VLADIMIR KARNOZOV / MOSCOW
Corporate flying in Russia has outgrown its infancy and is now the country's fastest-growing aviation sector. But progress could be stifled by a dearth of new-generation aircraft
Soviet-era aircraft manufacturers did not consider the VIP market when designing new types. Heads of state and Communist party officials were usually offered derivatives of airliners or combat aircraft for personal travel. In the mid-1950s, Soviet president Nikita Krushchev flew to the USA in a Tupolev Tu-95 bomber hastily given VIP treatment. A six-seat Mach 3 supersonic business jet based on the MiG-25 interceptor was offered between 1963 and 1965, but the intended customer refused to fund it.
Since then, few indigenous airframers have ventured to build dedicated business aircraft designs, with the exception of former bomber maker Myasishchev. In January, the Moscow-based airframer received certification for Russia's first dedicated business aircraft, the M-101T. But despite its ability to transport four travellers to commercial centres in St Petersburg in the north and Rostov in the south, the aircraft has attracted little interest from Moscow's growing business community and wealthy elite.
Mark Belenki, executive director of Russia's business aviation association (ADA), says: "The M-101T is by no means able to satisfy the larger half of the Russian business aviation operators. Most of our members work with larger and faster jets, serving relatively rich clients who will never move into the narrow M-101T cabin of merely 7.5m3 [265ft3] space."
Sergei Nedoroslev, chairman of the programme's backer Kaskol, says: "Prestige does not always determine aircraft choice. When economics are a concern, a small turboprop is the best option." A standard production M-101T with a 760hp (565kW) WalterM-601F engine, Western instruments, auto-pilot, weather radar and GPS navigation is offered at $1.3 million. With an advertised flight-hour cost of $220-290, Nedoroslev predicts a market for 100 M-101Ts in the CIS. Deliveries begin in July, with eight aircraft due to be handed over this year.
The aircraft will prove a niche product, says Belebski. "Some operators may find it good enough to fly passenger services to small airports or even towns not having a concrete runway." Only 60 of 436 Russian airports have well-kept runways, so the M-101T's ability to operate from short grass fields can help establish missing transport links in Russia's vast territory.
But low fuel consumption and good field performance are of no interest to some customers, who want high-quality services on fast and well-equipped business jets and matching service across the region's modern business aviation terminals and fixed-base operators (FBO).
A high level of customer service is essential for business aircraft travel, and to support it, the region's infrastructure has been radically modernised and improved. A notable example is Moscow, which has seen a boom in FBO construction. There are the Avcom and LukOil terminals in Sheremetyevo; the RKK Energia and Vnukovo-3 terminals in Vnukovo; the Gazprom main terminal in Astafievo; and the Avcom-D business aviation centre in Domodedovo. The largest terminal is in Sheremetyevo, a two-storey building with 1,500m2 (16,140ft2) of floorspace and a plethora of customer and support services.
Domodedovo business aviation centre, comprising a 900m2 terminal and 2,500m2 hangar, opened in April. The hangar will eventually serve as a maintenance station for Western business jets.
Moscow's superb ground infrastructure is in stark contrast to Russia's ageing aircraft fleet, which has only 12 Western-built designs - two Dassault Falcon 900s, four Falcon 20s, four Raytheon Hawkers, one Cessna 208B and one Gulfstream GIV-SP. Of these, only three Hawkers and two Falcons are Russian-owned. Converted regional jets such as the Tupolev Tu-134, Yakovlev Yak-40 and Yak-42 represent the majority of the 100 or so VIP-configured jets in Russia's inventory. Of these, 65 are operated by 32 commercial operators, which are experiencing a steady rise in demand.
According to the ADA, commercial operators flew 4,650 missions in the first nine months of 2002 alone, compared with 4,345 for the same period in 2001. With 6,000-7,000 flights, including transits, performed by foreign aircraft in Russian airspace, business jet movements totalled about 14,000 last year.
West Siberian company UT Air received a GIV-SP in 2002, becoming only the second Russian operator to place a new Western aircraft into the country's register. A deterrent to other companies following suit is the 20% import tax and 20% VAT levy imposed by the Russian government.
According to the ADA, Russian businessmen and charter operators last year acquired new-generation business aircraft worth $500,000, but registered them in other countries to escape the tax. Details of these deals have yet to emerge because the owners decline publicity, but the media suggests the purchases include two Boeing Business Jets, six Gulfstream IV/Vs, two Falcon 900EXs and a Bombardier Global Express.
Noise restrictions are limiting flights for Soviet-era types outside CIS territories. Before the restrictions, Tu-134s were making 30-40% of VIP charter flights to western Europe. Operators of Russian types are also facing tough competition in the home market. The dozen air taxi companies in the Moscow area operate about 20 Tu-134s between them. These popular types have almost pushed out of business the less capacious and slower-flying Yak-40. The latter had been quite popular on short routes before one crashed at take-off from Sheremetyevo three years ago.
However, the newer and bigger design from Yakovlev, the Yak-42, is becoming increasingly popular as a corporate jet. A Stage III aircraft, it has sufficient range for European services and plenty of space for the traveller's comfort. At least three aircraft were converted into VIP types last year, and four more are being worked on.
Russia's largest Ilyushin Il-76 freighter operator and passenger airline, East Line Airlines, set up a dedicated department to serve corporate customers after acquiring a VIP-configured Mil Mi-8 helicopter two years ago. Last year it contracted Minsk maintenance station and Moscow interior specialist Kvand to convert two 68-seat Tu-134s to VIP types. The first 39-seat aircraft was delivered in November.
East Line Aviation general director Aleksei Raevsky says the carrier's decision to spend millions on repairing and converting the old non-Stage III aircraft was commercial. "We did not opt for a Western business jet because it would require hangar keeping and other demanding treatment," he says. "Also, without a solid client base of frequent travellers, it would not bring profit. The Tu-134 can do so with less flying hours. It is an ideal aircraft to fly within Russia, including Siberia."
Regular customers
This view is shared by Aeroflot subsidiary Aeroflot-Plus, which considered the Dassault Falcon 2000 before dropping the plan. "This type of aircraft will never make a profit for the company if you do not attract regular [corporate] customers," says the company.
UTair, on the other hand, has secured a contract from the Surgutneftegaz oil and natural gas company. A Gulfstream IV-SP joined the airline's VIP fleet of three Yak-40s, a Tu-134 and two Mi-8s based in Surgut, west Siberia, and logged more than 120h last year alone.
Kvand chairman Oleg Ponomarev says: "Having flown a business jet belonging to their Western partners, Russian businessmen return home, buy a used regional jet for $3 million and order the same or a better interior than the one they saw on the $30 million Falcon [for example]." This is giving plenty of work to dedicated VIP interior companies Kvand, Vemina-Aviaprestige, InterAMI and AKKO. Such clients end up spending more on an aircraft's interior than on the airframe.
Air taxi companies normally stick to inexpensive interiors, but the few who choose to spend more on equipping their aircraft could see a good return on their investment in less than 18 months because the aircraft has more appeal and can be charted at a higher rate.
The development of Russian business aviation aircraft depends on local manufacturers responding to customers' demands. Tupolev's latest offer is a "special variant" of its Tupolev Tu-324 and Tu-334 regional jets, on which prominent business jet operators have yet to be briefed in detail. Antonov and Sukhoi also plan to offer business aircraft variants of their respective An-148 and Russian Regional Jet. Ukraine-based Antonov is also offering a VIP conversion of the An-74 freighter, and Yakovlev the Yak-48, an analogue for the long-serving Galaxy, with a fuselage developed by Yakovlev under contract with Israel Aircraft Industries.
The ADA says European companies already control a bigger share of the VIP charter market for flights from Russia to Europe and the USA. The danger is that if Russian manufacturers fail to come up with worthy designs of dedicated business jets, the protection of high import taxes will one day fall and Western rivals will move in.
Source: Flight International
