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2011

An-158 wins type certification 4

China and Russia: strategic partners

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AN-148: OPERATORS VERDICT

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CONTENTS
Aircraft
04 06 14 AN-158 wins type certification Leasing firm favors TU-204SM AN-148: operators verdict

China's gates become world's aerospace center

Interview
24 China and Russia: strategic partners
Interview with Alexander Fomin

Exhibitions
28 Russia eyes Indian civil markets

Airport
32 An airport for sale!

Airlines
38 Hong Kong Airlines 20102011: high ranking, new schedueld services, IATA membership 40 Per aspera ad... Alliances There are already two Russian airlines in global alliances, who is next?

Editorial
More than five hundred companies have expressed their intent to exhibit at the Asian Aerospace 2011, one of the most popular airshows in the Asia-Pacific Russia will show her most advanced airliner, the Sukhoi Superjet 100 regional airplane created by the Sukhoi Civil Aircraft Company (SCAC), a joint venture of the world-famous fighter house and its European partner Alenia Aeronautica of Italy. SCAC will be accompanied by the Russian Helicopters, a large holding structure in control of all key rotorcraft companies in the country. It will be present with a wide products line including most recent rotorcraft models and derivatives. Russian Helicopter is a phenomenon of the modern aviation for its unrivaled ability to operate safety and efficiently in very harsh environments. Mil and Kamov helicopters are in service with many Asian nations, and quite popular in the People's Republic of China. Late 2010 and early 2011 were marked with a number of achievements for the Russian aerospace industry. The Tupolev Tu-204SM jetliner took to the air for the first time on 29 December 2010. Its certification is expected at the end of this year. Then, on 3 February 2011, the Air Register of the Interstate Aviation Committee issued type certification for the Sukhoi Superjet 100. Finally, on the eve of this show opening, another promising design, the Antonov An-158 large regional jet, won type certification, too. The Sukhoi Superjet 100 (its current 95B version) has maximum takeoff weight of 101,150lb, nominal seating capacity of 98 passengers and maximum payload of 21,600lb. Its operational range with full payload is up to 1,333 nautical miles. With this airplane Sukhoi Civil Aircraft is challenging the world's leading regional aircraft manufacturers: Embraer of Brazil and Bombardier of Canada. The An-158 represents a stretched 99-seat variant of the baseline An-148-100 regional jet developed by the Antonov state enterprise of Ukraine, and mastered in production by VASO plant in Voronezh, Russia. The An-148-100 has won a good reputation with Aerosvit and GTK Rossiya airlines: read our comprehensive report about the type's performance in revenue service. Arguably, the Tu-204SM is the world's most advanced narrow body jetliner ever flown. It can take in 176 to 210 passengers, depending on cabin layout. This new, refined version was created on the base of the current production Tu-204-100. The latter has proved one of the safest series narrow body jets in the world airline inventory. On one occasion, a Tu-204-100's fuel tanks got completely depleted in flight, causing both PS-90A turbofans to flameout, and yet the airplane permitted the crew to perform safe landing in an airport, and thus save nearly two hundred lives onboard. Sincerely yours, Alexander Gudko

Director General Evgeny Osipov Deputy Director General Alexander Kiryanov Commercial Director Denis Kostin Deputy Commercial Directors Vitaliy Galuschak Natalia Chizh Marketing Director Leonid Belyaev Marketing Manager Elena Bebneva Creative Director Alexander Strelyaev Editor-in-Chief of A4 Press Publishing Vitor Murakhovskiy Editor-in-Chief of AirFleet Alexander Gudko Editors Mikhail Nayden Art Director Al'vina Kirillova Designers Alexander Shipilov Nadezhda Fadina Elena Shishova REPRESENTATIVE OFFICE IN SAINT-PETERSBURG Deputy Director General Roman Moshnin Commercial Director Sergey Baydak Advertising Sales Director Milana Nikolaeva Marketing Director Grigoriy Zubok Photos and graphics in this issue: M. Lystseva, Hong Kong Airlines, wordpress. com, flickr.com, iaviationnews.eu, aviasg.com, dic. academic.ru, businessweek.com, photobucket. com, nycaviation.com, davs.ru, nicholaskralev.com, airliners.nl, i.flamber.ru Partners: Literra Translation Agency Office 202, Gapsalskaya St., 1, St. Petersburg, tel.: +7 (812) 680-17-03; e-mail: info@li-terra.ru
Circulation: 10 000 The magazine is registered in the Committee for Press of the Russian Federation. Certificate 016692 as of 20.10.1997. Certificate 77-15450 as of 19.05.2003.

AIR FLEET, 2011 ADDRESS P.O. Box 77, Moscow, 125057, Russia Tel.: + 7 495 626-52-11 Fax.: + 7 499 151-61-50 E-mail: af@airfleet.ru

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AN-158 WINS TYPE CERTIFICATION

ICAO Chapter IV noise requirements with a comfortable margin of several dB. The prime-minister of Ukraine Nikolai Azarov took part in the ceremony of 28 February 2011. He said the An-158 certification opens the way for further develType certification for the An-158 large regional jet was awarded on 25 February opment of this airplane and its production for many years to come. He added that 2011. The respective air worthienss cerUkraine makes its return to the very tiny tificate is issued by the Air Register of International Aviation Committee (ARMAK), club of the aviation nations with the ability to develop and manufacture advanced which serves as civil aviation authoriaeronautic designs. ty in the territory of the Commonwealth The An-158, previously known as of Independent States (CIS). the An-148-200, is further refined and The certificate was handed over to advanced version of the baseline An-148. the Antonov state enterprise, the airIt is offered in two factory standard cabcraft developer, on 28 February 2011. The ceremony took place in Kiev, the cap- ins. One seats 99 economy class passengers in a five-abreast arrangement with ital of Ukraine. MAK chairwoman Tatyana Anodina handed the certificate over to seat rows spaced at 30 pitch. Another cabin has 86 seats in two class compartAntonov general designer Dmitry Kiva. ments, one for 12 business class passenTatyana Anodina stated that the Angers and other for 74 economy class pas158 meets highest international stansengers. dards for regional jets. She especialOutwardly, the An-158 differs from ly mentioned the airplanes capability to the original An-148-100 in having two operate in harsh environments and adcylindrical extensions in the fuselage exverse weather conditions. Anodina added that the new airplane meets current Eu- tending it by 1,700mm. Besides, the An158 features improved avionics and interiropean regulations to noise and emission or. In particular, the hand baggage overlevels. In particular, the An-158 meets

head beans are refined. The rear section of the fuselage has been reworked so as to cater for the longer fuselage at takeoffs and landings. The An-158 has maximum takeoff weight of 43.7tons, maximum payload of 9.8tons, maximum cruising Mach number M=0.79 and maximum cruise altitude of 12,200m. It can transport 99 passengers 2,500km or 86 passengers 3,100km or 62 passengers 4,230km. The An-158 carries 87 onboard computers in 58 computing systems, which helps the airplanes flight control and system management complex control over 4,000 parameters. Under agreement with Russia, the An158 will be built at Antonovs Aviant plant in Kiev, while Russias VASO in Voronezh focuses on An-148. The two enterprises supply each other with airframe components so as to streamline manufacturing process. First deliverable An-158 shall enter operational service by the end of 2011, Dmitry Kiva says. He gives An158 list-price at US dollar 27 to 30 million, depending on options. Kiva further says that Antonov is going to assemble eight aircraft in 2011.

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LEASING FIRM FAVORS

TU-204SM

After a hot discussion at the top political level and among the local aeronautics industry elite, the Russian government has issued approval for continuation of the Tu-204SM effort. Russias leading aircraft leasing company, Ilyushin Finance Co. (IFC) has been a keen supporter of this decision and will play a major role in its practical implementation. A vastly improved version of the current production Tu-204-100/300 series of the Tupolev narrow body twin jets, the Tu-204SM shall enable Russia to keep her hard-won positions in the biggest sector of the worlds commercial aircraft market in fierce competition with the European and US manufacturers. Today, only Airbus, Boeing and Tupolev are present in the given market sector, with A320, 737 and Tu-204 respectively.
The decision to continue with the Tu204SM was made in January 2011, after a thorough revision of the current state of this project launched in 2008. The move was much influenced by the first successful flight of the first airframe, registration RA64050, from the aerodrome of AviastarSP aviation plant in Ulianovsk. It happened in Christmas time, on the eve of the New Year 2011. With the airplane behaving up to expectation and delivering its promises on fuel burn in typical regimes, the decision in favor of the program was, therefore, well-founded and logical. The sector of the narrow body twinjets is the largest one in the worlds commercial aviation. According to the most recent market forecast prepared by a respectable governmental organization, in the next twenty years the sales of narrow body airliners will comprise 3,840 120-seaters, 13,723 160-seaters and 2,358 200-seaters. In dollar values, these will respectively came to 251 billion, 1.111 trillion and 281

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The Tupolev-204SM shall enable Russia to keep her hard-won positions in the biggest sector of the worlds commercial aircraft market in fierce competition with the European and US manufacturers
billion respectively. Together, this makes 19,921 sales valued at US dollar 1.643 billion a huge business by any standards. China alone needs nearly 3,000 new narrow body jets worth US dollar 237 billion. These figures come from the Market Forecast 20102029 released in November 2010 by the Commercial Aircraft Corporation of China (COMAC). Russia is aiming at a place in this market with the Tu-204 series (including its newest Tu-204SM derivative) and, later, the next-generation MS-21 (currently at the design phase). Finding a launch customer is always a key thing for any aeronautical project and of enormous significance for success of the whole effort. At first, Iran Airtour was considered for the role, with initial order for five airframes plus fifteen options. However, the United States Department of State threatened sanctions against US firms involved in the propulsion system. This prevented the Persian aviators from becoming Tu-204SM launch customer. Red Wings, the currently the largest Tu204 user, took over. Also known as the Airlines 400, this Russian operator runs a fleet of nine Tu-204-100/-100V jets on scheduled services and charters to popular holiday destinations. Contract with Red Wings is of complex nature; and will take some time to be arranged. The airline and its backer, the National Reserve Corporation run by Russian entrepreneur Alexander Lebedev, are seeking a larger deal with the Russian government, aeronautics industry, financial and leasing structures, with its central idea being that of a better arrangement of assets, financial and industrial resources in the interests of both the nation and the local business community. This larger deal has been agreed in general, but negotiations on detailing it are still ongoing.

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Red Wings is looking to acquire a batch of 44 Tu-204SM aircraft at a good price. Through this deal, the airline wants to get a higher place in the Russian air transport industry, upgrade from a second-class to the top five of Russian airlines. Furthermore, Red Wings wants deliveries and after sales support for these Tupolevs to be arranged by IFC, the largest Russian aviation leasing company with National Reserve Corporation among its shareholders. In addition to the structured financial package for the acquisition of above-mentioned 44 jetliners

on financial lease terms, Red Wings wants the industry and the lessor to guarantee residual values of these aircraft and provide smooth operations of them via an effective after sales support system. From its side, IFC is ready to arrange all this and raise 90% of the requisite funding, provided Tupolev, Aviastar-SP and their vendors take obligations on pricing of the aircraft and its components, as well on related product support issues. We are ready to arrange all this, in apprehension that such a deal is going to be

Alexander Roubtsov: the Tu-204SM will have larger payload capability and longer range, which makes it very interesting for the holiday charter market
the biggest and most complex we have ever attempted. If happens, the deal will be the largest in history of the Russian commercial aviation, says IFC general director Alexander Roubtsov. There are several key points with arranging this deal. First of all, by placing a large order the airline and the lessor want to get considerable discounts, up to 30% to the list-price. Most of the discount shall be on the account of vendor items. Roubtsov explains: The vendors are given a choice: take it or leave it. Either they trim up and agree to such discount in exchange for a decently large order, or the airline, the lessor and the government pull out. In its turn, the Russian government says it is ready to support the local industry and the airlines but only if this support helps them recover and attain competitiveness. In plain words, the Kremlin can afford wasting money for no outcome. So far, orders placed for Tu-204 airplanes have been relatively small: one-two, up to five aircraft at a time. In this situation, airframe production lines have been running at low speeds, and hence the price per a unit of production was high. In the past few years the Tu-204 list-price has risen to US dollar 4550 million per airplane, depending on options. The industry asks US dollar 50 million for a brand-new Tu-204SM. Red Wings and IFC say they cannot afford more than US dollar 36 million, but will buy 44 aircraft at once, provided their price is accepted. Deliveries would proceed at a pace of 810 aircraft annually over the period of five years, 20122016.

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For Aviastar-SP such a large order promises sufficient backlog until 2016, when the factory plans to commence production of the Il-476 next-generation air lifter for the Russian air force and commercial operators of large ramp freighters. Meantime, the Tu-204SM project promises not only to bridge the gap until the Il-476 becomes available, but also create a suitable product in the distinct market niche for passenger airliners. Roubtsov thus speaks about it: The new version of the Tu-204 will have larger payload capability and longer range, while the baseline airframes maximum cabin capacity of up to 216 economy class passengers makes it very interesting for the holiday charter market. In my view, the Tu-204SM is a good solution for the charters. Marketologists see three other distinct niches for the improved Tu-204. In addition to tourist charters, this airplane can be effectively used on scheduled passenger services between city-pairs with rather long flight distances, five thousand kilometers or more. Placing smaller and lighter Airbus and Boeing narrow bodies on such services are not economically viable. At the same time, wide bodies from these makers often appears over capacious for the existing passenger flows on some city-pairs. Vladivostok Avias decision to acquire six Tu-204-300s was because these airplanes can support daily flights between Vladivo-

Russian government supports Tu-204 program In January 2010 the Russian government decided to support the Tupolev Tu-204 jetliner and provide additional Rouble 9.9 billion. This amount of money is needed to keep Tu-204 production line running. And is an estimation of the United Aircraft Corporation (UAC). The Russian press pictures the situation as though it is less expensive for the Kremlin to keep the Tu-204 manufacturing line busy rather than stop it and by doing this render thousands of machinists out of work. The money is needed not only to support production, but also for certification of the Tu-204SM, the recent mutation of the ailing aircraft family. First such airplane flew at the end of the past year from the aerodrome of Aviastar-SP factory that does assembly of the Tu-204 airplanes. The Russian press speculates that it is less expensive for the Kremlin to keep Aviastar-SP working rather than to close down this huge enterprise. Out of 9.9 billion Roubles required, some 5 billion will go for clearing the balance of Aviastar-SP in 20112013.
stok and Moscow with maximum passenger loading factor while larger Airbus A330200 and Boeing 767-300ER cannot always be loaded to capacity on this given route. The Far East Airlines, Dalavia, gave another example of effective employment of the Tupolev narrow bodies, in this case the Tu204-200 (Tu-214, a version with higher gross weight), on long-and-thin routes, like that linking Khabarovsk and Moscow. One more Russian airline, KMV, has been successful in using Tu-204-100s on the route connecting Caucasus Mineral Waters with Moscow and other large Russian cities. Next niche is the certain foreign customers who have traditionally been oriented on the Soviet and Russian products and unable to buy in the West for political reasons. North Korea, Syria and Cuba already operate Tu-204 series aircraft. Iran hired Tu-204-120C freighters and has been seeking to buy Tupolev twin jets and even produce them locally under license. This particular niche is not limited to so-called pariah states. Rather, it also includes other traditional users of Soviet and Russian airplanes, such as CIS countries and other Russias allies. Egypt, with five

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ers as a viable alternative to the Boeing 727, 737 or 757 converted from passenger jets into freighters at the end of their lifetimes. TNT, AirRep and other western companies hired Tu-204C series aircraft and make their cost-effective use on European cargo services. More recently, Tupolev freighters have found new customers in the form of Cubana de Aviacion and Air China Cargo. The existence of four distinct niches for the Tupolev narrow body jets in the huge global market for this class of aircraft gives certain airlines and aircraft leasing companies hope that their financial resources will be well-spent on respective programs on improvement of the baseline Tu-204, its cost-effective production in worthwhile quantities and subsequent leasing. Vladimir Karnozov

Tu-204-120 passenger and freighter airplanes, gives a good example of the nation that can buy from the West, but nonetheless selected Russian products for some good reasons. The last, but not least, is the freighter market, where the Tu-204C (cargo) versions have had some effective employment. There is a sufficient number of dedicated general cargo airlines. Some of them see newly-built Tu-204C freight-

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Maiden ight On 29 December 2010 the first operable Tu-204SM registration RA-64050 performed its maiden flight from the aerodrome of Ulyanovsk aviation plant with Victor Minashkin and Denis Vyazankin at the controls. Chief engineers Vladimir Salatov and Vladimir Filimoshkin were also aboard the airplane, to see to the test equipment. All systems were functioning normally during the flight. The Tu-204SM features advanced Perm PS90A2 turbofans, improved navigation and radio communication set, and crew of two pilots. Creation of the Tu204SM resulted from the huge and persistent work done by Tupolev together with its industrial partners and state establishments. It is a milestone for Russian aircraft makers, said Alexander Bobryshev, Tupolev President and Senior Vice President with United Aircraft Corporation. He expressed satisfaction with the work that has been done on the Tu-204SM project. I am sure that the Tu-204SM will provide a reliable platform for development of new passenger, cargo and special mission aircraft, Bobryshev said. Earlier in December 2010, the Interstate Aviation Committee (MAK) issued approvals for improvements of the Tu204-100C that permit increase in the maximum takeoff weight up to 110.5 tons. The Tu-204-100C is a dedicated side-door freighter version powered by two Perm Motors PS-90A turbofans. This airplane can now be offered to airline customers in two variants. One features maximum takeoff weight of 107.5 tons, maximum payload of 30 tons and maximum landing weight of up to 91.5 tons. Second version (reference Tu-204-100C-03) has 110.5, 30 and 93 tons respectively. Cargo version of the Tu-204 is given permission for 17,500 flight hours, 8,000 cycles and a calendar lifetime of 15 years, according to complimentary type certificate 233-Tu-204-120CE/D08 dated 15 December 2010. Besides, the certification authority has also issued certificate for the auxiliary power unit (APU) of the TA18-200 type, which is meant for installation on the Tu-204SM and other modern versions of the baseline jetliner. The APU maker, Aerosila scientific and industrial association, was awarded Certificate no. ST321-VD dated 16 December 2010. Separately, the certification authority approved changes in the TA1260 APU that allow its operations up to 8,700 cycles and increase in the permitted altitude for idle and working modes up to 10,000m. In-flight starting is now permitted at the altitude of 7,500m. The respective complimentary certification document reference is 101-vD/D03 dated 16 December 2010. 12

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AN-148: VERDICT OPERATORS

The aviation industries of Russia and Ukraine seek a new place in the global market for passenger jetliners with the Antonov An-148 regional jet family. A handful of initial-production An-148-100s have been in revenue service with Ukraines Aerosvit for a year-and-a-half and with Russias State Transport Company Rossiya (GTK Rossiya) for over a year. This year will mark commencement of overseas deliveries. What can the international customers expect of the new Russo-Ukrainian product?
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The An-148 had its maiden flight on 17 December 2004, when the UR-NTA got airborne. Revenue flights with Ukraines Aerosvit airline has been lasting for a year and a half, during which the UR-NTA airframe amassed nearly six thousand flight hours and the UR-NTC, delivered in May 2010, amassed three thousand flight hours. In the first year of revenue operations in Ukraine, the airplane demonstrated fuel burn of 1,760kg (3,880lb) per block hour, and block speed of 700kmh (378kt). Average flight duration was 1 hour 20 minutes. Initially, services were flown to six destinations within Ukraine, but later a dozen of international destinations were added.
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In addition to four airframes assembled in Kiev (two in service, one being handed over to airline customer and one undergoing certification trials), eight more have been made in Russia at VASO plant. Of the Russian examples, six went to GTK Rossiya and two more being flight-tested before delivery. By now, the St. Petersburg-based carrier has amassed considerable operational experience and decided to make the An-148 a backbone of its regional airliner fleet. In the fall of 2010, the airline signed followon order for nine additional An-148-100s. The decision was made upon a thorough analysis of the operational data and air-

craft performance during operational trials. As of mid-February 2011, the number of passengers carried on Russian-made An-148s exceeded 223 thousands. On 21 December 2010 GTK Rossiya celebrated a whole year since the new type commenced revenue passenger services. In its first calendar year, GTK Rossiya An-148s performed 1,875 scheduled flights in the central timetable to 26 destinations. The first Russian-built An-148, registration RA-61701, transported about nine hundred passengers on nine round services in the second half of December 2009. In the whole of 2010, during which the strength of the fleet gradually rose to six, the airline carried 192,240 passengers on nearly 2,000 city-pair flights. In January 2011, the carrier added over 22 thousand passengers, flying to twelve destinations in Russia and CIS. All six An-148-100s in the GTK Rossiyas fleet are on lease from Ilyushin Finance Co. (IFC). The lessor believes the current monthly utilization rate of 270 flight hours (FH) per a serviceable airframe can be increased up to 330 FH and even more. In terms of utilization rate, the RA-61704 has demonstrated the highest level so far, by amassing 296 FH on a single month. This means this aircraft routinely spent ten hours on a single day! It is a very good figure for an aircraft type that just entered revenue service. A brand-new An-148 full flight simulator shall help further improve the utilization rates. Its installation has been completed at the S7 Group training center in Moscow Domodedovo airport. The device was shipped in December last year, and began operations after final tuning in February 2011. The simulator corresponds to Flight Training Device Level D. It is the first such unit to have been designed and built in Russia. It comes with an advanced motion and visualization systems. The simulator was developed and built by Transas company based in St. Petersburg under Rouble 600million-plus contract (roughly Euro 15million) with IFC signed at MAKS2007. The involvement of the S7 Group was a major victory for the An-148 team

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Alexander Roubtsov: We continue working hand in hand with the developer and manufacturer and GTK Rossiya in order to make the An-148 a mature product able to compete successfully in the global market
The airline accepted RA-61701 with 150 deviations from the specification under promise these would later be eliminated. The number was down to 38 when RA61703 was delivering three months later. Most of the deviations and shortcomings were caused by the system crisis in the Russian aviation industry, but GTK Rossiya believed in the ability of the manufacturer to overcome those. We know VASO as a first class production site from our Ilyushin Il-86 experience, Sergei Belov explained. lots. The shortage of qualified crews was Practical interaction between Antonov, a cause for relatively low aircraft utilization VASO, IFC and GTK Rossiya has allowed rate at the beginning of the revenue paseffective rectification of the An-148 teethsenger operations. ing problems. Working together with othAddressing participants of an An-148 er Russian and Ukrainian enterprises, they operators conference, GTK Rossiya general director Sergei Belov thus spoke about introduced about 60 improvements and modifications into the original design. his fleet renewal strategy: the aircraft we These improvements were implemented buy must pay back our investment in revon the RA-61701 when this airframe was enue operations, they must justify our expenses. The airline rejected a factory stan- undergoing maintenance and repair at VASO in the second half of 2010. In Decemdard model and instead ordered a cusber the RA-61702 visited the factory to untomized An-148 version with dozens dergo similar work. of changes to the production specimen, inThe improvement work VASO carries out cluding avionics set (a US-made weathon first production airframes includes mainer radar and collision-avoidance system) tenance bulletins and changes to avionics and interior (allows quick-conversion from to enable ICAO Cat.IIIa landings, to which 68-seat two-class layout to 75-seat tourist cabin at 32 degree pitch seat row spacing). Antonov certified its airplane in early 2010. The recent maintenance bulletin helps elimCustomization took a year, and, as Belov inate problems GTK Rossiya experienced put it, we got what we wanted.

in 2010. IFC and S7 Group signed respective agreement at Farnborough2010. The S7s involvement in the project is expected to expand, to such an extent that the group may choose to acquire a quantity of such aircraft for the airline of its own. The S7 Group has invested its own funds into outfitting its training center at Domodedovo with a comprehensive set of An-148 simulators for training of pilots, cabin and ground crews. One of those is a procedural training device for training of cabin crews. This device is provided by Moscowbased AKKO. This company supplies business and economy class seats, as well as interior items to the An-148 manufacturers. The whole set of the An-148 training devices is promised to be in place and fully operational in March 2011. This shall ease the current situation for GTK Rossiya, which is short of type-rated pi-

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AN-148-100 VITAL DATA Maximum takeoff weight 41.5tons Maximum cruise Much number 0.79 Seating capacity single class, 30in pitch 80 passengers single class, 32in pitch 75 passengers two-class 8 business and 60 economy Hourly fuel burn in typical cruise 1,5001,600 kg IFC general director Alexander Roubtsov puts the matter his way: We are fairly close to the target with the recently made aircraft which have most of the earlier discovered design and manufacturing flaws rectified. We continue working hand in hand with the developer and manufacturer and GTK Rossiya in order to make the An-148 a mature product able to compete successfully in the global market. The An-148 brings about a major departure from the Soviet-style scheduled calendar maintenance to pro-Western on-condition approach to keeping passenger jets airworthy. The MRO program being implemented by GTK Rossiya is based on the airlines experience of operating the Airbus A320 and Boeing 737 aircraft families, as well as the 767-300ER. The intervals in this MRO program are broadly similar to that for the Airbus narrow bodies (for instance, Acheck is performed after 750 FH). To help keeping the An-148 in operable condition, VASO keeps eleven employees at Pulkovo airport of St. Petersburg, and engine maker Motor-Sich two. Work continues on improving maintenance procedures, so as to reduce number of man-hours required by the MRO program, and also to extend Manufacturers Minimum Equipment List (MMEL). Antonov admits that the An-148 currently requires more labor than the latest Boeing designs, but the gap is narrowing as the newer jet amasses real-life data on the airplanes operations in commercial service.

in the unusually cold weather of December 2009, when the ambient temperature kept well below 20 degree Celsius, causing freezing of water pipes in the rear fuselage. From its side, Antonov acknowledges teething problems with the new aircraft, but points out the An-148 comes equipped with a very modern Onboard technical servicing system (OTSS) for better fault tracing level. The developer insists that troubleshooting is naturally faster using OTSS. Antonov further says that the Aerosvit and GTK Rossiya raised 35 technical issues. They have been answered by the Antonov designers and engineers through issuance of technical solutions and bulletins. Besides, the company provided training servicing for airlines customers, and improved their quality upon airlines recommendations. Over 200 airline employees have undergone training in the An-148 at Antonov bases.

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Alexander Neradko: The An-148 may become the most popular jet in service with the airlines operating in the territory of the Russian Federation. This aircraft is the one we have been longing to see in revenue service
The lions share of passengers transported by Russian-made An-148s were carried between St. Petersburg and Moscow: this route was selected as most convenient from viewpoint of fixing would-be malfunctions discovered in flight, flight preparations or post-flight checks. But this put the An-148 into head-on competition with larger jets on the same route. Six other airlines fly between the two cities using Boeing 737 and Airbus A320 family jets. GTK Rossiya itself operates Airbus A319/320 and Boeing 737-500 on the same route, making a total of 15 daily return flights between the two cities in winter time. This makes it easy to compare the performance of different aircraft. Having analyzed first three month of winter operations, GTK Rossiya found the An148 to be a more effective money-making machine. The An-148 offers lower operating costs than the 737-500 per flight basis, Sergei Belov said. According to his founding, the costs for essential to increasing frequencies on our a round trip appeared to be 23% less. Although the 737-500 is somewhat larger, its route network. The other important observation excessive capacity was only occasionally the airline made was that the An-148 helpful, whereas the An-148 flew with avis most efficient on flight legs exceederage seat loading factor at 75%. On longer routes, such as those connecting St. Pe- ing 1,200km (650nm). The wide seats tersburg and Samara, the An-148s direct (18.5inches/470mm for business class and 17.3inches/440mm for economy), similar trip costs were 46% less than the Boeings. This makes Belov able to assert: The to those on commercial airliners, high ceilAn-148 is not only in demand today, it is ing (2,000mm) and large hand baggage bins (0.056 cubic meters per passenger) provide comfort conditions for the travelers, at the level comparable to the Airbus narrow bodies. This makes it reasonable to place the new jet on services to various remote provincial cities inside the country (taking account of the vast Russian lands) and also to small airports in the Western Europe where the traffic is not big enough to justify use of the narrow bodies. GTK Rossiya general director draws a conclusion: For us there is no question of whether the aircraft is good or bad: the An-148 is very much a good aircraft. It has proved worthy of airline service. At the same time, as any brand-new type, it has teething problems that need to be cured by concerted actions of the airlines, industry, financiers and government bodies. The airline says it wants to decrease downtime and maintenance costs. This is possible through streamlining An-148 production at VASO, and raising the strength of the airlines fleet from six to fifteen units.

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INTERNATIONAL BUSINESS AVIATION EXHIBITION

For the first time EVER! Jet Expo 2011 will be held at a unified site Vnukovo-3 airport

WE DEVELOP THE SHOW. WE THINK ABOUT OUR CUSTOMERS. WE DONT STOP.

September 14 16

WELCOME ONBOARD

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Operational revenue can be enlarged through an increase in frequencies and use of the aircraft with the right capacity on GTK Rossiyas network of routes. As a further sign of confidence in the An148, GTK Rossiya general director has applied to the Russian government with a letter in which he asks for additional state support to the program. In this letter he Sergei Belov writes that this aircraft can help the airline and the manufacturer regain their positions in the competitive environment of the aviation market. Alexander Neradko, head of Russias Federal Air Transportation Agency (acronym FSVT, effectively Russian civil aviation authority), believes in good prospects for the new Antonov. He says: The An-148 may become the most popular jet in service with the airlines operating in the territory of the Russian Federation. This aircraft is the one we have been longing to see in revenue service. It meets the expectations of Russian airlines to a robust regional jet able to operate from most of the Russian provincial airports. Initial operations confirmed most of our expectations, but also highlighted some teething problems with the type. I am sure we can overcome those by concerted actions of all parties interested in the success of the program. A number of Russian carriers have signed for the An-148 or expressed an interest in it. A word of encouragement to the An-148 team came from Aeroflot

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Vitaly Saveliev: the Russian flag carrier considers placing orders for fifteen An-148s along with purchases of other indigenous designs
general director Vitaly Saveliev. He said the Russian flag carrier considers placing orders for fifteen An-148s along with purchases of other indigenous designs, the MS-21, An-140 and SSJ100, from local manufacturers. Aeroflots interest in the An-148 comes from the fact that GTK Rossiya is one of the members in Aeroflot Group. Another member, Vladivostok Avia, has already ordered two An-148s via IFC, for delivery in 20112012. IFC intends to stay the main supplier of newly made An-148s coming off the assembly lines at the aviation plants in Voronezh and Kiev. The lessor says this year it will place with its airline customers five more Russian-made An-148-100s and two Ukrainian-made An-148-200s (An-158s).

In February 2011 Alexander Roubtsov said IFC will acquire 80 An-148s in the next six years, and place them with airlines. IFC general director believes the technical problems discovered during initial revenue operations are resolvable and can be dealt with in the conditions of unprecedented publicity for the Russian aerospace sector. We never hide anything. The An-148 is a very open project to anyone interested. In fact, it is the most widely discussed civil aeronautical project of all ever attempted by the local manufacturers. If you try to obtain real figures on other new airplanes in the marketplace, you will never get more
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detailed and trustworthy information than that available on the An-148. Thats because we and our partners are confident in the success of this program. We feel comfortable when sharing data on An-148 operations with the community. Today, the An-148 is arguably the newest and most efficient regional jet available elsewhere, designed from scratch on computer screen using modern CAD/CAM/ CAE technologies (computer-aided design, manufacturing and engineering). Antonov and its partners believe they can provide competition to Embraer and Bombardier. According to Chinas COMAC market forecast 20102019, the global market for regional jets is worth US dollar 130billion, and will see 807 deliveries of aircraft in the 70-seat class and 2,445 more in the 90-seat class. Russias largest aircraft lessor has a prognosis of its own. In next twenty years Ilyushin Finance Co. predicts 350400 sales for the An-148 and 200250 more for the An-148-200 (An-158), a stretched version seating 99 passengers compared to 75 for the baseline model. Vladimir Karnozov

English-cockpit certied for An-148 On 22 February 2011 the Air Register of the Interstate Aviation Committee (ARMAC), effectively the CIS civil aviation authority, awarded Antonov of Ukraine a complimentary type certification (CTC) for Englishlanguage cockpit of the An-148-100E twinjet. Here, the E suffix pointing at the customized version of the 75-seatrer for the Myanmar government. Meantime, two An-148-100Es assembled at VASO factory in Voronezh, are being prepared for delivery to the customer after having flown several dozens of test missions to achieve the CTC. Deliveries are scheduled for March 2011, upon completion of the hot-and-high trials and issuing of another CTC. The Myanmar government placed order for two An-148-100Es along with twenty Mikoyan MiG-29 fighters in November 2009. The respective contracts are of government-to-government nature. Thus, Myanmar is set to become the first non-CIS operator of the new regional jet. Meantime, Antonov has performed all necessary flights in the program of hot-and-high trials in the Islamic Republic of Iran, another possible customer for the type, using one An-148-100B and one An-158 (also known as the An-148-200, and is a stretched version seating up to 99 passengers). According to the Ukrainian manufacturer, all providing documentation has been submitted to ARMAC, so that hot-and-high CTC is now expected in March. The CTC shall allow field operations for 3,000-meters-high runways at ambient temperatures up to +40 degree Celsius.

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China and Russia have had a long and eventful history of collaboration in the spheres of defense and heavy industries. Alexander Fomin, first deputy director at Russias Federal Service for Military-technical Cooperation (FSVTS), has kindly agreed to answer some questions about the current situation in that field and the future prospects for SinoRussian relations. The interviewer is Vladimir Karnozov. Question: How can you estimate current state of military-technical cooperation between China and Russia? Answer: The state of our relations is that of strategic partners. Q: What does the future bring in the sphere of our military-technical cooperation? A: In my view, we have had a history of relationship rich with many events and milestones. This relationship is being developed further by concerted actions of both sides. Such a relationship certainly has future prospects. The Chinese aviation industry came into being largely due to the massive Soviet aid. There are quite a few of spheres and directions for further continuation of our cooperation, where we can be partners and work hand-in-hand for mutual benefits.

CHINA AND RUSSIA: STRATEGIC PARTNERS

Q: There were no Russian-made aircraft on display at Airshow China 2010 in November. But the previous events, in 2008, 2006 and before, saw rather large presence of Russian airplanes and helicopters. Why is that change? A: Whatever the reason was, it is by no means an indicator of where we go. The nature of our relationship with China has not changed. Chinese government structures operate a large arsenal of Russian and Soviet combat systems, including copies of those systems assembled locally under license. Many of the locally designed and made systems exhibited at Airshow China are, in one way or other, represent derivatives or improved versions of our original designs including those supplied directly by Russia and Soviet Union or their further developments. Many of the contemporary Chinese flying vehicles on display at the above mentioned show use our components, vendor item or technical solutions. Q: Perhaps the most interesting exhibits at Airshow China 2010 were the J-10 fighters brought by the People Liberation Army Air Force (PLAAF) and the JF-17 by the Pakistan Air Force. The J-10 and JF-17 are the most recent Chinese aeronautic designs, and both are powered by Russian-made engines. Will it continue to be like this? A: Your question touches a very sensitive matter of military-technical cooperation which I do not want to explain or comment. Q: From one show to another, it is clear to see the ways Chinese industry has been developing. One of the ways is that of creating and developing joint ventures. It seems to be a good for increasing

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production localization and drawing foreign partners into big projects led by Chinese state corporations. But this mostly applies to western partners. Is this also possible with Russia? A: Yes, quite. Q: But why does this trend is not yet common between Russia and China? A: Perhaps that is so because we are yet to get mature enough for such cooperation. A joint venture is a good way of industrial collaboration, as far as technology transfer and production localization are concerned. If our relationship has not yet reached enough maturity so as to permit materialization

of various projects between Russia and China by means of creating joint ventures, then it only means we have a lot ahead of us on our way. So far, we have been doing rather well without it, by making use of other forms of interaction. For instance, government-togovernment agreements. Creating a joint venture is not the only way of doing things. We can materialize a project of mutual interest using other means. Having no joint ventures have not restricted our nations during all these years we have been working together.

AL-31FN

The history of military-technical and industrial cooperation between the Peoples Republic of China (PRC) and my country has been going on for over sixty years. Back in the fifties, when the massive Soviet aid was available, PRC commenced construction of manufacturing plans and factories in large numbers not dozens, but hundreds and thousands of them! These new industrial enterprises springing up all over China had various specializations. They were receiving and mastering Soviet military, double-use and general purpose technologies. Since that time we have been collaborating, sharing our knowledge and experience. Seemingly, no other nation can boast relations with PRC on the scale and level of mutual trust present in the long and successful history of the Sino-Russian relationship. This is especially true in the high-tech sphere. Who else has given China advanced technologies on that scale?! No-one else in the world can possibly challenge Russia in that. Broadly speaking, there are few nations in the world that manufacture

J-10
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the whole spectrum of armament and military equipment. One can count them with his fingers. If we leave in consideration only those who willingly share their technologies with other nations, the number will be even less. Again, I do not find many examples in the worlds history that could be compared with the Sino-Russian relationship by the scale of military technical cooperation. Q: Which topics currently on the agenda you would like to highlight? A: There are many topics for discussion in various fields, including deliveries, technology transfer and after sales support. They are many simply because there is quite a few programs PRC and Russia have been materializing. Most of these programs have been widely featured by the media, and became well known to the international community. On the eve of Airshow China 2010, took place the fifteenth session of the Chinese-Russian interstate commission for military technical cooperation. During this session, important decisions were made. We are set to continue our steady work with our Chinese partners. We do not only talk, we deliver. Q: PRC is one of few countries manufacturing the Kalashnikov assault rifle under license. Why do you think the Chinese agreed to procure the license from Russia after long years they produced these rifles without one?

A: The fact you have mentioned is very illustrative. It reflects the current state of Sino-Russian relationship. There is no space for clever hand practices between old good friends. Sadly, some countries chose another approach in case with the Kalashnikov assault rifle. Dozens of them (fifty in total) continue making copies of this rifle and other Russian arms without license from the Original Equipment Manufacturers (OEMs). They even try selling their illegal copies in the global marketplace! Some of those countries try to picture themselves as devoted fighters for democracy and the rule of the law. But, at the same time, they continue making illegal copies of our product using purposely built factories for their purposes. By so doing they ruin the image of Russia on the market for arms. They cram the market with forgeries, illegally use the Russian trademark and pay no

royalties to OEM. It is worth to notice that very same countries behave in quite another manner when dealing with other leading nations in arms design and manufacturing. The very fact that PRC has chosen for itself the civilized way of doing things is an illustration of our exceptionally good level of relationship. This relationship between PRC and my country is full of trust and mutual understanding. Let me stress again: relationship between China and Russia is that of strategic partners. We understand very well how we must behave in relation to each other. We make our choice in favor of honest and trustful relationship. Q: After this story with the Kalashnikov assault rifle, can we expect PRC to arrange proper license production rights to do with other Russian designs? A: Yes, we can.

No other nation can boast relations with PRC on the scale and level of mutual trust present in the long and successful history of the SinoRussian relationship. This is especially true in the high-tech sphere
Tu-204Cargo

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RUSSIA EYES INDIAN CIVIL MARKETS

During the main press briefing of the Russian official delegation at Aero India 2011, the key speakers spoke a lot about their plans for cooperation with the local industrial companies on civilian programs and sales to Indian airlines of modern Russian jetliners.
The Indian market for commercial jetliners have been developing fast, reflecting the strong growth of the Indian economy. Roughly, the Indian passenger and cargo aircraft market is roughly estimated as one-third of that for China. Indian civil airlines once operated a number of Ilyushin Il62 long-range jetliners, Tupolev Tu-154M narrow-body tri-jets and Mi-8/17 series helicopters. Besides, the Indian government and the air force operated a number of Soviet civilian aircraft on VVIP and transportation duties, including the Tu-124 twinjet (with the Air Headquarters Communications Squadron based at Palam air force station) and Il-14 twin piston (same operator). The focus of the Russian marketing efforts on was firmly on the MS-21 next-generation narrow body jetliner, the most ambitious and expensive civilian aeronautical project Russian ever attempted. This project is the key one among all other civilian aeronautical efforts being undertaken by Russias United Aircraft Corporation (UAC). Irkut Corporation, a member in UAC, has been acting MS-21 project leader. Presenting this new product to the show participants, Oleg Demchenko, president of Irkut Corporation, broke out a big news: the launch customer for the MS21, Crecom Burj Resources Limited of Malaysia, agreed to make advance payment in March. By doing so, the Malaysian financial group will make the most crucial commitment to the MS-21 project and enable the launch of the program in honest. Crecom Burj Resources Limited signed firm order for fifty MS-21 jetliners at Farnborough 2010 past summer, in presence of the top Malaysian government officials and military leaders, including the minister for defense Dato Seri Dr. Ahmad Zahid Hamidi, and commander of the Malaysian armed forces General Tan Sri Dato Sri Azizan bin Ariffin. Touching on orders for the MS-21, Demchenko said that by the time of the Indian airshow, the number of commitments had

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reached 150. However, at that time Crecom was the only customer with a firm order. Demchenko expects another major order, from Russian Technologies (Rostechnologii) state corporation for another fifty jets to be firmed up in March, after ongoing technical negotiations are completed. Rostechnologii want to place their MS-21 with Aeroflot. For half-a-year Irkut has been talking to Hindustan Aeronautics Limited (HAL), urging it to take part in the MS-21 project. Earlier attempts to draw Airbus and the Chinese airframes proved fruitless. Demchenko assesses HAL involvement in the project as probable. Promoting Irkuts first-ever commercial jetliner into international market proves difficult, Demchenko confessed, and added: we are new-comers, it feels hard, but we will continue our efforts. In November 2010 the MS-21 passed airframe mockup inspection with Russian aviation authority ARMAK, the Air Register of Interstate Aviation Committee. Same month, Perm-based Aviadvigatel design house, a member in the United Engine Corporation, submitted first PD-14 core engine to bench testing. The PD-14 is a Russian alternative to the Pratt&Whitney PW1400G of the PurePower family Geared Turbofan engines. At the same time, in 2010 Irkut selected the PW1400G as the main powerplant for the MS-21. I believe we

S-21 model

do the right thing by offering our aircraft to customers with a choice of two engines, Demchenko explained. Aerocomposite startup firm founded by United Aircraft Corporation (UAC) has submitted first parts of MS-21 carbon wing to bench testing. All this give me the ground to assert the MS-21 has moved from the virtual reality into practical work with hardware, Demchenko commented. The MS-21 is expected to pass Gate 4 of the Boeing seven gates aircraft development and screening system in April May timeframe. Demchenko describes the Gate 4 as the most important phase of the aircraft shaping process. It involves

final selection of all vendors and freezing of the airframe concept. Besides, it enables the next phase, that of issuing documentation for manufacturing, the Irkut president said. He claims the project is on track for maiden flight in 2014 and European Aviation Safety Agency (EASA) certification in 2016. Speaking of the competition, Demchenko ruled out Boeing on the ground that the US maker has not yet presented a re-engined 737. He leaves only two competitors in consideration: Airbus with the A320NEO and COMAC with the C919 under consideration. COMAC is Commercial Aircraft Corporation of China based in Shanghai that was founded to promote the C919 project. Demchenko described the C919 as an aircraft broadly similar in advertized performance to the A320NEO, they are

Oleg Demchenko: The launch customer for the MS-21, Crecom Burj Resources Limited of Malaysia, agreed to make advance payment in March
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Mikhail Pogosyan: We believe that the facts of the Indian air force operating a large fleet of Ilyushin quads and good chances for the Il-476 give us strong grounds to believe in the long term future for this platform
roughly the same level of performance. The advent of the A320NEO only proves the right choice Irkut made earlier for the PurePower PW1400G powerplant, he added. While the new European jetliner also relies on the Pratt&Whitney engines, the C919 is instead taking chances on the LEAP-X turbofan from CFM International company. The latter is a joint venture between Snecma of France and General Electric of the United States of America. Since the MS-21 is a clean-sheet design, I believe we win in flight performance against the A320NEO, Demchenko insisted. Compared to the current production A320, the MS-21 wins by 15% in operational economics. Hence, we know where we go and why we do so, the Irkut president concluded. In his turn, the newly appointed UAC president Mikhail Pogosayn says he do not see reason in revising the current UAC strategy that positions the MS-21 as the commercial narrow body liner of the future, aiming at creation of competitive product for the respective very large segment of the global market for commercial jetliners. Mikhail Pogosyan further said that UAC plans to attain competitiveness by a wide scale use of composite materials, open architecture onboard systems, and a whole set of other innovative solutions. The advertized performance of the MS-21 shall be achieved through getting most of the Russian industry and involving western firms into the project. Giving Russias point of view on the ways to expand cooperation with her client states, the new head of UAC said the following. In his view, the scope of Indo-Russian cooperation must not be limited to military systems alone. Instead, it should also grow in the direction of commercial aviation. Creation of modern commercial airplanes is the key priority for UAC now. At AeroIndia 2011 the Russian corporation exhibited the Sukhoi Superjet 100 (SSJ100), a 98-seat small commercial jet sized in between the narrow body commercial jetliners and the regional jets. This aircraft was the only full-scale flying vehicle brought from Russia for this airshow. The airplane was ARMAK type certification on 3 February 2011. We consider Asia-Pacific as the most important region to promote the SSJ100 into the global market. I believe we soon be able to sign agreements with Indian airlines and also airlines of the region, on this airplane, UAC president said. Besides, Mikhail Pogosyan sees some sales prospects in the region for the Russian-made Antonov An-148 jetliner with nominal seating capacity of 6880 passengers. We connect our plans for future with promotion of the An-148 into the AsiaPacific, another new airplane that is a joint product of UAC and our Ukrainian partners, he said. Promotion of the MS-21, SSJ100 and An-148 into the Indian market will take advantage of the heavy presence the Russian companies enjoy in India through their air lift business. The Indian air force has long been operating the Ilyushin Il-76 quad jet family aircraft that comprises the Il-76MD air lifters, the Il-78MKI air tankers and the EI airborne early warning and control system on the refurbished Il-76 platform. It is

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worth to notice that the Il-76M/T and Il-78 series aircraft powered by the Saturn D30KP engines are also in service with Chinas People Liberation Army (PLA) and her air force, the PLAAF. At the same time, the EI flying radar uses improved platform featuring advanced Russian and Israeli avionics and on-board systems and, importantly, the more advanced Perm PS-90A76 high-bypass turbofans. The PS-90A series are currently the main source of power for Russian passenger jetliners, the Il-96 wide body quad and the Tupolev Tu-204 narrow body twinjet. Russia hopes for victory in the ongoing Indian defense ministrys tender for additional quantity of air tanker aircraft. In the tender, the improved Il-78MKI, in the form of the Il-476 tanker variant, is competing against the Airbus A330-based tanker aircraft. Production of the Il-476 is being prepared by Ilyushin and Aviastar at the Ulianovsk plant. We believe that the facts of the Indian air force operating a large fleet of Ilyushin quads and good chances for the Il-476 give us strong grounds to believe in the long term future for this platform, Pogosyan said. Meantime, Indo-Russian cooperation in the field of airlifters enters a quality new level with commencement of the Multi-

role Transport Aircraft (MTA) project. According to Pogosyan, together with FGFA, the Fifth-Generation Fighter Aircraft, these two programs are the most important for the future of cooperation between Russia and India in the aeronautical field. United Aircraft Corporation of Russia and Hindustan Aeronautics Limited of India have commenced first phase of the MTA project execution. In December 2010 the two partners registered a joint venture to undertake this project.

At AeroIndia2011 the Russian and Indian officials told the media that a joint working group has been formed to look at ways the MTA should be developed. I think, in frame of preliminary studies, the group will consider different ideas, Pogosyan said. Mikhail Pogosyan has not ruled out the possibility of using the An-148 as a platform for development of the MTA. At the same time, the resulting design shall meet specifications of the Russian and Indian customers to this new airplane. I think that the specification to the An-148 and that to MTA are somewhat different, naturally. Yet, the working group may find this idea [usage of An-148 platform] worth considering, he added. Wrapping up the Russian press conference at Aero India 2011, Mikhail Pogosyan drew attention to the recently revised UAC strategy. We will speed up our work in the direction of innovations, as the Russian government instructs us. But, on the whole, I found the current UAC strategy as a good one as it focuses our resources on key high-tech programs that shall result in a competitive product, such as the Sukhoi Superjet 100, MS-21 and fifth-generation fighter. The current strategy creates a high concentration of our resources on perspective directions. Vladimir Karnozov

S-21 cockpit
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AN AIRPORT FOR SALE!

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It was announced at the end of February that private shareholders can expect the municipal stock of shares of Vnukovo Airport in Moscow to be privatised in the second half of the year. And, according to one of the owners of Vnukovo, Vitaly Vantsev, the auction for the 75% share of the airport that belongs to the government of Moscow will take place in the second half of 2011. It has earlier been made public that there have been two valuations of the airport. The first one was done by an auditing company affiliated with the Moscow authorities, which was not named. According to them, Moscows share is approximately $1 billion. But the valuation by another auditing company called Troika Dialog turned out to be as little as $0.5 billion, but Troika Dialog refuted this information later on.
Loss-making Sale
On 3 February 2011 the aviation industry found itself in the grips of a serious scandal. A certain rather competent periodical publicised the data from a presentation by the Troika-Dialog investment company, as of December 2010. The presentation had the results of several valuations, including that of Vnukovo Airport. The representatives of the JSC Vnukovo Airport expressed incredulity at this valuation. That brings up the following question, what data are these conclusions regarding the cost of the airport based on? It needs to be reminded that Vnukovo includes several enterprises, such as the JSC Vnukovo Airport, the JSC International Vnukovo Airport, the JSC VARZ-400, the JSC Avia-BusinessTerminal and others. All the three passenger terminals are in different forms of ownership. The shareholders own different shares in the enterprises of the Vnukovo Airport Complex, said the spokespeople for the company. Later on another company mentioned in the presentation, Sheremetievo, denied any involvement in it, and then the Troika-Dialog company itself followed suit. As a result, it was decided to take as a point of reference the valuation of 27 billion roubles, proposed by an auditing company affiliated with the council of Moscow, which remains unnamed. The largest official private shareholder of Vnukovo, Vnukovo-Invest, accepts the possibility that the starting point at the auction will be 27 billion roubles, the amount quoted with references to unofficial sources. The company is determined to participate in the auction and use their own funds and hedge their bet by having recourse to reserves of certain financial
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structures in order to buy the Moscow stock of shares. According to estimations by Vnukovo-Invest, 27 billion roubles is more or less equal to the amount invested in the airport by the city of Moscow. Apart from Vnukovo-Invest, such largest Russian holdings as Basel and Renova are interested in acquiring the Moscow share of Vnukovo Airport. The former expressed willingness to develop the domestic lines terminal and turn it into a base for low-cost flights. There have been rumours that the JSFC Systema is going to bid for

According to estimations by Vnukovo-Invest, the largest official private shareholder of Vnukovo, 27 billion roubles is equal to the amount invested in the airport by the city of Moscow
the airport as well, but it has been denied by the company itself. Moscow can, therefore, earn 27 billion roubles through the sale of its share in Vnukovo Airport, thus recovering its investments into the airport itself. But, according to unofficial sources, Moscow spent several times as much in developing the in-

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frastructure around Vnukovo, investing 60 billion roubles from the municipal budget. The airport complex is currently integrated in the infrastructure of the city by means of three motorways (Kiev, Minsk and Borovsk motorways). Besides, a 2,5-kilometer-long two-level flyover was erected along the front of the terminal as a part of the modernisation project. First class trains running from Kiev Station without intermediate stops arrive at the underground train station of Vnukovo Airport which has a direct exit to the new Terminal A. But, according to experts, it is impossible to recover these investments now through selling

the airport. They note that in a few years time the city would be able to sell Vnukovo with a higher profit. Besides, according to certain sources, the most valuable assets of the airport actually do not belong to the Moscow authorities but to private investors.

Excuse me, but this is not yours!

According to the spokespeople for Vnukovo Airport, the government of Moscow currently owns 75% minus one share of the JSC Vnukovo Airport, 25% plus one share of the JSC International Vnukovo Airport, 26% of the JSC Avia-Business-Termi-

nal and 25% minus one share of the JSC VARZ-400. It has also been found out that one of the most attractive assets, the new cargo terminal, does not belong to Moscow. Our sources in Vnukovo claim that businessmen Alisher Usmanov and Lev Kvetnoy invested substantially in the cargo terminal. As a result, we got a postal and cargo complex, stunning in its scale, which by technical and economical parameters is one of the largest air-cargo logistical centres in Russia. The special advantage of the project is that the building of the cargo complex is close to the aircraft parking area, which considerably reduces the time

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needed to load and unload cargos, said one of the press-releases. This is all good, but what has Moscow to do with it? The situation with another attractive asset of Vnukovo Airport, the new Terminal A, is not very clear either. But the new terminal seems to be the main sheet anchor for the airport. It will mean new possibilities and will enable us to increase the traffic capacity of Vnukovo up to the level of 20 million passengers a year by 2015, said one of the press-releases of the airport. According to the general manager of Vnukovo, around 40 billion roubles was spent on the construction. The total cost of the project is 65 billion roubles. There is a clear understanding of the way the project was funded regarding the 120 million provided by the Bank of Moscow as a loan to the airport at the beginning of 2010. The money was allocated for five years at a 10.5% annual interest rate. The bank also received a 3% non-recurrent commission of the credited amount. But however hard you try to convert 120 million into roubles at the rate of Moscow Central Stock Exchange, you still will not succeed in getting 40 billion. The press service of Vnukovo did not manage to say where the rest of the investments came from, noting that this is classified information. It was only found out that the money was provided mostly by private investors. The co-owner of Vnukovo, Vitaly Vantsev did not deny it, though. The rest of the funds were officially transferred to Vnukovo through buyback of additional share issue in lots in proportion to the parts of property: Vnukovo-Invest around 25% of the amount, the government of Moscow 75%. But the sources in the airport claim that payments were actually organised in a different way and investments came from private structures. But now it is practically impossible to restore this chain and find out what conditions the private investors set for paying for the share of Moscow. I would like to emphasise that the new terminal is officially registered as property of the JSC Vnukovo Airport, where Moscow has 75% minus one share. The rest of the property of the airport is a rath-

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er modest hotel, a part of a preventorium, a boiler-house and the old terminal for domestic flights, says one of the high officials of Vnukovo, and although the Terminal A is assigned for the JSC Vnukovo Airport, it should actually be considered a management company rather than a sole proprietor company. In light of this, the return of Lev Kvetnoy to the board of directors of Vnukovo is quite understandable. As they say at the market, he did not confine himself to investments in the cargo terminal. According to the official information published at the website of the National Standard Bank, Mr. Kvetnoy controls at least

1.7% of shares of the JSC Vnukovo Airport. According to unofficial sources, he owns a considerable share practically in all enterprises around the Vnukovo air complex. We should not, however, forget about another aspect. The new Terminal A will pass into the ownership of the Bank of Moscow for five years after its construction has been finished. The guarantee by the JSC International Vnukovo Airport, the JSC Vnukovo-Invest, the JSC Air and Oil Company and the JSC Vnukovo Handling, which are all controlled by Vitaly Vantsev, will act as a loan security. By the way, he pledged his own word for this loan. Some experts note that the scheme

According to some experts, the company that buys out the Moscow share of the airport for 27 billion roubles is the real investor, and not the government of Moscow

is rather strange, it is absolutely unclear why he needed to pledge if the bank has the terminal as security. This combination might have been created so that even if Vnukovo Airport turned bankrupt or it was no longer possible to pay back the loan, the Vantsev family could keep control over the new terminal. If they pay the debts of the airport they can easily claim a bigger share of the Terminal A. According to the official version, however, Vitaly Vantsev just really believes in Vnukovo, and this is the reason why he pledged all his assets. According to some experts, the company that buys out the Moscow share of the airport for 27 billion roubles is the real investor, and not the government of Moscow. They do not exclude the possibility, however, that the new mayor of Moscow, Sergey Sobyanin, will reconsider the unofficial agreements regarding Vnukovo which have been reached so far. Irina Dorogan

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HONG KONG AIRLINES 20102011: HIGH RANKING, NEW SCHEDUELD SERVICES, IATA MEMBERSHIP
ample, the direct thrice weekly scheduled non-stop flight Moscow Hong Kong was officially launched in Sheremetjevo airport on 30 June 2010, daily scheduled nonstop service from Hong Kong to Singapore have started this year (an inauguration ceremony was organized at the Hong Kong International Airport on 15 January 2011). The scheduled service Moscow Hong Kong will be organized fore times a week since April. It's remarkable, that the Hong Kong Airlines Business class inflight service level is highly recognized now both with passengers and experts. This became one of the most outstanding achievements for the carrier last year. Joining to the International Air Transport Association (IATA) became the new step in company development. IATA members include the worlds leading passenger and cargo airlines, carrying 93% of the worlds international scheduled traffic. Hong Kong Airlines become an Active Member of association since 22 October 2010. Ms Yvonne Ho, General Manager, Hong Kong, IATA, presented the welcome certificate to Mr Wang Yankun, Commercial Director of Hong Kong Airlines on 20 December at Hong Kong Airlines' Citygate office.

This year one of most large China carriers Hong Kong Airlines have officially received a Four-Star Ranking of Product and Service Quality by Skytrax one of the worlds major rating agencies. The President of Skytrax, Mr. Edward Plaisted presented the Four-Star Airlines certificate to Mr. Yang Jian Hong, President of Hong Kong Airlines at the Asia World Expo Hong Kong on 14th January 2011. The official Skytrax Airlines Star ranking is universally recognized as an independent and creditable measure of service quality of an airline. The star rankings of Skytrax are rated according to the ground and inflight services of an airlines Business class and Economy class, as well as the general aspects including the quality of lounge service, in-flight entertainment, website, and more other criteria. Hong Kong Airlines was established in 2001 and its allied company Hong Kong Express Airways in 2004 (both companies are affiliated with the Hainan (HNA) Group, one of the largest Chinese holdings). Since that time they turned into carriers with full scale of services providing passenger and cargo transportation to more than 20 cities of China and Asia. Air fleet

of the companies increased to 55 aircrafts such as Boeing-737, Airbus-330, Airbus-320, with mean age of only 3 years. And this is not the limit. Air fleet will be sufficiently increased in the next few years due to confirmed order for 58 modern aircrafts. If during its maiden years Hong Kong Airlines operated only with interregional traffic in China and neighbor countries such as Japan, Indonesia, Philippines and Vietnam, but now the carrier is aiming to expand the routemap as wide as possible. For ex-

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Moscow Hong Kong

New Airbus A-330 liner, from April the 1st round trip 4 times a week! (Monday, Wednesday, Friday, Sunday)
For details visit www.hkairlines.com or contact the Hong Kong Airlines ofces
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PER ASPERA AD...

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ALLIANCES
There are already two Russian airlines in global alliances, who is next?
Being a part of the global market, Russian air service cannot avoid being involved in global processes. The common trend of the last decade is that along actual reduction in number of airlines, major players have been merging into alliances. Creating such partnerships is mainly aimed at a united competitive fight against other alliances, cutting expenses and appealing to more passengers through wide route networks. Two Russian companies have already joined such partnerships, Aeroflot Russian Airlines has joined Skyteam and S7 Group Oneworld. The main mystery now is what company will become partners with Star Alliance which has no outpost in Russia yet. It should be reminded that this global partnership is unofficially led by Lufthansa, a rather aggressive company when it comes to market promotion.
Before looking at each alliance and its potential on the Russian market more closely, let us point out a few aspects that should be taken into account when analysing this issue. The first one is the reason why engaging a Russian carrier with a wide domestic route network in an alliance means unquestionable competitive advantages. The truth is that unlike in most Western European countries, the Russian Air Code forbids foreign carriers to provide domestic air services. So, if, for example, some European routes can be replaced by travelling by land, in Russia, due to its vast territory, there are no alternatives to flying for transit passengers from remote regions. Russias vast territory is a crucial development incentive for civil aviation. Most passengers travel with airlines connecting Moscow with eastern regions, St. Petersburg, resort areas and also with the capitals of the CIS and major European counA I R F L E E T

tries. Apart from that, using air service saves a lot of time: it is the air transport that prevails in long-distance carriage of passengers (over a thousand kilometres). Getting a Russian player opens a gate for foreign companies deep into Russia and enables them to go beyond the three of four large Russian hubs. On the other hand, there are positive aspects for Russian companies, too, as they join global partnerships. Alliances make it possible to keep seeming present all around the world, even when there is a decrease in the number of international flights, by means of code sharing, that is a reciprocal agreement to share the airline codes. Carriers which do not actually operate flights on certain routes, can, nevertheless, offer these destinations to their customers by means of participation in an alliance. Experts note that alliances provide opportunities to create an exten-

sive route network and increase the carriers profits. Participating in a global partnership allows carriers to attract more passengers with the comfort and shortest possible stop-overs in hubs. It is also appealing because accumulated points in common frequent-flyer programmes can be redeemed with different members of the alliance. They are also interesting for the special rates, a single brand and the standards of service quality. According to members of various alliances around the world, they manage to increase their revenues by 57% through this cooperation. Although participation in a global partnership does not exclude the danger of bankruptcy, carriers can still hope that the other members will lend a helping hand and, if worst comes to worst, will at least help to save the brand. Thus, for example, only the BMI, which joined

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Russia in the frame of SkyTeam
According to the plan by the Russian National carrier, it will be the Terminal D of Sheremetievo International Airport in Moscow that will act as the base for development of SkyTeam in Russia. The Managing Director of SkyTeam, Mr. Marie-Joseph Mal, says that the Moscow hub has strategic importance for the alliance. It is not for nothing that there has even been a meeting of SkyTeam members there. Both domestic and international Aeroflot flights have already been transferred to the Terminal D, as well as flights operated by SkyTeam carriers. (The unofficial leader of the alliance, Air France, is still at the Terminal E of Sheremetievo). The terminal will be able to serve 12 million passengers a year, which will

the alliance with Lufthansa, managed to survive on the British market under the pressure of British Airways. The carrier did, however, lose its actual independence and the bulk of its assets now belongs to the Lufthansa Group. A similar story happened to SWISS, Brussels Airlines and Austrian Airlines. Prime examples in other alliances include the merger of British Airways and Iberia, and that of Air France and KLM. A few years ago experts unanimously claimed that there might be only three traditional carriers left in the near future (low-cost airlines do not normally merge). Figuratively speaking, Lufthansa (Star Alliance), Air France (SkyTeam) and British Airways (Oneworld). For Russian carriers joining an alliance in time is an opportunity not only to survive when Russia joins the WTO, but also to overcome more complicated global difficulties.

ly led by Air France, fly to 898 airports in 169 countries. Around 13 000 flights depart daily under the brand and the annual passenger flow comes up to 383 million people. 116 million people participate in its frequent-flyer programme, and 447 lounges around the world serve its premium-level customers. The fleet consists of 1,940 mainline aircraft plus 1,120 from related carriers. The alliances current members are Aeroflot, Aeromexico, Air Europe, Air France, Alitalia, China Southern, Czech Airlines, Delta Air Lines, Kenya Airways, KLM, Korean Air, TAROM and Vietnam Airlines. Its future members include China Eastern, Shanghai Airlines, China Airlines, Garuda Indonesia and Aerolineas Argentinas.

Sky Team. Friends and enemies.

There are currently three global alliances, which serve around a billion passengers a year. These are SkyTeam, Star Alliance and Oneworld. The first Russian carrier to join a global partnership was Aeroflot. It became a member of SkyTeam. The participants of this alliance, which was founded in 2000 and is unofficial-

practically double the potential capacity. It is possible that the other parts of the airport complex will also work for the benefit of SkyTeam. And though several members of the alliance are still opposed to the transit from other Moscow airports to Sheremetievo (such as Vietnam Airlines), this will inevitably happen.

Join Oneworld to become number one

In mid-November, 2010, four years after Aeroflot entered SkyTeam, another agreement was signed. It provided for

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a second Russian carrier to join a global alliance. S7 Airlines became a member of Oneworld. Through S7 Airlines, Oneworld added 55 new destinations to its map across Russia and the CIS, as well as nine new countries: Azerbaijan, Armenia, Georgia, Kazakstan, Kyrgyzstan, Moldova, Tajiki-

stan, Turkmenistan and Uzbekistan. This nearly tripled the number of Oneworld flight destinations in Russia, the CIS countries and Eastern Europe, so the total number of the alliance destinations in these regions now comes up to 84 in 26 countries. Together with S7 Airlines, the route network of Oneworld reached 750 des-

tinations in 150 countries, and operates nearly 8500 daily flights, carrying over 300 million passengers per year on a fleet of 2250 aircraft. And the total annual gains reached 85 billion US dollar, according to S7. The following entry of Air Berlin, the fifth largest carrier in Europe, and Kingfisher Airlines, the leading Indian carrier, which will take place within the next eighteen months, will increase the number of destinations offered by Oneworld up to 900, and the fleet up to 2500 aircraft. The company will then operate over 9500 daily flights and carry 340 million passengers per year. The alliance will include fourteen leading airlines and twenty affiliates. The annual profit of the alliance will reach 90 billion US dollars. Being a full member of Oneworld partnership, S7 combined its frequent-flyer programme with that of Oneworld and offered the participants of S7 Priority programme a possibility to travel and use the benefits provided by all alliance carriers around the world. S7 Priority cardholders can accumulate and redeem bonuses on all routes of Oneworld network. Platinum and Gold Card holders receive Oneworld Emerald and Oneworld Ruby statuses respectively. The benefits of these

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cards include access to over 550 airport lounges all around the world. S7 Priority Silver Card holders are now awarded with Oneworld Ruby status. Apart from the mentioned carriers the alliance now includes American Airlines, British Airways, Cathay Pacific, Finnair, Iberia, Japan Airlines, LAN, Malev, Qantas and Royal Jordanian. And 100 million customers participating in the alliances frequent flyer programmes can now accumulate and redeem bonus and status miles and enjoy all the benefits when flying with S7 Airlines.

S7 Group Chief Executive Vladislav Filev said, The Company is entering a new era. By joining Oneworld, we made a big step forward. The alliance will allow us to move on to an absolutely different level, providing our customers with access to an extensive route network all around the world and a wide range of services and benefits. Getting to this position has required a great deal of hard work. Willie Walsh, the CEO of British Airways (a company which supported S7 in realisation of the integration programme), says, Our aim has always been to establish Oneworld

as the world's pre-eminent and most successful global airline alliance, with an unrivalled collection of quality carriers. Today, Oneworld has added another great airline, the best, we firmly believe, in Russia and the Commonwealth of Independent States S7. According to Mr. Filev, S7 Group was guided by two principles when choosing an alliance, First of all, economical reasons. We ordered a consulting research which showed that it would be timely and profitable to join Oneworld. Secondly, theres the emotional aspect. Traditional-

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ly, weve have the best relations with Oneworld members. Mr. Filev also pointed out that the whole S7 Group is going to join the partnership, that is both S7 Airlines and Globus. By the way, Oneworld passengers will be welcomed at Domodedovo, the largest airport in Russia. Its management is quite positive about the new status of the airport as the base of the alliance. . The only problem is the recent transition of Star Alliance and its most companies to Domodedovo. Being neigh-

bours with Oneworld is hardly beneficial for this rival partnership. And as regards acquiring partners on the Russian market, Star Alliance is lagging behind its rivals, which must upset the management of the group. The key people of the alliance may smile at reporters and say that they have executed agreements with le leading airlines. But two tw out of four will prefer f SkyTeam or Oneworld, optimizing connections, establishing cooperation and combining their loyalty programmes...

of years ago several Russian carriers combined under AiRUnion were considered to be a potential partner. But AiRUnion went bankrupt in 2008, and the careful Germans started having second thoughts and stopped the negotiations with the other two potential partners, Transaero and UTair. Although Transaero is based in Domodedovo, where most members of the star group are concentrated, Transaero mostly flies abroad, while, as it has been mentioned before, the alliance needs a partner with an extensive domestic route network. This is the reason why UTair, which offers more destinations across Russia, becomes the main candidate for entry despite its location in Vnukovo. On the other

The Fast British and Careful Germans

Star Alliance, founded on 14 May 1997, is the worlds first and largest existing airline alliance. It includes 27 carriers, which is more than any other partnership. The fleet consists of over 4000 aircraft with an annual passenger number of nearly 604 million. Their flights reach 181 countries and 1160 airports with 970 lounges. And yet, Star Alliance has not found a partner in Russia so far. Although it was one of the first to try to do it. A couple
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hand, the company might have to move to Domodedovo... This seems to be the most intriguing issue for today. Transferring airlines to a different airport is undoubtedly rather difficult, but if it does happen, Star Alliance has, probably, been waiting for a reason. It means the company will make a dash and will easily leave its rivals behind. This was not for nothing that the top-manager of Vnukovo casually mentioned that Lufthansa is taking a closer look at the airport. Why not indeed? Star Alliance will obtain

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a brand-new hub, which is also the nearest one to Moscow. Cooperation processes have already been tested by a Lufthansa affiliate, Germanwings. Besides, it has recently been announced that UTair might acquire Moskva, which opens the gate to Asia. Could this be the reason why the conflict between Vnukovo and Domodedovo has remained unresolved for so long? And was it not an interesting passing move to move the potential partner of Star Alliance to Vnukovo? Analysing these facts gives an impression that a solution to rather a difficult mathematical problem has been found. Ekaterina Sobol

Alliances as an unequal marriage Let us pause and think why the largest Russian carriers are so eager to join one of the alliances. There are quite a few examples in the industry that show airlines which are not in any of the global partnerships and yet they serve numerous passengers, especially in the US. Russian air carriage business has everything required, the country is vast in territory, is populated by millions of people and its geographical location provides possibilities for successful flight operation to Europe, Asia, as well as Americas. But the situation is quite the opposite. According to the top-manager of a Russian carrier which has already joined one of the alliances, some alliances even try to control Russian airlines which essentially provide so many opportunities to these partnerships. And domestic airlines, even the largest ones, generate a rather low passenger flow, compared to their foreign counterparts, therefore they enter alliances as inferiors. Speaking of the necessity to join a global partnership, the CEO of UTair, Andrei Martirosov, pointed out that if the Russian air space was legalised for Russian carriers and the conditions were more benign, the carriers would hardly be dying to enter international alliances. The Russian government that protects domestic airlines and aviation industry and oil industry and banks (the list is endless), has created so many formalities in the business that full-scale development in such conditions is simply impossible. The situation with jet fuel and prices for is very illustrative in this respect. Lufthansa, for example, is not a single carrier but a whole conglomerate with huge passenger flow and cheaper credit resources. Being an oil country, everything Russia can offer to its airlines as support is discounts on jet fuel. Otherwise, Russian companies would either have to resort to dumping and incur losses or passengers would go for the more appealing prices offered by foreign carriers, says Vladimir Spiridonov, the CEO of the Aerofuels Group. One of the most pressing problems is the institute of appointed carriers, where Aeroflot get the majority of appointments. It makes other companies look for partners in the west in order to offer their customers alternative trips (even with stopovers). European and American air space is already open and all carriers can fly wherever they want to. Russian air companies cannot renew their fleets on the conditions similar to the ones that foreign companies have. Extortionate VAT rate, expensive credit resources, customs duties (though partly cut) are to blame for it. If they managed to overcome these difficulties, Russian companies would enter global alliances with a sense of pride, rather than steeplechase through bureaucratic barriers in search of a window to Europe. 46

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