Allocation in state budget to underwrite interest rate is cut for domestic aircraft leasing

The Russian government has advised Aeroflot Russian Airlines to think again about its fleet-renewal plans and take "a closer look" at indigenous airliners as an alternative to Airbus and Boeing aircraft.

Aeroflot's passenger fleet includes 27 Airbus and Boeing types - 11 Airbus A310s, 10 Boeing 737-400s, four 767-300ERs and two 777-200ERs. The airline is also acquiring four McDonnell Douglas DC-10-40 freighters for its cargo arm.

Discussions have been under way for some time with Airbus and Boeing about the acquisition of new narrowbody and widebody aircraft to update and expand its fleet. The airline has just received permission to renew its Western-built fleet, but with no more than 27 Western aircraft.

"We can not put our own industry at risk," says Russia's minister of transportation Sergei Frank, who also chairs Aeroflot's board of directors. He wants the airline to reconsider "the best indigenous types currently available" - for example, the Tupolev Tu-204/214 twinjet.

Aeroflot's recent board of directors did not discuss the acquisition of the proposed Airbus and Boeing aircraft as it was expected to do. It was re-elected last month and now has fewer supporters of Western-built aircraft.

Efforts are under way to make the acquisition of Western aircraft less attractive, as the government looks to revive the local industry. The Russian government used to grant Aeroflot an exemption from paying import and value added tax on imported aircraft, but now the flag carrier can only hope for reduced tax. But officials are stressing industry protection measures need to be balanced to ensure Aeroflot's fleet strategy does not make it uncompetitive with other international airlines.

Meanwhile, Russian premier Mikhail Kasyanov has ordered an annual allocation of 500 million roubles ($15.9 million) in the state budget to help Russian airlines lease CIS-built airliners. The money will underwrite a move by commercial banks to slash the interest rate charged on opening credits for aircraft leases.

Presidential airline GTK Rossiya has already benefited from the funding, doubling its Tu-214 order with Kazan-based factory KAPO to four aircraft. The additional aircraft could be configured with a VIP layout.

Russia's second largest airline, GUAP Pulkovo, has expressed interest in buying up to 20 Tupolev Tu-334s to replace its 11 Tu-134 twinjets. General director Boris Demchenko says that although it could not afford a direct purchase, it is prepared to take aircraft from the first production on batch lease.

Source: Flight International