 3.6 tons and has a length of 4.91m. It was built by the Energia Rocketand Space Corporation and waslaunched on 15 September 2001.

For quite some time the developmentof the Russian ISS segment was imped-ed by a variety of factors. The hardestblow to the assembly progress was dealtby the Shuttle Columbia disaster on 1February 2003, in the wake of which theentire budget of the Russian mannedspace program got steered towards pro-

viding crew relief missions on boardSoyuz-TMA vehicles and cargo resup-ply flights by Progress craft. Financialdifficulties were also never far away fromthe ISS — the Russian funding did notfall into a comfortable pace with theprogram needs until the mid-2000s.

Looking into the futureDespite these difficulties, Russia hascontinued working to expand the ISS.The global economic crisis notwith-standing, the financial problems havebeen largely solved, and the current tar-get of the year 2015 or 2016 as the com-pletion date for the Russian segmentdoes not look all that fantastic. TheMIM-2 research module was launchedon November 10, 2009 from BaikonurCosmodrome. This module is based on aProgress spacecraft design, and its pri-mary role will be in providing the dock-ing opportunity for an extra Soyuz-TMAcraft. This is essential because the per-manent ISS crew was expanded fromthree to six people earlier this year. Thismeans that at any given time the stationmust have two Soyuz-TMAs docked toprovide a rescue capability in case of

emergency. MIM-2 will dock Zvezda’sspace-facing port. The module weighssome 4 tons, including one ton of instru-mentation to be used on the station.

In the spring of 2010, space shuttlemission STS-132 will deliver to the ISSanother small-size research module -MIM-1. This one is being built atNASA’s request. It will have a total massof just under 8 tons, including 3.2 tons ofcargo for the station — of this figure, 1.4tons will be destined specifically for theUS segment. The MIM-1 design is basedon the as-yet-nonexistent RussianScience Power Module (NEM). Apartfrom the cargo for the ISS it will be usedas a docking module. It will dock toZarya’s Earth-facing docking node, andwill accommodate both Soyuz-TMA

and Progress-M vehicles. The lower sec-tion of MIM-1 houses components thatwill eventually be moved to Russia’sprospective Multipurpose LaboratoryModule (MLM). These include aportable airlock and a spare elbow joint

for the European Robotic Arm manipu-lator, and a transferable workplace withan ERA mounting platform.

The MLM has a mass of 21 tons. Itwill be one of the largest Russian mod-ules at the ISS. Scheduled for lift-off in2011, this module will serve as the newcenter of the Russian segment. It isplanned to be used for major scientificexperiments. The MLM design is basedon the concept of replaceable payloads,which turns it into a top-class multirolescience laboratory.

In order to expand the functional ca-pabilities of the Russian segment, TheUniversal Docking Module (UDM)with six docking ports is to be deliveredto the station in 2013. It will use one ofthose ports to dock to the MLM. The

Future Multipurpose Laboratory Module willenable Russia to conduct fundamental andapplied research and create new materials at ISS

The primary role of new MIM-2 module willbe in providing the docking opportunity foran extra Soyuz-TMA craft

SPACE BUSINESS

Subscribe today to Russia & CIS Observero Yes, I would like to subscribe to Russia&CIS Observer Quarterlyo Yes, I would like to subscribe to multiple copies of Russia&CIS Observer Quarterly Number of copies .......

Name and title..........................................................................

Organization ............................................................................

Position ....................................................................................

Address......................................................................................

Postcode/ZIP............................................................................

Country ....................................................................................

Telephone/Fax ..........................................................................

E-mail ........................................................................................

Please invoice me o by fax or o e-mail (Signature) ............................................

Annual* rates for 2010 (please tick)Print Electronic**

Moscow 2400 rubles o1760 rubles oRussia 2400 rubles o

Belarus, Estonia,Uzbekistan $112 o

$79 oRest of World $112 o

* Annual subscribtion includes 4 quarterly issues. The current rates arevalid until December 1, 2009

** Issues in pdf format sent by e-mail

Please complete this form and mail it to Russia&CIS ObserverP.O.Box 127, Moscow, 119048, Russia or fax it to +7 (495) 933-02-97

#

E-mail us at: [email protected]

UDM will be used to accommodate thetwo Science Power Modules (NEM-1and NEM-3), as will provide extradocking opportunities for Soyuz andProgress craft.

The Russian segment will be com-plete after the two NEM modules aredelivered. NEM-1 will go up in 2014,to be followed by NEM-2 a year later.These modules will accommodate ad-ditional scientific equipment and willincrease the Russian segment’s poweroutput by at least 72 kW. Each of theNEM modules weighs about 20 tonsand is fitted with large-area solar arrays.

The completion of the Russian seg-ment will boost the effectiveness ofISS-based scientific experiments,which has repeatedly drawn criticizedover the past few years. At present theRussian segment is used for a variety ofexperiments as part of a long-term ap-plied research program approved in1999. Many of them are conducted byRussian cosmonauts in the interests offoreign customers. The situation is sureto change after the MLM becomes partof the Russian segment and enables

Russia to conduct fundamental and ap-plied research and create materials withunique properties.

The most important question for theISS, however, is whether it will be able to

go on for much longer. The key existingagreements between the program partic-ipants expire in 2016. The USA has re-peatedly stated that it was not planningto keep using the station beyond thatdate. Washington’s position jeopardizesthe entire program, as Russia andEurope would like for the ISS to contin-ue through 2020. Recently, after BarackObama became president, the US ad-ministration has somewhat backed upon the issue. It would appear that, hav-ing encountered technical and financialproblems in its own Constellation hu-man spaceflight program, Washingtondecided after all to stick with the ISS.

In Russia’s case the ISS creates a verymuch specific problem that rarely getsmentioned. Up to 50% of the country’sspace budget is spent on the mannedspace program (the other space powers

spend much lesser proportions of theiroverall budgets on maintaining humanpresence in orbit). Such massive spend-ing precludes appropriate developmentof other aspects of space exploration.On the other hand, the ISS once res-cued Russia’s space industry by keepingit busy through the difficult mid-1990sand early 2000s. Besides, Russia cannotjust dump one of its priorities — long-period manned space flights. This iswhy the Russian segment is being builtin such a way as to continue operatingautonomously, as the national orbitalstation, if the Western partners chooseto walk out on the program.

The ISS program has once rescued Russia’sspace industry by keeping it busy through thedifficult mid-1990s and early 2000s.

The Show Observer is brought to youby the publisher of the renowned AirTransport Observer magazine (ATO)and its sister publications – Russia’sonly true aerospace industry publica-tions, which are recognized worldwidefor the quality of reporting and in-depthnews coverage since 1996.

The official on-site publication for the mostimportant Russian aerospace exhibitions

In 2010, the ShowObserver will be publishedat the following importantRussian aerospace events:

HELIRUSSIA 2010(May 20-22, Moscow)Russia’s third internationalexhibition of the helicopterindustry

ENGINES 2010(April 14-17, Moscow)11th international aero enginesexhibition

JETEXPO 2010(September, Moscow)The fifth annual exhibition,and the most significant forumfor the Russian business aviationcommunity

• Delivers your message to all chalets andbooths at the exhibitions, as well asmajor Moscow hotels through ourdistribution of 10,000+ copies

• Reaches exhibitors and atten-dees, including members of thegovernment, as well as execu-tives from the air transport sector,aerospace industry, financialcompanies, service providers, etc.

• Informs readers about the latestdevelopments in the evolvingRussian/CIS aerospace industry,with news reported on-site

• Complements your presence atRussian exhibitions with highlyeffective advertisements in theShow Observer

• Creates awareness of your company witha showcase advertisement, even if youare not exhibiting at Russian shows

The Show Observer:

Evgeny Semenov, PublisherTel. +7 495 626 5356. Fax +7 495 933 0297.e-mail: [email protected]

For advertising information in the Show Observer, contact:

2010

Russia/CIS Observer, 27

Documents

Transcript of Russia/CIS Observer, 27