VLADIMIR KARNOZOV / MOSCOW
Too many suppliers are chasing Russia's small market for regional aircraft. As regional airlines consolidate, not all programmes are likely to survive
Regional aircraft manufacturers are embroiled in a fierce battle for the CIS market. No fewer than eight alliances have been formed to compete for business that cannot sustain all of them - a situation reminiscent of the European and US regional markets a decade ago.
The groupings are unusual, to say the least, and include manufacturers and design houses that have no previous experience of producing and selling regional airliners. Fighter supplier Sukhoi, for example, is teamed with Ilyushin, Yakovlev and Boeing to offer the Russian Regiional Jet (RRJ) family, with 60, 75 and 95 seats; while Aviant, RSK MiG and Tupolev are pushing the 102-seat Tu-334; and Antonov, Kharkov and UUAZ the 80-seat An-148 regional jet.
Yakovlev and the Saratov aviation plant are offering improved versions of the 90- to 110-seat Yak-42D90/D100 trijets; Ilyushin and Uzbekistan's TAPO are pushing the Il-114 64-seat turboprop; and KAPO and Tupolev the 50- to 70-seat Tu-324/414 jet family. Finally, Antonov and the Kharkov plant are offering the An-140 with 52 seats and the An-74TK300 and An-74TK300U with 52 and 70 seats, respectively.
Scarce sales
Very few aircraft have been sold to Russian airlines since the break-up of the Soviet Union in 1991. Six Honeywell TPE331-powered An-38-100 commuters have been delivered to AlRosa, NAPO-Aviatrans and Vostok, and the limited sales to date are being attributed to the relatively high unit cost of $5 million. Three An-38-200s with Russian-made OMKB TVD-20M engines have been constructed and are being prepared for delivery. In 2002, start-up operator Vyborg received three Il-114s, while in other CIS states, Ukrainian airlines took five Antonov An-140s and Uzbekistan Airways took delivery of three Avro RJ85s and has just started operations with the first of 10 Il-114-100s powered by Pratt & Whitney Canada PW127H engines.
Manufacturers believe that if the revival of air traffic in the former Soviet Union continues, it will come mostly from restoring links between pairs of small and medium-sized cities - the routes that suffered most in the past 10 years. Also, the Russian and Ukrainian manufacturers feel they have little chance of competing with Airbus and Boeing on the international markets, but can challenge Bombardier and Embraer with regionals. European and US politicians and industrialists have often suggested Russia should open its market to large Western aircraft while concentrating its resources on smaller types with Western help. The continuing crisis in CIS civil aviation is making such a deal more likely.
Aeroflot's assessment of the Russian market from 2002 to 2015 predicts sales of 934 regional aircraft, based on the gross national product rising at 4-5% a year. This is broken into: 149 regional aircraft in the 100-seat category, 310 with 50-80 seats, 215 with 26-50 seats and 260 with 19-25 seats. Traffic is predicted to rise from 25 million passengers in 2002 to 43-45 million in 2015.
The consolidation of the airline industry would see the formation of 20-30 large regional carriers, feeding passengers to 15-18 main hubs. Most demand would be met by new regional aircraft, with revenues sufficient for each airline to procure 10-12 new regional jets a year.
Russia's current regional fleet comprises 314 Yakovlev Yak-40s, 250 Antonov An-24s, 238 Tupolev Tu-134s and 81 Yakovlev Yak-42s. The fleet will dwindle by 40% in 2005 and 80% in 2008-10 as older aircraft are withdrawn. "We now need 100-150 modern regional aircraft with fast turnaround capability and low fuel burn," says Aeroflot general director Valery Okulov.
Ukrainian airlines together own 73 An-24s and 63 Yak-40s, of which 33 and 42 respectively are in active service. The immediate need is for 20 An-140s, five having already been delivered to Aeromost-Kharkov, Motor-Sich and Odessa Airlines. To help cash-limited operators acquire the $8.5 million aircraft, the state-run UkrTransLizing company was established and offers generous terms for the CIS market, with financial lease payments arranged over 15 years, based on a 12% interest rate.
Assembly lines
At this year's Paris air show, Kharkov won a $45 million contract from Air Libya for five An-140s. Another order, from Iran, will see an assembly line set up in Isfahan to build up to 100 aircraft. Three aircraft have already been assembled under the local name IrAn-140. In Russia, the An-140 assembly line is set up at Aviacor, with the first aircraft due to roll out this year.
Despite their different performances and sizes, despite the demand being enough to support only one type, Russia's Tu-324, RRJ, Tu-334 and Yak-42D, with Ukraine's An-74TK300 and An-148, are all fighting for the same market - to replace the 68-seat Tupolev Tu-134 and 160-seat Tu-154B. The smaller airlines will probably link their choice to majors such as Aeroflot, KrasAir, Pulkovo and Sibir, which together generate 50% of the country's passenger traffic.
Since 1996, the number of operators has dropped from 389 to 235, of which 100 maintain scheduled services. A further cut to 20 is seen as essential if fleet renovation programmes are to get off the ground. State bodies are considering additional measures to stimulate airlines' interest in new aircraft. Stricter environmental conditions have been mooted by the minister for economic development German Gref, Rosaviakosmos general director Yuri Koptev and head of the civil aviation authorities Aleksandr Neradko.
If the government remains passive, the airlines may vote for restoring Tu-154M and Yak-42D production because they are more affordable at $7 million and $10 million, respectively. The Yak-42D100 proposal, with D-436T engines and redesigned wing, offers a low-cost Stage 4 solution. This compares with the $18 million estimated unit price and $330,000 monthly rental for a Tu-334 produced in RSK MiG's new workshops in Lukhovitsy, near Moscow. Even with import taxes included, the new airliner is not competitive with a 15-year-old Boeing 737-500 or MD-82, easily available at a cost of $100,000 a month.
RSK MiG and Tupolev have applied to the government for exemption from VAT and property tax for five years, which would drop the price to $13 million, and monthly rental to $100,000-130,000. This would render the new aircraft economically viable on domestic Russian routes and help win the 100 orders needed to justify development and production costs.
State guarantees are required to borrow the Rb1 billion ($330 million) needed to launch Tu-334 production and to increase output from four airframes planned in 2004 to 24 in 2009. A consolidated order for 40 aircraft is being finalised with a group of Russian airlines. Valery Menitsky, general director of Atlant Soyuz, which has ordered four aircraft, says the Tu-334 "is a real aircraft with already-proven flight performance that will benefit from the modern logistics mastered by RSK MiG on central and eastern European MiG-29s".
Tu-334 certification is targeted for May 2004. The first prototype logged more than 200 flights and a second was rolled out from Kiev-based Aviant earlier this month. The third airframe is being assembled at Lukhovitsy. The government has provided Rb700 million for the Tu-334 programme so far this year, and RSK MiG has spent $47 million of its own funds.
Family concept
Although the RRJ exists only on paper, it is the Tu-334's main rival. Sukhoi is talking to Aeroflot, KrasAir and Sibir about orders for up to 50 aircraft. The RRJ's claimed strength is the Western-style concept of a family of six models - three standard versions for 60, 75 and 95 seats and their long-range variants. The basic 75-seater is promised to cost 15-20% less than Embraer's 170, but this will still be much more than the domestic competition.
Sukhoi believes the project will break even in seven or eight years, after the first flight in 2006 and delivery the following year. Although Boeing's expertise is crucial to the project, the US manufacturer is keeping its distance. "The RRJ is a Russian programme with Boeing participation," says Boeing president for Russia/CIS Sergei Kravchenko. "Responsibility rests with Sukhoi and its Russian partners."
The An-148 programme gets no Russian state support and no input from the Ukrainian state budget. Antonov Airlines, Odessa and Volga-Dnepr have said they will take the 80-seat An-148 at $17 million if deliveries begin, as advertised, in 2005.
The An-148's two-crew glass cockpit is based on technologies from the Antonov An-70 airlifter. A family of aircraft is offered, with the 80-seat version to be followed by a 10-seat VIP model, an extended-range 55-seater and freighters with ramp or side cargo doors. The aircraft is set for roll-out in December and first flight next March
Source: Flight International
