Russia/CIS Observer, 25

www.cis.ato.ru

Russia & CIS Observer

special focus on paris air show 2009

QUARTERLY

SU TO BSC se D R I e AY B p.

E 25 !

â„– 2 (25) june 2009

WINGS OF RUSSIA AVIATION FORUM 7th international conference and exhibition

organized by

in cooperation with

An impressive growth of air traffic volume that defined the Russian air transport industry over the past decade has suffered a dramatic drop in the beginning of 2009.

Nevertheless, long-term development trends of the Russian air transport give us all reasons to expect its fast regeneration.

Russia’s leading airlines are receiving a growing recognition within the international air transport community. This spring S7 Airlines was approved as a candidate to join the Oneworld airline alliance. One more Russian air carrier, UTair Aviation, is currently negotiating its membership within another global alliance.

Today’s economic challenges lead to inevitable changes in the structure of the Russian air transport market. The high summer season brings along some relief to the industry but in October, when the Wings of Russia forum is traditionally held, the time will come to prepare for the winter season.

What will the Russian air transport market look like by then? What will be its shortand medium-term prospects? What plans will the government have come up with in order to support the country’s air transport system? The Wings of Russia forum will discuss these and other pressing questions.

October 7–8, 2009 • Moscow • Renaissance Hotel

media support

The key topics at the conference include: • Russian air transport market: the current state and future prospects • The government and the market: amending the interaction model • Regional air services: finding sources of support • Russian air carriers: increasing the competitiveness • The global market: a ground for cooperation, a ground for competition • Renovation of Russian airline fleets: a complex problem • Aviation finance: a tool for reshaping the market

Register before July 31 to get an early bird discount

Тел.: +7 (495) 626 5329, факс: +7 (499) 245 4946 www.events.ato.ru; e-mail: events@ato.ru

Russia & CIS Observer

№ 2 (25) june 2009

from the publisher of

9

4 12 18

29 • AEROSPACE INDUST RY

• AIR TRANSPORT

Russia/CIS Observer Quarterly is produced by: Publisher Evgeny Semenov Editior-in-Chief Maxim Pyadushkin Art Director Andrey Khorkov Director, Marketing & Advertising Konstantin Rogov Commercial Director Sergey Belyaev Translated By: Andrey Bystrov 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.

© № 2 (25), June 2009 Tel./Fax: +7 (495) 933 0297 Correspondence: P.O. Box 127, Moscow, 119048, Russia To subscribe e-mail to subscribe@ato.ru or contact «MK-Periodica» agency: e-mail: info@periodicals.ru http://www.periodicals.ru or one of its partners in your country.

Printed in Finland by PunaMusta Oy P.O.Box 99, Kosti Aaltosen tie 9, FINLAND-80140, Joensuu

Russian aircraft manufacturers adjust

Stagnation of the official dialogue on air

production plans ..................................2

transport between Russia and the EU ....14

Tu-204 airliners await modernization ....4

The financial crisis reshapes the

Interview with Andrey Shibitov, head of Russian Helicopters ................5

Russian air transport market ..............18

Russian engine is chosen for

Top 20 Russian airlines in 2008 ............20

Mi-38 rotorcraft ..................................6

Russian airports keep up investment

Russian designers work

programs despite the crisis ..................22

on future rotorcraft ..............................8 • BUSINESS AVIATION • DEFENSE Russian biz aviation is taking a severe The Russian Air Force orders Sukhoi Su-35 multirole fighters ............9

beating from the economic crisis ..........26 • SPACE BUSINESS

• PARIS AIR SHOW 2009 The Sukhoi Superjet 100 makes

Russia will get a new manned

its debut at Le Bourget........................12

space system ......................................29

Visit our website at www.cis.ato.ru RUSSIA/CIS OBSERVER № 2 (25) JUNE 2009

1

A E RO S PAC E I N D U S T RY

Declining numbers

Russian aircraft manufacturers adjust production plans Alexey Komarov he global financial crisis has already negatively affected Russia’s aerospace industry.

After several years of growing air transportation Russian airlines experienced a sharp decline in passenger and cargo traffic and began to revise their fleet renewal plans. The slumping demand for new aircraft made the Russian manufacturers cut their production plans for commercial airliners by more than one half compared to previous estimations announced at the end of 2007. In late April 2009 the United Aircraft Corporation (UAC), the holding company which controls all the Russian fixedwing aircraft manufacturers, trimmed its medium-term production plans in accordance with the new market realities.

T

During the airline boom of the second half of 2007, Russian aircraft makers were planning to produce 15 Ilyushin Il-96 widebodies (both in the 300 and the newer -400 modifications), 84 Tupolev Tu-204/214 narrowbodies, as well as more than 300 regional jets: 96 Antonov An-148s, 236 Sukhoi Superjet 100s and Tupolev Tu-334s. The total number of commercial jets to be manufactured by the end of 2012 was planned at 431 aircraft.

The reduced plan, as approved by the board of directors, calls for production of only 196 commercial aircraft by 2013, including nine Il-96s, 58 Tu-204s, 74 Superjet 100s, 44 An-148s, as well as 11 Beriev Be-200 amphibian aircraft.

The most precipitous decline – of up to 60% compared to earlier plans - is expected for regional jets. Furthermore,

Leonid Faerberg

The Russian manufacturers face reductions in commercial aircraft output, but keep their military programs unchanged

The UAC board of directors on April 29 approved an amended plan of civil aircraft production for 2009-12. “The necessity of amending the plan was caused by a negative impact of the global financial crisis, which had initiated a downturn in the air transport market and a decrease in orders for commercial passenger and cargo aircraft,” the board of directors stated.

2

the Tu-334 jet has been completely omitted from the UAC production program. According to the corporation, the new program takes into account only contracts already signed and agreements in final stages of negotiations.

Nevertheless, the United Aircraft Corporation has included in the program the expected purchases of Tu-204 airliners by the Rosavia air carrier, which is being

RUSSIA/CIS OBSERVER № 2 (25) JUNE 2009

formed at the moment by the Russian Technologies corporation. Although the airline has not started operations yet, Russian Technologies in May signed a preliminary agreement with the UAC on long-term deliveries of domestically manufactured commercial aircraft.

Within the next six years Rosavia plans to purchase 63 airliners from the Russian industry: 14 Tu-204s and 49 regional jets.

As for the latter, the choice is expected to be made between Superjet 100s and Russian-assembled An-148s. The agreement also mentions future purchases of up to 100 MS-21 short- to medium-range aircraft. These should start from 2015, after the MS-21 development and certification are completed.

In this difficult situation the UAC board has attempted to preserve some optimism, mentioning that the revised plan for 2009 “calls for an increase in production of civil aircraft as compared to the 2008 results”. This year the Russian aerospace industry is expected to manufacture 22 commercial aircraft, including four Il-96s, 10 Tu204/214s, two Superjet 100s, four An148s and two Beriev Be-200 amphibians.

The Sukhoi Civil Aircraft Company defines the UAC-approved plan for the production of 74 Superjets in 2009-12 as “a highly pessimistic estimate of the market potential”, and hopes that airlines will order more Sukhoi regional jets. At the moment the Superjet 100 order backlog totals 98 aircraft.

But the crisis has not affected the military programs, apparently due to the government’s efforts to preserve the Armed Forces’ procurement budget.

All the manufacturing plans for combat and transport aircraft, which are not disclosed to the general public, remain intact, the UAC board’s statement says.

A E RO S PAC E I N D U S T RY

Tu-204 airliners await modernization Maxim Pyadushkin espite the downfall of air traffic in Russia and the respective drop in demand for new airliners, the country’s United Aircraft Corporation (UAC) and its leasing subsidiary Ilyushin Finance Co. (IFC) sound optimistic about the future of the Tupolev Tu-204 mid-range aircraft family. Production of this type is gaining pace at the Ulyanovsk-based Aviastar assembly facility, and at the end of March the aircraft carrying the round serial number RA-64050 was handed over to the Russian charter carrier Red Wings. Already now the UAC and the IFC promise to shortly roll out the Tu204SM modernized version.

D

A.B.E. Media

Russia’s charter carrier Red Wings is the largest operator of Tu-204 airliners

As IFC general director Alexander Rubtsov explained, the first Tu-204SM prototype will be assembled in Ulyanovsk and will make its maiden flight as soon as 2010. The modernization program included the replacement of the aircraft’s Perm PS-90A engines with the PS-90A2 variant with a modernized hot section and a new control 4

system. Compared with the basic version, the PS-90A2 will have 35% cheaper life-time operating costs, 50% better reliability, improved efficiency, lower noise and emissions. The modernized aircraft will have a two-member crew and a new navigation system that will enable it to land under ICAO Category IIIa conditions, a new communications system and a digital air conditioning system, IFC officials say.

PS-90A2 testing on a flying testbed should start in September, and the engine’s certification is to be over by the end of the year. The new aircraft itself is expected to be certified in 2010. Deliveries should start the same year; the first Tu-204SM operator may be Iran Air Tour, which has already placed five orders for the type. As Rubtsov explains, this contract may be extended to 25 more aircraft, while the possibility of launching licensed assembly of Tu204SMs in Iran is also being discussed.

Transaero may become the first Russian customer – it is expected to convert 10 Tu-214 airliners already on order to the same amount of Tu-204SMs. The UAC and the IFC have also mentioned a possible order for 14 aircraft from the new carrier Rosavia currently being formed by the Russian Technologies corporation and the Moscow city authorities. In general, the UAC estimates the market for this modification at 50 aircraft.

RUSSIA/CIS OBSERVER № 2 (25) JUNE 2009

Meanwhile, Aviastar expects to increase output of the existing Tu-204 variants. Since mid-2008, production of the Tu-204 in Ulyanovsk has been gaining pace. In 2008 the facility rolled out six airframes: two for the Vladivostok Air carrier and four for Red Wings.

This year Red Wings has already received two aircraft; one example of the Tu-204CE cargo variant was handed over to Cuba’s Cubana de Aviacion airline.

Red Wings has become the largest Tu-204 operator with eight of the type in its fleet. In 2009 the air carrier expects to take delivery of four more airliners, and to sign another contract for nine aircraft of this type. By 2010 the airline plans to have a 19-ship Tu-204 fleet. According to Rubtsov, the airline has a definite edge by using Tu-204 for charter flights due to the aircraft’s 210seat capacity – this is a more efficient solution in the current crisis conditions than 300-seat aircraft typically operated on charter routes.

Aviastar plans to roll out nine Tu204s this year. Besides those airframes destined for Red Wings, three aircraft in cargo configuration should go to the Volga-Dnepr carrier. Through 2015, the UAC is expected to produce up to 100 aircraft of this type.

“Starting in 2015, we are planning to break into the market with the new MS-21 mid-range aircraft,” says UAC president Alexey Fyodorov. “But this doesn’t mean that production of the Tu-204 will be cancelled.” He explains that as the first MS-21 modification to enter the market will have only 150seat capacity, the 210-seat Tu-204 will not compete with it. “The Tu-204 family will be produced in Ulyanovsk for as long as it is demanded on the market,” Fyodorov says.

A E RO S PAC E I N D U S T RY

Optimistic expectations

Russia & CIS Observer: The global aerospace sector is reeling under the financial and economic crisis. To what extent has the declining demand for new aviation equipment affected Russian helicopter manufacturers? What anti-crisis measures is Russian Helicopters planning to implement?

Andrey Shibitov: For the time being we continue to work on the existing contracts and there have been no customer cancellations so far. Despite the crisis, enterprises of Russian Helicopters built 169 rotorcraft last year, or 3% more than planned – a growth rate of 60% from 2007. We hope to further increase output. Under our production plan through 2011, at least 231 helicopters must be built this year. We still stand by our strategic development task of gaining 15% of the global helicopter market by 2015.

But the global financial and economic situation has indeed changed. The challenge facing Russian helicopter manufacturers is to use state funds for speeding up industrial reform and increasing the competitiveness of their products, rather than making up for immediate profit losses. Specifically for this purpose we have developed medium-term development programs for the Russian helicopter industry.

We have also set up our vision of what support we expect from the state. There are a number of federal programs in place, but these will be implemented only from 2011. The years 2009 and 2010, therefore, may become particu-

larly difficult for the industry, and anti-crisis state support will be especially welcome during that period.

RCO: Consolidation of Russian helicopter manufacturers into a single holding company is now virtually complete. What is to be done now in order to increase the industry’s production efficiency?

AS: Russian Helicopters has entered the final phase of consolidation. We are completing the construction of a helicopter engineering center in Panki, Moscow Region. It will comprise two design bureaus, a flight test center, an experimental production facility and a research center.

A project has been developed for overhauling the holding company’s production capacities. An ideology has been defined for the key centers of excellence and business units. In the new configuration of Russia’s helicopter industry, production facilities will play the crucial part of forming a competitive image of the industry for the current and future production projects.

RCO: What new products are Russian helicopter manufacturers planning to introduce so as to strengthen their positions on the global market?

AS: We are planning to supplement our product range with a high-speed helicopter. This will be a breakthrough product based on the future technologies of 2015-20. Work on this program

Marina Lystseva

For a number of years now, the Russian Helicopters holding company has been the sole manager of Russia’s rotorcraft industry. The sector is now in the final phase of consolidation, during which its production capacities will be overhauled and the future product range determined. Andrey Shibitov, general director of Russian Helicopters, told Russia & CIS Observer Editor-in-Chief Maxim Pyadushkin about the first results of the consolidation process and the industry’s most important projects.

is being led by both our design bureaus.

However, it will be quite difficult to carry through with our own money, and its timeframe is directly dependent on government funding.

RCO: In 2008 your parent company, Oboronprom, announced the project to assemble AgustaWestland helicopters in Russia. Do these plans still stand?

AS: We are not abandoning this project. Last summer was signed an agreement on setting up a joint venture to assemble AW139 medium twin-engine helicopters in Russia. We are now working on a draft license agreement, which will be an important element in the necessary legal paperwork. Preliminary work is already under way in Panki, where an AgustaWestland assembly line will be built from scratch. The facility is expected to be launched in 2010. Already in 2011 Russian-assembled AW139s will be available in Russia and across the CIS.

RUSSIA/CIS OBSERVER № 2 (25) JUNE 2009

5

A E RO S PAC E I N D U S T RY

Back to the origins

Indigenious engine is chosen for Russia’s new Mi-38 rotorcraft Alexey Komarov t appears that the program to build the 15-ton Mil Mi-38 utility helicopter is in for more changes. The Russian Helicopters holding company said in midApril it could abandon the Pratt & Whitney Canada PW127T/S turboshaft engine as the powerplant of choice for this helicopter, which is designed as a replacement for Mi-8/17 rotorcraft.

“We have been forced to revise the terms of our cooperation with Pratt & Whitney Canada,” Russian Helicopters director Andrey Shibitov commented.

“We are now looking into an alternative option of using Russian TV7-117V engines on the Mi-38. From now on, Russian Helicopters will concentrate its efforts on this version of the helicopter.”

I

This is not the first time the Mi-38 has seen its engine supplier replaced. It was conceived in the early 1980s as a purely Russian helicopter, with indigenous engines and avionics. Then the USSR collapsed, and the transition to market economy robbed the program of state funding. In order to continue with the development, the Moscow and Kazan helicopter plants in 1994 teamed up with Eurocopter and the St Petersburg-based engine specialist Klimov Company to set up the Euromil joint venture. Klimov’s interest in the project was to fit the Mi-38 with a turboshaft version of the TV7-117S turboprop engine it was developing at the time.

Klimov walked out in 1996. One year later it was decided to install PW127T/S engines on the Mi-38, but Pratt & Whitney Canada never joined Euromil.

Leonid Faerberg

The Mi-38 is turning back into a purely Russian product as the program sheds foreign partners

Pratt & Whitney Canada was cautious in its comments. “We cannot confirm recent media reports [about Russian Helicopters dropping the PW127T/S],” said company spokeswoman Maria Mandato. “We continue negotiations with our customer.”

6

In 2000 Euromil and Pratt & Whitney Canada signed a contract for the delivery of the engines for the first prototype.

The PW127T/S-powered helicopter first flew in 2003. Since the very start the Russian side wanted domestic manufacturers to participate in the serial produc-

RUSSIA/CIS OBSERVER № 2 (25) JUNE 2009

tion of the Canadian engine. In a protocol signed in 2008, Pratt & Whitney Canada stated its intention to develop and certify the engine jointly with Russian Helicopters, the Ufa-based UMPO engine plant and the CIAM Central Institute of Aviation Motors. The PW127T/S should have been produced in Russia under license at UMPO facilities. European and Russian certification was expected to be obtained in 2011, while the launch of Mi-38’s serial production was planned for 2012.

Meanwhile, back in 1997 Klimov had its TV7-117S engine certified for the Ilyushin Il-114 regional turboprop. Since then the engine has been produced in small batches due to a modest demand for the Il-114. Klimov general designer Alexey Grigoriev told Russia & CIS Observer: “We have developed a complete documentation package for the TV7-117V, fit-checked the demonstrator engine on a Mi-38 and started building flight-test and certification prototypes.”

The development of the helicopter variant of the TV7-117 will evidently require cooperative efforts of several Russian engine manufacturers, which have recently merged into United Engine Corporation.

As Mi-38 general designer Georgy Sinelshchikov explained, under the initial estimations the TV7-117 will be much more efficient in intensive fullpayload and maximum-range operations than the PW127T/S engine.

By abandoning the Canadian engine the Mi-38 is going back to the original idea of being a purely Russian product.

Another foreign partner – Eurocopter, which was responsible for supplying the avionics for the new helicopter — withdrew from Euromil in 2005. However, more time will be needed to turn the current TV7-117 into a helicopter version and launch series production. This may further stall the Mi-38 program.

A E RO S PAC E I N D U S T RY

High-speed plans Russian designers work on future rotorcraft Maxim Pyadushkin espite the financial crisis that has also affected aerospace industry all over the world, the Russian Helicopters holding company, a recent merger of the country’s rotorcraft manufacturers, plans to enter the market with a new product – a high-speed helicopter within a decade. The company first revealed its high-speed concept in 2007, but at the HeliRussia 2009 exhibition, which took place in Moscow in May, Russian Helicopters displayed two high-speed helicopter concepts: the Mil Mi-X1 and the Kamov Ka-92, and released preliminary performance data for their designs. “The work is going on,” says Andrey Shibitov, head of Russian Helicopters. “This year we finalized the requirements for the [high-speed] program and defined the problems that should be solved before the development starts.”

The program includes simultaneous development of two designs – the Mil Mi-X1 and the Kamov Ka-92. The MiX1 is designed to have a take-off weight of just 10 tons, seat 25 passengers and

Marina Lystseva

D

fly to 1,500 km. The helicopter’s single main rotor means that in order to travel at high speeds it will have to overcome the retreating blade stall (RBS).

This phenomenon occurs at airspeeds of some 300 km/h, and leads to vibrations that may ultimately destroy the rotor. Mil’s solution to fighting the onset of the RBS is to offload the rotor with the help of the proprietary Stall Local Elimination System (SLES). According to Mil Chief Designer Nikolay Pavlenko, the designers have already agreed to test SLES at Russia’s TsAGI Central Aerohydrodynamics Institute.

Earlier the manufacturer asserted that using SLES alone would give the Mi-X1 a speed of 450–500 km/h. According to the updated information made public at HeliRussia 2009, the helicopter will have a cruise speed of 475 km/h and a dash speed of 495 to 520 km/h. This will be possible through the use of a pusher propeller and a number of aerodynamic improvements, including a retractable landing gear and streamlined forward and rear fuselage sections. The Mi-X1 might be powered by two uprated Klimov VK2500 turboshafts. Similar engines are

Kamov Chief Designer Sergey Mikheev believes that the high-speed Ka-92 will compete with regional turboprops

8

RUSSIA/CIS OBSERVER № 2 (25) JUNE 2009

installed on Mi-28N and Ka-52 attack helicopters.

The pusher propeller will also be used on the Kamov Ka-92 helicopter. As Kamov Chief Designer Sergey Mikheev explained, the traditional design when the main rotor both lifts and pushes the aircraft forward only works up to a speed of about 300 km/h. “Now we plan to split the functions of horizontal and vertical flights between different rotors,” said Mikheev. The Ka92 is planned as a 30-seat passenger helicopter with a take-off weight of 16 tons. It will feature Kamov’s signature coaxial main rotor. According to Mikheev, the first prototype will be powered by two reliable VK-2500 engines equipped with a new gearbox. But the designers plan to install more powerful 3,200 hp VK-3000 turboshafts as soon as St Petersburg-based Klimov Company finishes their development.

Thanks to improved aerodynamics and a rear-mounted pusher propeller, the Ka-92 will have a cruise speed of 420 to 430 km/h.

Russian designers believe that the combination of VTOL capability, a cruise speed approaching that of fixed-wing regional aircraft, and a range of 1,500 km will make the highspeed helicopters an ideal transport for remote regions in Russia’s Siberia and the Far East.

By the end of 2009-2010 Russian Helicopters plans to select one of the two designs for further development.

According to Andrey Shibitov, the first Russian high-speed helicopter is expected to take off in seven to 10 years if the government will finance the development. The company hasn’t applied for budget subsidies yet, but it already confesses it hasn’t enough financial resources to create a high-speed helicopter on its own.

DEFENSE

Helping hand Maxim Pyadushkin espite certain expectations that Sukhoi would display both of its newest products — the Superjet 100 regional jet and the Su-35 multirole fighter — at Le Bourget this year, the Russian aircraft maker has decided to celebrate the 100th anniversary of the Paris Air Show only with its major civil product. Nevertheless, this does not mean that the Su-35 program has been overshadowed by the first successes of the Superjet 100 project.

Quite the reverse — the Su-35 program has recently received a serious financial boost with the Russian Air Force finally deciding to purchase the aircraft as an interim solution until the fifth-generation fighter enters service.

Sukhoi had lobbied for this solution for several years, all the while developing the Su-35 on its own. The purchase decision was announced by Russian Prime Minister Vladimir Putin during his visit to Sukhoi’s main assembly facility in Komsomolsk-on-Amur in the beginning of May. There he was shown a Su-35 prototype — as well as the prototype of the Sukhoi T-50 design developed to meet the air force’s next-generation fighter program, known as PAK

D

FA (the Russian acronym for Future Aircraft System of Frontline Aviation).

“We have decided to place additional orders with the [Sukhoi] facility,” Putin said after his visit to Komsomolsk-onAmur. “Until 2105 it will deliver 60 new combat aircraft to the Russian Armed Forces.” A source at Russia’s United Aircraft Corporation, a merger of domestic fixed-wing aircraft manufacturers that also includes Sukhoi, explained to Russia & CIS Observer that this figure includes 48 Su-35 airframes. It will enable the air force to fully re-equip two fighter regiments. The rest will be a mix of Su-27SM single-seat fighters and Su-30MK2 twin-seat aircraft, said the source. The deliveries of Su-35s to the air force should be completed by 2015 while other modifications will be handed over by 2011-12.

The single-seat Su-35 — also referred to as the Su-27SM2 by the Russian military — combines the proven Su-27 airframe with completely new onboard equipment, as well as the company’s modernization solution for existing Flankers and some developments for the future T-50 fifth-generation fighter. The first prototype was demonstrated at the MAKS 2007 air show, with the NIIP Irbis passive electronically scanned array already fitted

Sukhoi

The Russian Air Force has decided to order Sukhoi Su-35 multirole fighters on the aircraft. The Su-35 is powered by a pair of experimental NPO Saturn 117S engines, a further derivative of the Al-31 powerplant. Compared to its predecessor, the 117S has two more tons of thrust (to 14.5 tons) and a FADEC control system. Its swiveling nozzles are identical to those used on the Al-31FM modification that powers Su-30MKI fighters.

Sukhoi designers have also made a serious step forward in developing equivalents of certain foreign-made onboard components previously used in the Su-35 program. For example, the aircraft’s cockpit simulator demonstrated at the Paris Air Show in 2007 had a control stick made by the French company Thales. When presenting the first prototype a year later, Su-35 program director Igor Dyomin stressed that the aircraft had only Russianmade equipment. Among these newly developed components for the Su-35 he also mentioned an IR radiation detector and a new optical radar station.

The flight tests started with the first Su-35 prototype taking off on February 19, 2008. In October the same year the second prototype made its maiden flight. To date, both aircraft have made over 100 flights. Sukhoi has reported that during the first year of testing it

RUSSIA/CIS OBSERVER № 2 (25) JUNE 2009

9

DEFENSE

managed to confirm the aircraft’s stability parameters and check the integrated control system, various subsystems and navigation equipment. One more prototype completed static trials to achieve marginal conditions for the confirmation of the aircraft’s flight performance.

cruise speed, i.e. a supersonic speed at the highest thrust settings without the use of the afterburner — one of the distinct features of a next-generation fighter. This became possible thanks to the use of the more powerful 117S engines, combined with a lighter airframe incorporating composite elements, and

A.B.E. Media

The single-seat Su-35, also referred to as the Su-27SM2 by the Russian military, is a testbed for some innovations to be later used on Russia’s fifth-generation fighter

This year Sukhoi was planning to use the third aircraft for flight trials to bring the total number of test flights to 150160. Unfortunately, the third prototype missed its chance to take off as it was destroyed during taxi trials at the end of April 2009. Nevertheless, the company has confirmed that the development schedule remains unchanged and that this year it plans to complete the static trials and begin testing the super-agility mode on the flying prototypes.

During the first test flights the Su-35 unexpectedly demonstrated super10

more advanced onboard equipment.

“We didn’t expect such a result and were surprised at it,” — Igor Dyomin confessed at the time. He also confirmed that the aircraft had reached supercruise speed twice, at the altitudes of 5,000 and 11,000 meters. “It went supersonic and continued to speed up,” Dyomin said, adding that Sukhoi would continue assessing the parameters achieved and testing the aircraft at supercruise settings at various altitudes and missions, including flights with combat loads.

RUSSIA/CIS OBSERVER № 2 (25) JUNE 2009

The order from the Russian Air Force gives Sukhoi significant financial support and will enable it to ensure a workload for its Komsomolsk-onAmur manufacturing site, which has suspended large-scale Flanker production since the completion of a series of Chinese orders in the early 2000s.

Sukhoi CEO Mikhail Pogosyan expects to sell up to 200 aircraft through 2020 and, besides the domestic orders, hopes to find foreign customers in South East Asia, Africa, the Middle East and Latin America. However, the Su-35, which was initially promoted as Sukhoi’s exclusive export product, has not met with any success on the foreign markets yet. It failed to make the short list for the Brazilian Air Force’s fighter competition. A Sukhoi source complained to Russia & CIS Observer that the Brazilian choice had been affected by political reasons; on the other hand, the tender’s offset requirements were categorized as unrealistic by the Russian side.

The domestic procurement of the Su-35 will help Sukhoi to finish the development of the T-50. The first flight of Russia’s fifth-generation fighter is expected by the end of 2009.

At any rate, Russian Air Force Commander Col-Gen Alexander Zelin in December 2008 expressed his hope to see the first flying T-50 prototype ready by the Air Force Day, which is celebrated on August 12. Members of the Russian government miss no chance to assert that the PAK FA program faces no delays. Vladimir Putin was no exception when he confirmed, after his visit to Komsomolsk-onAmur, that the Sukhoi facility was actively working to develop the fifthgeneration fighter. “The work is on schedule. I saw it myself,” said the Russian prime minister.

Earlier Sukhoi and government officials said that the PAK FA would enter service with the Russian Air Force in 2015. Now, with the decision to purchase the Su-35 in that year, it looks like Sukhoi is taking more time to complete the development of its fifth-generation fighter than initialy planned.

L IA ION IC AT FF IC O UBL P

The official on-site publication for the most important Russian aerospace exhibitions The Show Observer is brought to you by the publisher of the renowned Air Transport Observer magazine (ATO) and its sister publications – Russia’s only true aerospace industry publications, which are recognized worldwide for the quality of reporting and in-depth news coverage since 1996.

The Show Observer: In 2009, the Show Observer will be published at the following important Russian aerospace events:

• Delivers your message to all chalets and booths at the exhibitions, as well as major Moscow hotels through our distribution of 10,000+ copies

MAKS 2009

• Informs readers about the latest developments in the evolving Russian/CIS aerospace industry, with news reported on-site

August 18-23, Moscow-Zhukovsky Russia’s premier biennial aerospace show

• Reaches exhibitors and attendees, including members of the government, as well as executives from the air transport sector, aerospace industry, financial companies, service providers, etc.

• Complements your presence at Russian exhibitions with highly effective advertisements in the Show Observer • Creates awareness of your company with a showcase advertisement, even if you are not exhibiting at Russian shows

JETEXPO 2009 September 16-18, Moscow The fourth annual exhibition and the most significant forum for the Russian business aviation community

For advertising information in the Show Observer, contact: Evgeny Semenov, Publisher Tel. +7 495 626 5356. Fax +7 495 933 0297. e-mail: e_semenov@ato.ru

PA R I S A I R S H OW 2009

Celebrating the 100th anniversary The Sukhoi Superjet 100 makes its debut at Le Bourget Maxim Pyadushkin ussian aircraft manufacturers have prepared a special gift for the 100th anniversary of the Paris Air Show.

For the first time in quite a long period Russia’s new commercial airliner will make its international debut at Le Bourget’s static and flying display. It will be the Sukhoi Superjet 100 regional jet, designed and produced by Sukhoi Civil Aircraft Company (SCAC) which is a partnership between Russia’s Sukhoi jet maker and Italy’s Alenia Aeronautica company.

The Superjet 100 is currently the most important and successful civil aircraft program of the Russian aerospace industry. It relies on extensive international cooperation. In addition to its Russian supply chain, more than 30 leading foreign companies are involved, including Thales, Messier-Dowty and Liebherr-Aerospace. The Sukhoi Su-

R

perjet 100 program also became the catalyst for the creation of a large-scale joint venture: the PowerJet company, which brings together the efforts of French engine manufacturer Snecma and NPO Saturn of Russia in developing, manufacturing, marketing and providing after-sales support for the SaM146 jet engine that will power the new regional jet.

One of the major achievements is that, for the first time, a Russian aerospace company has succeeded in entering a strategic partnership with an industry-leading European company.

The SSJ100 program benefits from the active participation of Alenia Aeronautica, a business unit of Italy’s Finmeccanica.

In April, the Italian manufacturer completed the acquisition of a 25% stake, plus one share, in the capital of Sukhoi Civil Aircraft Company. The stock acquired by Aleina is valued at $183 million (138 million euros). In or-

der to make it possible for Alenia Aeronautica to subscribe the SCAC stake, the Russian government issued two legislative acts overruling an earlier prohibition on foreign ownership of more than 25% in a Russian aircraft manufacturer.

Mikhail Pogosyan, Director General of SCAC parent company Sukhoi, said that the closure of this deal results in “the biggest alliance between Russia and Italy ever to be developed in the aircraft sector”. He added that as a strategic partner, Alenia Aeronautica “will solidify the Sukhoi Superjet 100’s market potential worldwide, and will provide our product with distinct logistics support”. His counterpart, Finmeccanica Chairman and CEO Pier Francesco Guarguaglini, added: “This agreement is the first fundamental step for an ever broader collaboration between Finmeccanica, Sukhoi and the Russian aeronautics industry, and it paves the way for more partnerships in other strategic industrial sectors.”

Even before the deal was closed, in 2007, the partners — Alenia Aeronautica and Sukhoi – set up the SuperJet International joint venture in Venice, Italy.

It is responsible for the Sukhoi Superjet 100’s marketing, sales and deliveries in Europe, North and South America, Africa, Japan and Oceania, as well as for its worldwide logistics support. Alenia Aeronautica holds a 51% share in SuperJet International, while the remaining 49% is controlled by Sukhoi.

Marina Lystseva

Heads of Sukhoi and Finmeccanica, Mikhail Pogosyan (left) and Pier Francesco Guarguaglini, shake hands to mark the establishment of the biggest alliance between Russia and Italy ever to be developed in the aircraft sector

12

RUSSIA/CIS OBSERVER № 2 (25) JUNE 2009

PA R I S A I R S H OW 2009

Biryukov, a test pilot with the Russian Aviation Register of the Interstate Aviation Committee (IAC AR) – who is an expert on critical condition testing.

The pilots are already offering particular praise for the Sukhoi Superjet 100’s aerodynamics, which allow the aircraft to recover easily from erroneous inputs.

Advance warning of an impending stall is provided, giving a clear signal that further loss in airspeed would lead to the onset of a stall.

Sukhoi Superjet 100s that are currently flying. These flights were a part of the work of the EASA certification panel, which is responsible for certification flight tests. They also preceded the launch of the EASA certification flight campaign, and were aimed at introducing the EASA pilots to the aircraft and enabling them to conduct preliminary evaluation of its handling qualities.

"The first impression from the EASA pilots is that the aircraft is easy to fly

Twenty years ago Sukhoi unveiled at Le Bourget its Su-27 fighter, now the time has come for the Sukhoi Superjet 100 regional airliner SCAC

With the creation of this solid industry team, the Sukhoi Superjet 100 program has now entered the series assembly phase, with a total of 13 production airframes currently in various stages of completion.

The assembly line for all Sukhoi Superjet 100 versions is located at Sukhoi’s KnAAPO facility in Komsomolsk-on-Amur, while another Sukhoi subsidiary — the Novosibirsk NAPO plant — focuses on component production. In order to qualify for the Sukhoi Superjet 100 program, both NAPO and KnAAPO had to significantly upgrade their production facilities. This was necessary because, for the first time in the history of Russia, paperless design tools were used in developing the aircraft, with a virtual mock-up serving as the reference model for the tooling and production set-up.

The first two assembled jetliners, nos.

95001 and 95003, have been involved in the flight test program since 2008. The initial test flights were performed from Komsomolsk-on-Amur, home to the Sukhoi Superjet 100 assembly line. In April both aircraft made their first flight across Russia to land at the country’s main flight test center in Zhukovsky, near Moscow. Two more prototypes are in final assembly: no. 95004 is ready for engine installation, and no. 95005 is at the systems installation station.

The first production Sukhoi Superjet 100 has been moved to the final assembly building for wing-fuselage mating.

Fuselage assembly has been completed on the second production aircraft, and the third is now undergoing this operation.

The Sukhoi Superjet 100 has completed the second phase of the certification program, which involved high-angle-of-attack trials. Some enhancements had been introduced to the control system after the completion of the first phase. The aircraft is now being tested in what is referred to as “normal mode”, which represents the most advanced level of control system automation. Both stages of flight tests were performed by SCAC chief test pilot Alexander Yablontsev and Vladimir

In late April the Sukhoi Superjet 100 completed natural icing tests in Arkhangelsk in northern Russia. “The aircraft and its systems, including the anti-icing, demonstrated excellent performance in normal and critical modes,” said SCAC First Vice President for Program Coordination Igor Vinogradov. “None of the systems showed any icing-caused failures. All the five flights were credited toward the Sukhoi Superjet 100’s certification, and they confirmed the results obtained during ground-based rig tests years ago.”

The Sukhoi Civil Aircraft Company is aiming for parallel certification of the Sukhoi Superjet 100 in Russia and Europe, which will expedite the aircraft's entry into commercial service.

Acting on behalf of the SCAC, the IAC AR has applied for EASA validation of the aircraft’s type certificate. The familiarization phase of cooperation with the EASA on the Sukhoi Superjet 100 program is now completed.

Also in April, EASA pilots performed familiarization flights on the two

and comfortable to pilot,” said Fabrice Butin, EASA/CEV flight test engineer, who flew on board the Superjet 100 no.

95001 prototype. “In terms of handling qualities, it is very close to what we are used to.”

The Superjet 100 is expected to get Russian certification by the end of 2009 and the first deliveries should start shortly afterwards. To date, the Sukhoi Civil Aircraft Company has landed 98 firm orders for the aircraft from both Russian and foreign airlines. The first carriers to get the new regional jet will reportedly be Armenia’s Armavia and Russia’s Aeroflot.

The SCAC is now hard at work putting the aircraft into full production at its Novosibirsk- and Komsomolskon-Amur-based facilities, which together should be able to support an output of 70 airframes a year by 2012. The company also continues with a major retooling program in anticipation of future high demand from airlines, which it estimates at up to 1,040 aircraft through 2027.

RUSSIA/CIS OBSERVER № 2 (25) JUNE 2009

13

A I R T R A N S P O RT

Murky times call for a “reset”?

Stagnation of the official dialogue on air transport between Russia and the EU makes “industrial” cooperation, supported by inter-parliamentary and commercial connections, a critical tool for the development of cross-border businesses Boris Rybak elations between the European Union and Russia have hardly ever been worse since the end of the Cold War, as was clearly demonstrated at the recent RussiaEU summit in Khabarovsk. Nevertheless, a new partnership agreement will be developed and singed in the foreseeable future. It is obvious that both in Russia and in Europe there are interested groups with entirely opposite views of the future of Russia-EU relations, ranging from a return to headon confrontation to overwhelming liberalization and the removal of all barriers. One of the biggest advantages of air transport is that it’s equally needed by both sides.

As a result, cooperation in this complicated and still highly regulated area is virtually inevitable and potentially capable of filling the difficult political process with some positive pragmatic content.

“Official” dialogue between Russia and the EU has been virtually suspended since the spring of 2007. Last year did not bring any positive dynamics in that respect. Even more, the highest priority placed by the European Commission on resolving the trans-Siberian overflight payments dispute, and the intention of the Russian government to revisit this issue after Russia’s accession of the WTO, have blocked cooperation between the authorities – including on perhaps more important issues.

Difficulties in the official, “ministerial” dialogue also tend to spoil the business environment. In everyday life and actions of civil aviation authorities

R

14

new, negative moods are evident. Even reasonable actions of CAAs, airlines and airports are viewed through the confrontation prism. Further development of the market, which contributes to more than 70% of international traffic to and from Russia and is one of the fastest growing and profitable continental markets for European airlines, is grinding to a halt.

The air transport crisis has resulted in dramatic financial losses for most airlines both in Europe and Russia, jeopardizing their very existence as independent entities. The influence of governmental institutions on businesses is rapidly growing. Ideas of protectionism are taking over the minds of politicians and different authorities across the globe. At the same time some new, truly golden opportunities have emerged – for those able to grab them. Among these are bigger market shares, access to the acquisition of new promising assets and, at

of large European carriers. The question is whether the Lufthansa management will be able to cope with the challenging task of integrating five different airlines into an efficient holding structure. Provided this does happen, how will the European air transport scene change? What will be its influence on EU-Russia relations in the air transport area? It is worth mentioning that the air service agreement (ASA) between Russia and Germany is the broadest and the most liberal among all bilateral ASAs signed by Russia.

The second biggest merger deal, that of British Airways and Iberia, has encountered difficulties. There is an impression that the European Commission has not yet adopted an approach and position with regard to such international mergers. From the EU-Russia standpoint, the only thing is clear: the existing bilateral ASAs are drifting further and further away from the Russian and European realities of today. In the

The crisis has led to dramatic financial losses for most airlines both in Europe and Russia, but at the same time created some new, truly golden opportunities for those able to grab them. the end of the day, the possibility to gain completely new positions on the market.

Consolidation of European airlines is fully under way with Germany’s Lufthansa leading the “2008-2009 European season”. This year this most successful European airline (and probably one of the world’s most efficient airlines) will add to its assets a number

RUSSIA/CIS OBSERVER № 2 (25) JUNE 2009

context of bilateral ASAs, whose airline is Lufthansa Italia anyway – Germany’s or Italy’s?

Quite logically, new European megacarriers will look for Russian partners to cover the blank space on their network maps called Russia. So far only Air France – KLM has successfully solved this task. It is absolutely clear that participation of other major Russian air-

A I R T R A N S P O RT

of naming Rosavia the designated carrier. The desire to guarantee fair competition to their airline has made the Rosavia shareholders address Russia’s Federal Antimonopoly Service with an enquiry regarding the legal competence

The current hot discussions in Europe on the new environmental requirements gathered under the ETS umbrella are not well known in Russia.

Russian airlines today are not concerned with this issue, believing that this

For the past few decades Russian-German cooperation in air transport has been especially successful, leading to the creation of the most liberal and developed market of bilateral air services

Andrey Lekhtin

lines in other global alliances will reconfigure the Russian market dramatically. This already started to happen with the announcement that Russia’s second biggest airline, S7 Airlines, was being invited to enter the Oneworld alliance.

Not only are the global alliances looking to add Russian partners. A code-sharing agreement between Russia’s largest network carrier S7 and the European airline Air Berlin/FlyNiki is being perceived as a benchmark and has reverberated both in Russia and Europe.

The unfortunate demise of the much publicized first Russian airline alliance AiRUnion has left Star Alliance, the world’s largest global association of air carriers, without a Russian partner. Star Alliance members, who were busy for the past several years building a hub at Moscow Domodedovo airport, have suddenly found themselves without local feeders after the remains of AiRUnion were urgently transferred to another Moscow airport, Vnukovo.

The management of Star Alliance and its most active members in Russia, Lufthansa and Austrian Airlines, face quite a complex and important task of enrolling a new Russian partner that would be capable of accomplishing the alliance’s goals in the current difficult market environment.

An even more ambitious project has emerged on the ruins of AiRUnion. This start-up, called Rosavia, is potentially capable of drastically changing the whole configuration of the domestic and international segments of Russian air transport. Consolidation of state-owned assets, including large airlines like GTK Rossiya, combined with political influence of the start-up shareholders, could allow this new player to attain the required “critical mass” quickly.

Rosavia’s plans with regard to the international market may seriously influence international traffic to and from Russia and “aviation” relations between the EU and Russia in general. The intention of the new start-up to become a major competitor to Aeroflot on the international market would apparently require a radical change to most of the bilateral ASA agreements for the purpose

of Aeroflot’s receivership of the Siberian overflight payments.

2008 and beginning of 2009 featured new attempts by Russian airlines to acquire European air transport assets (Aeroflot/Alitalia, Aeroflot/JAT, S7/ Austrian). Accompanied by broad coverage in the Russian and European press, all of them have failed. Potential participation of Russian capital in European air transport meets with very little understanding in Russia and a very cautious, often nervous or even hostile reaction in the EU. European airlines which do have Russian capital, e.g. Hungarian Malev or German Blue Wings, have been viewed ambiguously and, according to the European press, their legal status could be subject to an investigation by European structures.

While consolidation of European carriers was rapidly growing in 20082009, the interest of EU trade investors in Russian airlines was extremely low, if any. Yet some Russian airlines have appeared to be potentially interesting and large stocks could be bought for very attractive prices. The only reasonable explanation is that the Europeans considered Russia’s related risks in air transport as being too high for investment.

will not happen any time soon. Quite unusually, Russia could team up with some other influential non-EU countries like the USA, Canada, China and India, to deal with the ETS problem.

The EU leaves non-EU airlines no choice and imposes new, additional financial burdens on operations to and from Europe. It is impossible to say today what kind of reaction would come from the Russian authorities, but if the current moods persist, this reaction could be extremely negative.

No matter how difficult the current situation appears to be, airline business does not stop even when official relations stagnate. Therefore, many in Russia and Europe hope that a direct dialogue among airlines and other air transport entities could fill the political process with positive economic content, thus contributing an additional momentum to the official dialogue.

Many also believe that there is an important role in broadening and intensifying the EU-Russia air transport dialogue to be played by institutions which have not been extensively involved in that process until now: the parliaments of Russia and EU member nations, the European Parliament, and trade associations, to name but a few.

RUSSIA/CIS OBSERVER № 2 (25) JUNE 2009

15

A I R T R A N S P O RT

No money

The financial crisis may reshape the Russian air transport market The previous global air transport crisis of 2001-2002 did not affect Russian airlines in any significant way: at that point the country’s air transport market was still shaping up after the difficult 1990s, and the fear of flying that descended on many countries post 11 September 2001 was not really a factor for the Russian flying public. Nowadays, although there remains considerable developmental disparity between the air transport sectors in Russia and elsewhere (first of all the USA, Europe and South East Asia), the Russian market is suffering just like any other country’s. Some of the problems that have befallen domestic airlines are similar to those facing their international counterparts – such as increasingly expensive borrowings, but at the same time the crisis in Russia has its own unique features.

Polina Zvereva and Valeriy Lyakh n April 2009 the International Monetary Fund reviewed its earlier outlook on Russia’s economy. The revised version states that the country’s GDP will plummet by 6%, against the 0.7% decline forecast in January this year. Given these gloom prospects, demand for domestic air travel in Russia will hardly resume growth in the near future. Despite a significant passenger traffic growth of

I

2006-2007, air transport in this country has failed to become an accessible means of transportation for all strata of the population – according to various estimates, only 3% to 7% Russians travelled by air on domestic routes over the past two years. Passenger numbers kept growing chiefly at the expense of charter flights and scheduled services to tourist destinations, and also thanks to domestic business travel.

Now that the country’s economy is slowing down, each of these air trans-

Sergey Sergeev

Despite financial problems, Kaliningrad-based KD Avia is still intent on adding 25 Airbus A319s to its current fleet of Boeing 737s

18

RUSSIA/CIS OBSERVER № 2 (25) JUNE 2009

port segments is suffering an inevitable decline. In addition, business passengers are increasingly downgrading to economy class, thus reducing the profitability of each flight. The diminishing demand leaves the airlines with the only passenger-attracting option of reducing air fares, which is extremely difficult to do in the current situation. Since early 2009 the Russian air transport market has been ridden with overcapacity; carriers are already merging or cancelling some of their flights, but this alone is not going to radically change the supply/demand imbalance. This is why airlines roll out special offers and promotions more often than before, despite constant complaints about their difficult financial situation.

The problem of searching for affordable loans is equally pressing in the international and Russian air transport markets. Back in autumn 2008, so-called system-forming Rus-

A I R T R A N S P O RT

probably lease them, rather than buying the lot.

Leasing has become another cause of Russian airlines’ worsening financial state. The weakening ruble has affected those carriers which used to renew their fleets through lease deals, since much of their revenues are in rubles, whereas lease payments are mostly made in foreign currencies. Access to state funding will now become key to the survivability of Russian civil aviation, because airlines will have to have operational credit lines at hand in order to honor their lease contracts.

months, UTair is not abandoning its plans to introduce new routes. During the winter season it launched flights between Moscow and Rostov-onDon, Omsk, Perm, and Barnaul.

Later on UTair came to Ulyanovsk, the city famed for its cutthroat competition and relatively small potential market. In order to capture its share, UTair introduced a very aggressive tariff policy on the Ulyanovsk route, with its fares maximally lowered to match those charged by the railway monopoly. The airline gets much of its profit from helicopter operations,

UTair, one of the top five largest Russian carriers, may weather the crisis thanks to its strong helicopter operation and aggressive domestic network policy

Apart from the growing cost of funding, another key risk for Russian airlines is associated with growing airport charges.

Those Russian airlines operating international scheduled flights are better off in the current situation. International operations have been the least hit by the traffic drop of late 2008 and early 2009. There are, however, just a handful of such lucky carriers, including Aeroflot, GTK Rossiya, and Transaero. Another carrier which is part of Russia’s top five largest airlines, UTair, will most likely survive thanks to its strong rotorcraft operation, whose performance has so far enabled it to make up for the decline in scheduled passenger traffic. Despite having lost quite a bit of traffic over the past

Leonid Faerberg

sian airlines (those carrying over 1 million passengers a year) were promised state support in the form of loan guarantees. However, the winter season brought no noticeable changes to the borrowings situation. As a result, several carriers found themselves in a tight spot. S7 Airlines in February defaulted on a loan worth 2.3 billion rubles (about $75 million); the debt is now being restructured by Raiffeisenbank.

Another high-profile Russian carrier, KD Avia, has found itself in a no less dramatic situation. The airline announced in March that it was suspending all flights due to funding shortages, but the problem was solved at the last minute. One month later KD Avia did suspend operations, albeit for just one day. Several days later Vneshtorgbank approved a 255 million-ruble credit line for the carrier.

The first tranche of 70 million rubles was transferred almost immediately afterwards. According to the Rosaviatsia federal air transport authority, KD Avia’s debt to lessors stands at 500 million rubles, and its total debt is 10 billion rubles. Over the past several years, KD Avia’s business model has come to be viewed as one of the most promising projects on the Russian air transport market. Unlike other carriers, which focus on package charter flights or hub-and-spoke operations between Moscow and domestic destinations, it set up a hub in Kaliningrad linking flights from Russian regions and European cities. Such projects require sizeable investments, mostly in the fleet, aircrew and the initial operation of new routes – up to the breakeven point. KD Avia announced in spring that, despite the current problems, it was not planning to drop its fleet expansion plans (one year ago the carrier placed a $1.7 billion order for 25 Airbus A319 airliners, with deliveries from 2014).

S7, for its part, was forced to cancel the 2007 contract, worth $2.4 billion, for 15 Boeing 787 Dreamliner aircraft.

The airline explained that it was still interested in the aircraft but would now

which have been less affected by the crisis, and is therefore able to invest in opening new routes even during the recession. If only UTair keeps it up after the industry has rebounded, it will be able to snatch a sizeable market share.

The possibility cannot be ruled out that the crisis will prove a favorable period for aviation projects backed by federal agencies or regional administrations. These might include the Rosavia airline, currently being set up by the Russian Technologies corporation and the Moscow city administration, or East-West Airlines, whose creation was announced this spring by the administration of Irkutsk Region. It all depends on whether these plans will be implemented, though.

RUSSIA/CIS OBSERVER № 2 (25) JUNE 2009

19

A I R T R A N S P O RT

Top 20 Russian airlines in 2008, by passenger carried and passenger kilometers flown Passengers carried Passengers, thousand

Passenger kilometers

Airline

Ranking in 2008 (2007)

Aeroflot — Russian Airlines S7 Airlines Transaero GTK Rossiya UTair VIM-Avia Ural Airlines Atlant-Soyuz KD Avia Aeroflot-Don KrasAir Orenair Sky Express Aeroflot-Nord Tatarstan Vladivostok Air Kuban Airlines Domodedovo Airlines Kavminvodyavia Globus

1 (1) 2 (2) 3 (4) 4 (3) 5 (5) 6 (6) 7 (9) 8 (8) 9 (18) 10 (12) 11 (7) 12 (15) 13 (17) 14 (10) 15 (11) 16 (14) 17 (20) 18 (13) 19 (19) 20 (*)

International and domestic routes 9,271.4 +14 5,892.5 +3 4,852.9 +50 3,514.3 +7 3,225.1 +10 1,597.9 -18 1,450.2 +19 1,427.5 -15 1,368.4 +110 1,314.4 +37 1,218.4 -27 1,146.4 +52 1,041.3 +53 1,014.6 -6 901.1 -14 892.8 +15 674.8 +15 607.2 -29 604.5 0 596.8 *

Aeroflot — Russian Airlines Transaero GTK Rossiya S7 Airlines Atlant-Soyuz VIM-Avia Orenair Aeroflot-Don Ural Airlines Tatarstan KD Avia KrasAir Red Wings Domodedovo Airlines Globus UTair Vladivostok Air Moskoviya (Gromov Air) Kavminvodyavia Dagestan Airlines

1 (1) 2 (2) 3 (4) 4 (3) 5 (5) 6 (6) 7 (12) 8 (9) 9 (10) 10 (8) 11 (14) 12 (7) 13 (*) 14 (11) 15 (*) 16 (13) 17 (15) 18 (*) 19 (17) 20 (21)

5,696.3 4,226.8 1,926.6 1,789.1 1,388.8 1,308.3 835.4 758.8 740.1 600.3 578.2 528.6 409.6 378.7 372.7 305.1 281.1 185.2 178.1 144.9

S7 Airlines Aeroflot — Russian Airlines UTair GTK Rossiya Sky Express Aeroflot-Nord KD Avia Ural Airlines KrasAir Transaero Vladivostok Air Aeroflot-Don Kuban Airlines Yakutia Airlines Kavminvodyavia Yamal Airlines Dalavia Interavia Gazpromavia Kolavia

1 (1) 2 (2) 3 (3) 4 (4) 5 (8) 6 (5) 7 (21) 8 (7) 9 (6) 10 (12) 11 (11) 12 (14) 13 (10) 14 (17) 15 (15) 16 (20) 17 (9) 18 (27) 19 (22) 20 (18)

4,103.4 3,575.1 2,919.9 1,587.8 1,022.4 ** 790.2 710.0 689.7 626.0 611.6 555.6 544.6 495.4 426.4 380.1 354.0 349.9 342.6 313.7

* not listed in the top 30 airlines for the year 2007 ** no official data available at press time

Source: Russian Transport Clearing House.

20

RUSSIA/CIS OBSERVER № 2 (25) JUNE 2009

Change to 2007, %

Ranking in 2008 (2007)

Passenger km, million

Change to 2007, %

1 (1) 3 (2) 2 (3) 4 (4) 5 (7) 6 (5) 7 (10) 9 (8) 14 (17) 13 (14) 8 (6) 10 (15) 20 (22) 19 (16) 15 (13) 11 (12) 24 (24) 12 (9) 21 (18) 18 (*)

27,247.5 14,350.7 17,548.9 7,808.7 5,063.1 4,455.2 3,947.5 3,652.7 2,284.6 2,539.8 3,743.6 3,031.5 1,332.1 1,374.8 1,859.0 2,943.1 911.5 2,567.6 1,187.1 1,518.3

+10 +3 +49 +15 +12 -16 +32 -16 +92 +53 -27 +83 +52 -11 -19 +20 +14 -33 +2 *

International routes +6 +53 +19 -15 -11 -11 +89 +45 +51 -14 +81 -29 * -21 * -14 -6 * -2 *

1 (1) 2 (2) 3 (4) 4 (3) 6 (6) 5 (5) 7 (11) 10 (12) 8 (10) 11 (8) 15 (15) 9 (7) 13 (*) 12 (9) 14 (*) 17 (13) 16 (14) 18 (*) 19 (17) 20 (21)

18,745.5 14,662.3 5,524.3 4,942.9 3,579.3 3,677.8 2,588.0 1,608.4 2,518.4 1,572.2 876.2 1,700.0 1,037.2 1,252.0 1,021.3 548.0 698.7 504.0 451.7 326.8

+4 +50 +25 -16 -14 -12 +115 +54 +59 -19 +29 -24 * -22 * -24 +2 * +9 +65

Domestic routes +14 +27 +14 -4 +50 ** +136 -2 -26 +33 +28 +29 +13 +30 +1 +8 -37 +40 +3 -14

1 (1) 2 (2) 3 (3) 5 (5) 13 (15) 14 (10) 10 (23) 9 (11) 7 (4) 4 (8) 6 (9) 16 (21) 18 (20) 8 (13) 19 (17) 24 (24) 11 (6) 15 (14) 20 (19) 22 (16)

9,407.8 8,502.0 4,515.1 2,284.4 1,292.8 ** 1,408.4 1,429.2 2,043.6 2,886.6 2,244.4 931.4 738.4 1,467.9 735.4 487.3 1,333.7 1,032.2 727.1 645.5

+17 +27 +19 -3 +47 ** +174 +1 -30 +45 +27 +50 +13 +40 -2 +7 -42 +7 +10 -15

A I R T R A N S P O RT

Things gone and things still here

Russian airports are trying to keep up their investment programs despite the crisis Although the global downturn has reduced Russian air passenger traffic, private and public investment in the country’s airport infrastructure is expected to reach some 40 billion rubles ($1.15 billion) in 2009. However, not all the development plans will survive the crisis.

St Petersburg’s Pulkovo Airport is not abandoning reconstruction plans despite the shrinking passenger numbers

Polina Zvereva he Russian airport industry followed the global dynamics in 2008. According to the Airports Council International (ACI), last year’s international performance was made up of two opposite trends. In the first five months of the year there was still some growth in passenger traffic, but in June, right before the high season, this growth was replaced by a decline that continued until year-end. The downturn resulted from the high oil prices. According to the ACI’s preliminary data, the global industry serviced 4.5 billion passengers in 2008, which is 0.2% lower than the year before. Overall airport movements dropped by 2.2% to 66.9 million (the data are for 900 airports world-wide, or

T

22

93% of the entire industry; full-year results, covering 1200 airports around the world, are to be published in July 2009).

Last year, Russian airports kept doing well slightly longer than the global industry as a whole, with passenger numbers starting to fall in September rather than June. From there, however, it all went downhill: the autumn figures for passengers handled by airports in Russia were lower than the same period in 2007. This was not due to the economic crisis alone but also because of the high kerosene prices that were driving air fares up; of several high-profile airline bankruptcies during the year; and of some carriers having slashed their route networks due to the scheduled retirement of Soviet-era airliners.

Overall, though, 2008 proved a successful year for Russian airports, which

RUSSIA/CIS OBSERVER № 2 (25) JUNE 2009

together recorded over 44 million emplanements, marking a 10% increase in passenger traffic. Taking into account passenger arrivals, this means that the country’s airports handled about 80 million passengers last year.

But the negative trend has not gone anywhere: this year started with a 20% drop in passenger numbers. The high season may yet turn the tide, but even then the full-year decline in traffic is still projected at 13-15%.

As passenger numbers keep shrinking, airports become more tight-lipped about their plans for the future — almost all of them decline to comment on any cancelled or delayed development projects.

The eight years of growth in Russian air passenger traffic were accompanied by growing public and private investment in the development of airports.

Aleksandr Aldonin, head of the airport development department at the Rosaviatsia federal air transport authority, says public investment in Russia’s airport infrastructure exceeded 24 billion rubles in 2008. This year the sum will be reduced to 21 billion rubles due to the economic crisis.

No change of plans

The lion’s share of all investment traditionally goes into the Moscow airports.

This trend is likely to continue throughout the crisis. The Sheremetyevo administration, for one, is not planning to revise the ongoing development program (which includes the completion of a new business aviation terminal by mid-2010). Moreover, it intends to engage in projects to develop the airports in Vladivostok and Irkutsk. Sheremetyevo’s projected investment in Vladivostok stands at $100-150 million.

A I R T R A N S P O RT

Sheremetyevo lost just 3% of passenger traffic in January, but already in Feburary the figure was 17%. The airport’s first-quarter loss may reach 10%.

Director Mikhail Vasilenko explains the lower-than-average traffic decline by significant numbers of scheduled international flights, which have been less seriously affected by the drop in demand than domestic operations. International charters have also taken a plunge, with tourist numbers dropping by 30% during the New Year holidays compared with the same period last year, according to the Russian Union of Travel Industry.

Domodedovo started the year quite poorly. The airport’s director Sergey Rudakov says passenger numbers dropped 20% in the first quarter and aircraft movements declined by 14%.

Domodedovo remains Moscow’s largest airport, so there is still hope that the summer season will help it improve its standing. Rudakov expects tourist traffic to decline by some 15%,

but argues that Domodedovo is home to some major tourist carriers, such as S7 Airlines and Transaero. The airport will cut its 2009 development program by about 30% (the figure for 2008 was $180 million), but has no plans to abandon the construction of a new terminal, he says.

not stop it from drawing the results of a tender for the reconstruction and 30year operation of the airport, announced in April 2008. The shortlist includes seven bidders: Basic Element and Changi Airports International Pte; VTB Europe Plc and Fraport AG; ZAO Lider and Flughafen Wien AG; Renais-

2008 proved a successful year for Russian airports, which together recorded over 44 million emplanements, marking a 10% increase in passenger traffic According to the Russian Transport Clearing House, Vnukovo lost 8.9% passengers in January. The administration declines to comment on its 2009 investment plans. It is known that the airport is building a new terminal, previously expected to be completed by late 2009.

The management of St Petersburg’s Pulkovo Airport says the downturn will

sance Capital and Macquarie Group; Renova Group and Hochtief AG; TAV Airports Holding; and GMR Infrastructure Ltd. The results were originally planned to be announced in March 2009, but the date has now slipped to the middle of the year. The winner is expected to invest $600 million in the airport.

E-mail: avia@ifdk-insurance.ru Tel./fax: +7 495 620-9533 License C № 1298 86

RUSSIA/CIS OBSERVER № 2 (25) JUNE 2009

23

A I R T R A N S P O RT

Searching for investment

Regional airports also carry on with their development programs, all with differing success. Novosibirsk’s Tolmachevo airport is prepared to spend some 350 milliom rubles this year on infrastructure modernization, including the completion of an international terminal and the second phase of a cargo terminal. A general plan adopted in early 2007 calls for investing a total of 25 billion rubles in the airport. This plan incorporates the project, first presented in May 2008, to build an international terminal, estimated at $100 million at that time. The first phase of the project was originally planned to be commissioned in 2010, but will most likely be postponed now.

Tolmachevo’s managing company Novaport, which also operates the airports in Chelyabinsk, Barnaul, Tomsk,

Astrtakhan, Chita and Bryansk, says all the current development projects will be financed via shareholder contributions and from the airports’ own budgets, now that the crisis has made borrowing virtually impossible. Domodedovo’s Rudakov concurs, saying that the lion’s share of investment in his airport will be taken from internal funds.

Yekaterinburg’s Koltsovo airport, for its part, seems to be having no difficulty borrowing from banks. The airport management says it aims to complete all the ongoing programs on time, including the inauguration of a new terminal and hotel and renovation of one of the runways.

Sochi airport has also secured a bank loan: Vneshekonombank in March approved a 5.4 billion ruble credit line for the completion of the airport’s new terminal, to be opened

Gleb Osokin

Fyodor Borisov

Apart from the completion of the new terminal at Sochi airport, Airports of the South this year will launch a refurbishment effort at Gelendzhik (pictured)

this year. The Sochi operator, the Airports of the South company, has another major project for 2009: refurbishing the airport at Gelendzhik.

The company does not disclose the planned sum to be invested in Gelendzhik, saying only that there will be no other major investment projects for 2009, so there is no need to cancel anything due to the crisis. Last year Airports of the South announced a tentative plan to begin development work at Krasnodar and Anapa airports in 2010. Now the company says both airports are appropriately equipped to operate in their current state until 2012.

Despite continuing modernization of some Russian airports, experts point out that the level of airside services has not changed much. Little is being done to encourage competition between service providers. Some airports still refuse to sign standard ground-handling contracts with carriers or assign slots to them, and generally impose disadvantageous conditions on airlines. Airport charges keep growing fast. In other words, any benefits of modernization are so far more evident to passengers than to airlines.

Domodedovo remains Moscow’s largest airport, so there is still hope that the summer season will help it improve its standing

24

RUSSIA/CIS OBSERVER № 2 (25) JUNE 2009

A I R T R A N S P O RT

Top 30 Russian airports in 2008, by international and domestic passenger traffic Passengers handled Airport

Ranking in 2008 (2007)

Moscow (Domodedovo) 1 (1) Moscow (Sheremetyevo) 2 (2) Moscow (Vnukovo) 3 (3) St Petersburg (Pulkovo) 4 (4) Yekaterinburg (Koltsovo) 5 (5) Novosibirsk (Tolmachevo) 6 (6) Kaliningrad (Khrabrovo) 7 (12) Krasnodar (Pashkovskaya) 8 (8) Sochi (Adler) 9 (7) Samara (Kurumoch) 10 (9) Ufa 11 (11) Rostov-on-Don 12 (13) Khabarovsk 13 (14) Vladivostok (Knevichi) 14 (17) Surgut 15 (15) Krasnoyarsk (Yemelyanovo) 16 (10) Irkutsk 17 (16) Tyumen (Roshchino) 18 (18) Mineralnye Vody 19 (19) Kazan (Osnovnoy) 20 (24) Perm (Bolshoe Savino) 21 (27) Chelyabinsk (Balandino) 22 (20) Yuzhno-Sakhalinsk 23 (21) Nizhnevartovsk 24 (23) Anapa (Vityazevo) 25 (22) Yakutsk 26 (25) Omsk 27 (26) Novyy Urengoy 28 (28) Arkhangelsk (Talagi) 29 (33) Volgograd 30 (32) Source: Russian Transport Clearing House.

Passengers handled, thousand

Aircraft movements Change to 2007, %

20,437.516 15,066.354 7,923.220 7,070.770 2,437.919 1,941.483 1,874.460 1,609.406 1,575.312 1,391.884 1,295.876 1,257.261 1,095.780 1,003.850 1,001.882 1,001.303 969.139 905.576 827.764 763.846 681.411 677.865 663.086 652.273 574.978 544.827 537.812 510.837 473.029 457.245

Subscribe today to

+9 +8 +17 +15 +8 +11 +71 +16 -1 +6 +15 +22 +11 +9 +6 -17 +4 +5 +9 +24 +29 +2 +6 +1 -7 0 -1 +4 +23 +18

Ranking in 2008 (2007) 1 (1) 2 (2) 3 (3) 4 (4) 5 (5) 6 (6) 18 (29) 7 (11) 9 (8) 8 (7) 10 (10) 14 (16) 13 (13) 24 (26) 12 (12) 21 (18) 16 (17) 11 (9) 30 (27) 19 (19) 20 (21) 28 (23) 27 (24) 15 (14) 17 (15) 23 (20) 25 (22) 29 (-)

Aircraft m ovements

Change to 2007, %

195,251 170,858 139,893 93,194 32,696 27,720 13,415 23,878 22,686 22,735 22,364 17,224 17,761 11,257 19,091 11,723 15,040 22,025 9,551 13,408 11,916 9,662 10,152 16,508 N/A 14,638 N/A 11,292 10,936 9,556

+8 +4 +15 +8 -2 +14 +42 +24 +4 -6 +13 +20 0 +13 +1 -15 +9 +4 -2 +5 +8 -4 +2 -5 -2 -1 +6 -

Russia & CIS Observer

o Yes, I would like to subscribe to Russia&CIS Observer Quarterly o 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 ........................................................................................

Annual* rates for 2009 (please tick) Print Electronic** Moscow 2400 rubles o 1760 rubles o Russia 2400 rubles o Belarus, Estonia, Uzbekistan $112 o $79 o Rest of World $112 o

* Annual subscribtion includes 4 quarterly issues ** Issues in pdf format sent by e-mail

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

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

E-mail us at: subscribe@ato.ru

#

B U S I N E S S AV I AT I O N

Grinding to a halt

Russian business aviation is taking a severe beating from the economic crisis

Source: UBAA.

26

RUSSIA/CIS OBSERVER № 2 (25) JUNE 2009

2008

Source: UBAA.

Dec.

2007

Nov.

2006

Oct.

0

Sep.

30000

Aug.

60000

Jul.

90000

40 35 30 25 20 15 10 5 0 -5 -10

Jun.

120000

Russian Foreign

Fig. 2. Monthly percent change in overall bizav flights within Russian airspace, 2007-08 vs. 2006 baseline

May.

150000

Business jets have been historically viewed as more of a status symbol in Russia than a business tool. The downturninduced ethos of cost control is putting an end to this, with the market focus shifting to second-hand airframes. According to Artem Pastukhov from Jet Trading Group, up to one-third of all business aircraft owned or operated by Russian nationals have by now been put up for sale.

Another 30% owners say they may sell if offered the right price. Koltovich seconds this estimate, saying that 100 to 150 out of the overall 300-400 business aircraft previously bought or ordered by Russian nationals have been put up for sale in 2009.

The problem is, there are no buyers - not a single business jet sale has been reported in Russia since October 2008, despite the prices having dropped 10-20% on the summer 2008 level (and sometimes to as low as 50% of the 2008 value). Jet Trading Group expects the gap between the supply and demand to persist until 2011, saying that no recovery should be expected before 2014.

Apr.

Fig. 1. Bizav flights within Russian airspace, 2006-08

Business jets down on their luck

Mar.

T

Feb.

he Russian business aviation industry was growing extensively in the past five years, starting to manifest features of a civilized market. The reduction in import duties on several business jet classes and the long-awaited passage of a law permitting registration of ownership rights to aircraft, have formed a solid foundation for the sector’s future development. However, the current global financial crisis is threatening to turn the unprecedented growth of Russian business aviation into a no less dramatic slump.

Despite a number of legislative problems that have been haunting Russian business aviation for years, the demand for business jet services has remained stable, serving a reliable indicator of the general state of the country’s economy. Russia’s dynamic economic growth and lavish revenues from the oil-and-gas, banking and construction sectors were driving up the demand for business jet travel, which was expected to keep growing for another year or two before eventually leveling out. Indeed, the sector was still going strong in the first months of the global economic crisis. But then the bad news caught up with the industry. By late 2008, the growth rate of bizav traffic had plummeted from 40% earlier that year to zero. In November and December, 25% fewer bizav flights were flown in Rus-

sian airspace year-on-year; operators started reducing prices and offering discounts from 25%. Sergey Koltovich, a representative of the Austrian business aviation operator Jet Alliance, believes that Russian carriers started 2009 in the red, often selling flights at a loss due to the shrunken demand. According to Russia’s United Business Aviation Association (UBAA), by February 2009 the domestic bizav market had rolled back to the 2006 positions.

Jan.

Anna Nazarova Elizaveta Kazachkova Maxim Fedosov, Managing Director, United Business Aviation Association (UBAA)

B U S I N E S S AV I AT I O N

Going down in flames

According to the UBAA, both national and foreign bizav operators enjoyed an increase in traffic in 2006-2008 (see Fig. 1). Overall growth in corporate flights during that period amounted to 21.6%; the figure was 15.1% for Russian operators and 28.6% for foreign operators. The UBAA bases its conclusions on an analysis of all unscheduled flights in Russian airspace, the critical assumption being that all such flights are by definition related to business aviation operations.

A month-by-month comparison to the 2006 baseline data (see Fig. 2) points to October 2008 as the watershed between the rapid growth of the fat years and the onset of recession.

Fig. 3. Monthly percent change in bizav flights by Russian operators within Russian airspace, 2007-08 vs. 2006 baseline

The crisis hit full-force in December, when the number of flights dropped below the 2006 levels.

The number of flights by Russian operators peaked in June 2008, then took a plunge in August and never really recovered afterwards (see Fig. 3). Foreign bizav operators recorded a significant growth in flights during the first nine months of 2008 (see Fig. 4). However, in October their performance dropped to the 2007 level, and December saw it dive even lower — past the 2006 point of reference.

The drop in demand for corporate air travel hit Russian operators harder than their foreign competition, chiefly because of their scarce numbers and limited range of available destinations. Most domestic bizav carriers operate corporate

Fig. 4. Monthly percent change in bizav flights by foreign operators within Russian airspace, 2007-08 vs. 2006 baseline 50 40 30 20

Source: UBAA.

Dec.

Nov.

Oct.

Sep.

Aug.

Jul.

Jun.

May.

Apr.

Mar.

Feb.

0

Jan.

Dec.

Nov.

Oct.

Sep.

Aug.

Jul.

Jun.

May.

Apr.

Mar.

10

Feb.

35 30 25 20 15 10 5 0 -5 -10 -15 -20

Jan.

Sergey Sergeev

By early 2009, up to one-third of all business aircraft owned or operated by Russian nationals had been put up for sale

Source: UBAA.

RUSSIA/CIS OBSERVER â„– 2 (25) JUNE 2009

27

B U S I N E S S AV I AT I O N

Fig. 5. Bizav flights within Russian airspace in January, 2006-09 12000 10000

Russian Foreign

8000 6000 4000 2000 0 2006

2007

2008

2009

jets that have been converted from Soviet-time airliner types.

These aircraft are no longer allowed to fly to Europe for failure to meet international noise and emission standards, and foreign customers are loath to travel by them. These operators’ market is therefore limited to Russia and the CIS. In crisis, this is clearly a disadvantage.

An analysis of January bizav operations (see Fig. 5) indicates that the total number of flights performed in the first month of the year dropped 2.3% this year against the same month in 2006. The number of foreign-operated flights, al-

Sergey Sergeev

Russian operators utilizing Soviet-made fleets proved especially vulnerable to the drop in demand for business aviation travel

28

RUSSIA/CIS OBSERVER № 2 (25) JUNE 2009

though down on 2008, still exceeded the 2006 level by 18.8%.

Russian-operated flights were 27.8% down on January 2006.

For the time being, Russia’s bizav market is still holding out — largely thanks to the performance of foreign operators.

Experts warn that traffic may slump even further this year, contributing to an overall 20-30% drop on 2008.

The long-awaited passage of a law permitting state registration of personal ownership rights to aircraft raises mixed feelings. On the one hand, it must have a positive effect on business aviation, because potential owners will now find it easier to attract investors. The law, passed in March 2009, will make it possible for Russian banks to view registered fixed-wing aircraft and helicopters as pawnable assets. On the other hand, given the global nature of the economic crisis, it is becoming more and more difficult to secure financing of aircraft purchasing deals. Russian traditional practices of doing things also demonstrate that the passage of some laws raises more questions than it provides answers. Time will tell how objective these appraisals are. Meanwhile, the positive changes in the regulatory framework and the lowering of import duties on some business aircraft classes have created a solid foundation that will start working as soon as the global economy begins to recover, driving up the energy prices – the key factor influencing the demand for business aviation travel in Russia.

S PAC E B U S I N E S S

ACTM given go-ahead

Oleg Shinkovich

Russia will get a new manned space system Igor Afanasyev and Dmitry Vorontsov he spring of 2009 may go down in history as a pivotal period for Russia’s manned space program. In early April, the Roskosmos Federal Space Agency named the Korolev-based Energia Rocket and Space Corporation as the winner in its tender to develop a new spacecraft, known as the Advanced Crew Vehicle (ACV). Under the request for proposals (RFP), the bidders were to present their concepts of vehicles that would be in no way inferior to “equivalent foreign-built space transportation systems”. It is perhaps the first time a request for the global competitiveness of a Russian space vehicle has actually been spelled out.

The ACV is seen as part of Roskosmos’ future Advanced Crew Transportation System (ACTS), which will also include a launcher and ground infrastructure. The recoverable crew vehicle will come in several versions. The baseline version will be able to carry six crew and 500 kg payload to low-Earth orbit and back. The Lunar version is for delivering four crew and 100 kg payload to near-Lunar orbit and back. There may also be several specialized ACV versions for such applications as au-

T

tonomous near-Earth expeditions lasting up to one month, crew rotation and supply missions to low-Earth orbit, and space tourism flights. Another vehicle being proposed is an unmanned resupply craft for orbital stations.

The ACV must ensure a safe and smooth atmospheric re-entry, including in emergencies. Its design on-orbit time is one year docked to a near-Earth orbital station and at least 200 days docked to a near-Lunar station. The probability of crew loss during a nearEarth orbit mission should not exceed 0.995, or five instances out of 1,000 flights. The conceptual design must be submitted by June 2010.

Energia vs. Khrunichev

Neither the announcement of the tender nor its outcome came as a surprise to the Russian space community. Roskosmos first revealed its decision to hold an ACV contest in the summer of 2006, after Energia’s Kliper winged reusable spacecraft lost the agency’s tender for a new manned transportation system. That tender was subsequently cancelled. It was at this stage that the new project was renamed PPTS, which is the abbreviation of the Russian term denoting the ACTS.

Ever since the decision was made in November 2007 to build the Vostochny cosmodrome in Russia’s Far East, Roskosmos has repeatedly stated that the new facility could accommodate space launches of the future manned system from the year 2018.

The two bidding proposals for the ACV tender were submitted by Energia and Moscow’s Khrunichev State Research and Production Space Center. A third potential bidder — NPO Molniya of Moscow, which had previously contributed to the creation of the Soviet Buran space shuttle — decided against running in the tender. This is understandable: NPO Molniya specializes in winged vehicles, whereas the ACV RFP required the development of a wingless capsule resembling the Soviet Soyuz design, the US Apollo or the newer Orion crew exploration vehicle. This is what Energia and Khrunichev eventually came up with.

The first details of Energia’s ACV design emerged in 2008. It consists of a reusable return vehicle and a disposable service module. The near-Earth variant weighs some 13 tons, and the Lunar version weighs over 16 tons. The highlight of the project is the return vehicle’s rocket-assisted touchdown on return to Earth, ensured by 12 solid-fuel

RUSSIA/CIS OBSERVER № 2 (25) JUNE 2009

29

S PAC E B U S I N E S S

Alexander Shlyadinsky

rocket engines. This solution is expected to provide for precision landings, but some experts — Russian cosmonauts included — criticize it for the high risk of malfunction involved. However, Energia is convinced this touchdown method is reliable: should the main system fail, the comparatively small command module, which houses the crew, will separate from the return vehicle for a safe parachute recovery.

The exact specifications of Energia’s tender bid are still unknown. Precious little is known about Khrunichev’s project, too. We can only guess that it may be based on a concept unveiled at the MAKS 2007 exhibition in Zhukovsky and may outwardly resemble Energia’s project, albeit incorporating solutions tried out 30 years ago on the project to develop a resupply vehicle for the Almaz orbital system.

From the very beginning it was obvious to many experts that Energia would win the Roskosmos tender. It is Russia’s only company that can independently develop a manned space system.

Another factor is that, unlike Khrunichev, which was at that time inundated with orders, Energia’s backlog was quite modest. Nevertheless, there were still formal selection criteria to be met, including the project cost and the bidder’s qualification.

Energia has secured a contract for early design work worth some 800 million rubles ($23.5 million at the current exchange rate). Of this sum, Roskosmos expects to release about 600 million by the end of 2009. The program should eventuate in flight tests in 2015.

Unlike the ACV, which Russia was at one point hoping to create jointly with Europe, the new launch vehicle has always been projected as a purely Russian design Europe’s role

The main intrigue of the ACTS story is the role of the European Space Agency (ESA). Until recently the future manned space system was viewed as a Russia-EU program. If nothing else, its English name has been around for much longer than the Russian equivalent.

Europe has always wanted independence in manned space exploration, but all plans to create a European manned vehicle have been thwarted by limited finance and the absence of relevant experience. Research in this area was revived following the USA’s decision to retire its Space Shuttle fleet after 2010 and exit the International Space Station (ISS) program after 2015. If these plans were implemented, the ESA would be left without crew rotation and resupply vehicles to service the ISS, which Europe has heavily invested in. Consequently, the decision was made to negotiate with Russia. At the initial stage, starting in late 2005, Roskosmos and the ESA were considering Kliper as the The highlight of Energia’s Advanced Crew Vehicle is the return core of a future vehicle’s rocket-assisted touchdown on return to Earth that is expected to provide precision landing manned space sys-

30

tem (in the course of those talks Kliper was often referred to as the ACTS).

But in the summer of 2006 the EU walked out on Kliper. The formal reason cited was the project’s poorly developed concept and insufficiently defined rationale. Also, the ESA needed a

RUSSIA/CIS OBSERVER № 2 (25) JUNE 2009

spacecraft for Lunar missions, which were not among Kliper’s priority applications.

Some experts assert that the ESA was unhappy with the role of a mere hi-tech supplier Roskosmos was ready to assign to it on the Kliper project. The European agency, they say, wanted equal participation and was even ready to share its experience developing the ATV cargo vehicle.

In parallel with the ESA’s talks on Kliper, European space corporations were looking into the possibility of developing manned vehicles without Russia’s help. One such design, dubbed ATV Evolution, was proposed in 2008.

It is a modular vehicle with a conical re-entry vehicle.

A final decision on which vehicle to select was expected to be made in November 2008, at a meeting of ESA ministers in the Hague. However, the meeting did not produce a definite answer. Instead, it decided to fund both a purely European project and a joint program with Roskosmos. In either case, the funding would only be enough to cover the R&D expenses.

Roskosmos, which was keenly interested in internationalizing its civilian space programs, waited to the bitter end. On 17 March 2009, when it became clear that the EU had preferred to develop a vehicle of its own, Roskosmos deputy head Sergey Savelyev said: “The Russian side unequivocally understands the fact that Europe has abandoned the idea of creating, jointly

Alexander Shlyadinsky

S PAC E B U S I N E S S

The Rus-M project, based on a modular design, may potentially evolve into a family of launch vehicles for different applications

with Russia, a new-generation manned space vehicle. We appreciate this decision, but at the same time we would like to recommend those specialists taking part in the relevant development efforts to adopt a wider perspective on the interaction between Roskosmos and the ESA for the purpose of submitting proposals on the prospects of bilateral cooperation in this sphere to the [ESA] Board.”

ESA Director General Jean-Jacques Dordain replied that he believed the issue of cooperation with Russia on the ACTS to be open. He admitted that the European countries had failed to reach consensus on this issue: “We could not secure a greater budget for the implementation of the program to create a manned transport system.” He opined that such a development had been caused by “differences between ESA member states” and the absence of a complete agreement with Russia “in defining the range of applications for such a transport system”.

New launcher

Unlike the ACV, which Russia was at one point hoping to create jointly with Europe, the ACTS’s launch vehicle has always been projected as a purely Russian design. A tender for the new launcher, held by Roskosmos from 14 February to 16 March 2009, became 32

another milestone of Russia’s space program.

On 19 March, the tender commission awarded the contract to develop the conceptual design of a Rus-M newgeneration medium-class launch vehicle with an increased payload capacity.

The tender was won by Samara-based TsSKB-Progress, which had co-developed its bid with Energia and the Makeyev design bureau of the town of Miass. The losing bidder was Khrunichev.

Roskosmos has already contracted TsSKB-Progress to produce a conceptual design of the launcher. At the time of the tender the contract was valued at 375 million rubles (about $11 million).

According to TsSKB-Progress head Alexander Kirilin, this year Roskosmos will allocate 145 million rubles. The design should be ready by September 2010.

The launch vehicle will most probably have three Energomash RD-180 oxygen-kerosene engines on the first stage and four KB Khimavtomatiki RD-0146 oxygen-hydrogen engines on the second stage. If launched from Vostochny, it will be able to insert up to 2023 tons of payload in low-Earth orbit or up to 4 tons into geostationary orbit.

Up to 20 Rus-M launches could be performed every year.

Rus-M may potentially evolve into a family of launch vehicles for different

RUSSIA/CIS OBSERVER № 2 (25) JUNE 2009

applications. The project is based on a modular design and uses an interface platform between the launcher and the launch pad (similar to the Block Ya interface used on the Energia-Buran space shuttle system). According to Kirilin, “this principle will enable us in the future to assemble 40-ton [that is, capable of delivering 40 ton payload to low-Earth orbit — R&CO] and 60-ton vehicles on the same launch pad. This generation of launchers will be around for at least 30 or 40 years. Therefore, serious materials have been prepared for their potential long-term use. Already now this allows us to speak of flights to Mars and, of course, to the Moon…”

Independent experts are split over the new Roskosmos projects. Opponents of the ACTS argue that by the time it enters service, the ISS will be already nearing the end of its operational life, and that plans for Russian manned space missions beyond 2020 have not yet been defined. Instead, the skeptics propose focusing on upgradation of the venerable Soyuz design which, in their view, would help avoid spending funds on the creation of the new cosmodrome and launch vehicle. Others view Roskosmos’ decisions as a chance for Russia to return to the “world space league”. Whatever the case, the very fact that the tenders for new manned systems have been held is certainly heartening.

EU – RUSSIA AIR TRANSPORT TODAY AND TOMORROW THIRD INTERNATIONAL CONFERENCE WITH PRECEDING RECEPTION ORGANIZED BY

ORGANIZED BY

Key issues of the conference: Russian and European Business Cooperation: Political and Economical Aspects

COUNCIL OF FEDERATION

EU-Russian Air Transport Policy Overview and Outlook

THE FEDERAL ASSEMBLY OF THE RUSSIAN FEDERATION

Airlines Cooperation: Further Development Directions Services and Solutions for Air Transport: Market Changes and Trends New Threats and Challenges for Airline Efficiency Enhancement THE RUSSIAN MINISTRY OF FOREIGN AFFAIRS

December 8–9, 2009 • Renaissance Brussels Hotel • Brussels, Belgium

REGISTER BEFORE 15.09.09 TO GET AN EARLY BIRD DISCOUNT

Tel.: +7 (495) 782 1435, fax: +7 (499) 245 4946 www.eurusdialogue.ru info@eurusdialogue.ru Among the participants from the previous conference: Andrey Avetisyan, Russian Ministry of Foreign Affairs

Sergei Gavrilov, Russian State Duma

Viktor Glukhikh, Council of Russian Federation

Vladimir Kamynin, Domodedovo International Airport

Natalia Teymurazova, Aeroflot – Russian airlines