Air Transportation: Russia Does Damage Control

Archives

March 11, 2016: While the Russian Air Force ordered 15 An-148 commercial transports in mid-2013, the contract (and guarantee of payment) was not signed until February 2016. At that point three of the An-148s were awaiting delivery and two more were almost complete. There is often a delay between the order and the signed contract in Russia but 30 months is an exceptionally long delay. The reason was the plunge in oil prices after the An-148s were ordered followed by a bunch of trade sanctions because of the late 2014 invasion of Ukraine. That last action had a direct bearing on the An-148 because 30 percent of the components for this aircraft are made in Ukraine. The Russian manufacturer of the An-148 says that this is no longer a problem.

The An-148 is a twin jet commercial transport that normally carries up to 80 passengers or nine tons of cargo. Max range is 2,100 kilometers and the high-wing design means that the stretched An-178 cargo version can carry up to 15 tons and have a rear door for quickly loading and unloading. The An-148 is costing the Russian Air Force about $39 million each and all will be delivered by 2017 after five are delivered in 2016. The air force does have a need for An-148s, but the government has an even greater need in keeping the Russian commercial aircraft manufacturers in business. That’s the main reason behind this purchase.

Antonov introduced the An-148 as a competitor for the American Boeing 737. Although Antonov soon had orders for over 200 of the new aircraft, the first operators reported that the An-148 was more expensive to operate than a comparable 737 (in service since the 1960s with over 6,000 built). Sensing that competing with the 737 (which costs more than 50 percent more) on price alone might not work, Antonov announced a military version of the An-148, the An-178. This would be a cargo aircraft, with a max payload of 15 tons. But that segment of the market is already being served by aircraft like the Western AN-295 and C-27J. The basic problem here is that once mighty Soviet civil aviation industry has been shriveling away since 1991, and has few viable opportunities to make a comeback.

The disintegration of the Soviet Union in 1991 not only destroyed centuries of Russian empire building but ruined the Russian civil aviation industry. For decades Soviet commercial aircraft manufacturers had guaranteed customers for their second-rate (compared to Western models) aircraft. Russian and East European airlines had to buy the Russian models, and many poor countries that could not afford Western aircraft accepted the Russian planes as better than nothing. After 1991, the Soviet Union was replaced by a much reduced Russia and 14 new nations that had been part of the old empire. No one was forced to buy second-best anymore. The dissolution deal had whatever Soviet assets were in the new nation belonging to it. Most of the civil aircraft manufacturing facilities were outside of Russia (in Ukraine and Uzbekistan). Of the three major aircraft manufacturing firms, Antonov was headquartered in Ukraine, Ilyushin in Uzbekistan, and only Tupolev in Russia. Russia has managed to persuade (via cash and help with sales) Ilyushin to move a lot of manufacturing back to Russia. Tupolev is being merged with several military aircraft manufacturers, as part of the United Aircraft Corporation. Antonov may be forced to reconnect with Mother Russia as well, given their inability to design and manufacture aircraft that can compete with AirBus and Boeing (not to mention many smaller Western firms).

New Russian commercial aircraft designs keep coming up short compared to what the West is offering. It’s not just Boeing and AirBus, but also smaller manufacturers in Europe and the Americas. Even China is entering the commercial aircraft market and is poised to beat the Russian efforts as well. But the Russian government is still determined to pay the price of staying in the market. As long as the subsidies, in the form of cash and government purchases, keep coming, the Russian firms will keep trying.

 


Article Archive

Air Transportation: Current 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 1999 


X

ad
0
20

Help Keep Us Soaring

We need your help! Our subscription base has slowly been dwindling. We need your help in reversing that trend. We would like to add 20 new subscribers this month.

Each month we count on your subscriptions or contributions. You can support us in the following ways:

  1. Make sure you spread the word about us. Two ways to do that are to like us on Facebook and follow us on Twitter.
  2. Subscribe to our daily newsletter. We’ll send the news to your email box, and you don’t have to come to the site unless you want to read columns or see photos.
  3. You can contribute to the health of StrategyPage. A contribution is not a donation that you can deduct at tax time, but a form of crowdfunding. We store none of your information when you contribute..
Subscribe   Contribute   Close