Russia in World Air Transport Boom-and-Bust / News / News agency Inforos
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Russia in World Air Transport Boom-and-Bust

Russian Air Transport Horizons in South East Asia

Russia in World Air Transport Boom-and-Bust
South East Asia is one of the most dynamic and appealing markets for the development of Russian aviation. During the last two decades Russian aircraft industry, especially civil one, has been developing in less effective way than wished it to be, and that has led to giving several world market grounds.

Nowadays aviation industry in Russia is in a state of deep structural transformation – United Aircraft Corporation of Russia (UAC) is being created, international trade and economic, research and production cooperation in aircraft engineering is being expanded, and South East Asia is heavily involved in this process.

The region includes countries showing rapid economic growth during last decades: Singapore, Malaysia, Indonesia, Thailand, the Philippines and Vietnam. Despite their different socio-political systems, they have something in common: all of them have export oriented productions and most enterprises in these countries are branches of international corporations.

Export oriented economy of the region determines the development and continuous improvement of transport infrastructure in the region. Air transportation in the transport system is second to sea one due to geographical features. Virtually all major airlines of the world are involved in the transportation of goods from the region and plan to increase their market shares soon.

Russia's cooperation with East and South East Asia countries in the last 10-15 years has become quite stable. Expansion of trade and economic relations in aircraft building with South East Asia economic leaders - Indonesia, Malaysia, Singapore, as well as with other countries of the region, is owed to changes in their foreign policy, their realization of new geopolitical realities in the world, as well as the desire to pursue a more independent and coordinated policy. Their desire to diversify aircraft purchases by distributing business portfolio among several leading world manufacturers is also very important.

Russia has the longest history of cooperation with Malaysia and Indonesia – the countries which can be certainly referred to as regional leaders. Moscow has repeatedly confirmed the image of a reliable and responsible partner in the region, ready to make concessions in such sensitive matters as the payment of contracts if necessary.

While airlines in Europe and America lose passengers and revenue, low-cost carriers in South East Asia are in a real "boom" ordering new aircraft valued at billions of dollars. For example, Indian company GoAir purchased 72 Airbus A320s $ 7.2 billion worth, and Philippine Cebu Pacific bought 37 such aircraft totaling $ 3.8 billion. Unofficial sources report that this year Chinese airline AirAsia (Hong Kong), Asia's biggest low-budget carrier, shall sign a record contract for delivery of 200 new aircraft with European concern Airbus.

"600 million people live in only ten ASEAN countries. In our neighboring China and India there's a total of 2.5 billion people, and all these people want to fly. If we offer them affordable prices, they use our services", - considers Tony Fernandez, president of AirAsia.

Daniel Tsang, an analyst with Aspire Aviation consulting company based in Hong Kong, believes that "low-cost air transportation is certainly booming in Asia." "Over the next 20 years lowcosters will carry more than half of all passengers," - he said.

Meanwhile, aviation industry of the rest of the world is in crisis. According to experts of International Air Transport Association comprising 230 airlines which control more than 90% of global air travel total income of all members of the Association will be only $ 4 billion this year, 78% less than in 2010. The main reasons for this catastrophic decline are the consequences of the earthquake and the tsunami in Japan in March, political unrests and civil wars in North Africa and Middle East and oil prices rising as well.

As for Russian manufactures, one of the most striking achievements of domestic aircraft industry in South East Asia in recent years was the agreement of Irkut corporation signed with its Malaysian partner Ujit Sentosa. The document was signed in April 2010 during the International exhibition of arms and military equipment Defence Services Asia (DSA) and involves the creation of the first regional Center for promoting new projects of Russian civil aviation to all Southeast Asia (SEA) markets in this country. Since the agreement was signed, the promotion of one of the most ambitious Russian civil aviation programs in this region – the newest MS-21 liner – has passed the level of the protocol of intent and was merged into full agreement.

The negotiations have proved convincingly that the up-to-date Russian MS-21 airliner is of great practical interest not only to Malaysia, where the Center will be based, but to most other countries of the region as well.

MS-21, or "Mainline aircraft of the XXI century", will replace the outdated Tu-134, Tu-154 and partially replace Tu-204. Under the current schedule, the certification of the liner according to Russian standards should be completed in 2015, and according to international standards - a year later. MS-21 is scheduled to be produced in three configurations - 200, 300 and 400. They will carry respectively 150,181 and 212 passengers at distances up to 5,500 km.

The program of MS-21 short-medium-range aircraft family is being developed by Irkut corporation together with OKB Yakovlev Design Bureau.

It became known in the middle of September this year that the specialists of the Central hydrodynamic Institute (TsAGI) have already begun design work at MS-21 airliner. Sergey Chernyshev, Executive Director of TsAGI, said that the institute "will accompany the project up to the certification of the aircraft." According to him, MS-21 has better aerodynamics than Airbus NEO series by 6-7%.

United Aircraft Corporation, which controls and manages the MS-21 project, has already received orders for 146 such aircraft. The first serial Russian airliner will be delivered to the customer, Malaysian company Crecom Burj Berhad, in 2016.

Irkut corporation is long known in the region as a reliable manufacturer of Su-30 family military aircraft, and that to a large extent contributed to the decision of establishing the Center for promoting new projects of Russian civil aviation.

Sukhoi Superjet 100 short-haul passenger aircraft developed by Sukhoi Civil Aircraft Company also has good prospects. Although South East Asian countries do not hurry to purchase this modern Russian model (primarily due to its short range - from 3000 to 4500 km), the aircraft has a good chance to join the fight for passenger traffic within the region. In many ways the system of Russian service centers will contribute to it. This is the area where a solution has to be found, since Russia's exports can be seriously undermined without it (and that also applies to military exports).

Nowadays China enjoys the existing "gap" selling spare parts for Russian equipment, in Malaysia particularly. Creation of service centers can be the first step towards improving cooperation between Russia and the countries of South East Asia, which will benefit to the image of Russia as a reliable and long-term partner of the countries in the region. And the next step could be the creation of a joint production with Russia in a number of South East Asian countries.

We should not forget about the export prospects of Russian helicopter industry. Thus, in early 2011 a service center for Russian civil helicopters opened in India. This structure was created by Russian-Indian joint service enterprise Integrated Helicopter Services Private Ltd., an offspring of Helicopters of Russia helicopter holding (Obronprom corporation) and Indian company Vectra Group.

"The opening of the service center in India is a very important event - the general director of Helicopters of Russia Dmitry Petrov said. - We plan to make the center one of the key elements of a service system that supports the operation of both the existing fleet of Russian-made helicopters and Mi and Ka new helicopters planned to be delivered in India and Southeast Asia as a whole."

It is remarkable that Helicopters of Russia holding plans to build service centers of Russian-made helicopters in Africa, Latin America and Asia by 2012.

The holding introduced its multifunctional Mi-17 and Ka-32A11BC medium helicopters and multi-purpose light Ka-226T manufactured for the Asia-Pacific Region (APR) at Defence Services Asia (DSA) - 2010 exhibition.

These helicopters are capable of performing any task from passenger transportation and commercial exploitation to special operations in natural disaster areas. The machines can be used as corporate, passenger, cargo, search and rescue, construction, and fire patrol.

Nowadays South East Asia remains one of the fastest growing markets in the world. Among the few problems that prevent a more efficient economic growth in the region the difficulties of traffic associated with the peculiarities of terrain and island location of the states stand out. One solution to this problem may be using Russian-produced helicopters.

The program of global service network based on certified centers and joint ventures for helicopters servicing around the world supports Russian-made helicopters throughout their life cycle - from transfer to the customer to disposal.

Thus, we should recognize that the potential for the development of cooperation between enterprises of Russian aviation industry with East and South-East Asian companies is quite high. At the same time, Russia as a country having undoubtedly higher scientific, technical and technological capabilities in the field of aircraft construction should take into account some realistic things. For example, the fact that the possibility of expanding sales of finished aircraft products manufactured at its assembly plants or in third countries with the participation of domestic companies and firms in the short term will be possible only in case of the related structures' of the region involvement in industrial cooperation. This can said with confidence looking at the experience of leading world producers.
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