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Written by Louisa Ignatieva; Originally appeared at Realnoevremya, translated by AlexD exclusively for SouthFront

“Russian Helicopters” under attack: the military reduce purchases, foreign markets are cramping competitors and the air ambulance aviation programme ends in 2020

“Russian Helicopters” (RH) in the desire to expand the domestic market of helicopter transportation are lobbying for the introduction of a brand new state programme of trade-in, which involves the exchange of the Mi-8T over the age of 25 for a new generation machine. All carriers would be shaken up: at least 60 percent of the fleet of rotorcraft machines in the country are “oldies”, for which helicopter holding plants could receive new orders for their replacement. The correspondent of “Real Time” looked into how the idea of recycling “Soviet workers” at the “Economics of the Helicopter Industry: Components of Success” was presented.

Andreï Boginsky and Boris Aleshin in Kazan

Unprecedented excitement reigned yesterday at the “Economics of the Helicopter Industry: Components of Success” helicopter forum which was held in Kazan the last two days. The forum brought together almost everyone who is associated with this industry in Russia – manufacturers, operators, representatives of leasing companies and even the heads of flight schools. The plenary meeting was topped with a large gathering of helicopter pilots, who are the “first face” of the industry’s profits. After watching the first flight of the Mi-38, which took place in the early snowy morning at the KVZ airport, the head of the state holding “Russian Helicopters” (RH) Andreï Boginsky and the Advisor to the President of the “United Aircraft Corporation” Boris Aleshin arrived in the conference room “Riviera”. Apart from them the head of Rosaviatsia Aleksandr Neradko appeared in the hall. The head of the subsidiary “Rostech”, the RPEO (Research and Production Enterprise of Obninsk) “Technology, in the name of A.G. Romash” greeted them in a good-natured personal manner. Andreï Silkin of Romash was the moderator of the helicopter discussion. And instead of the expected Prime Minister of Tatarstan Alexei Pesoshin, who was greeted in the cold by a M-38, the head of the Ministry of Industry and Trade of the Republic of Tatarstan Albert Karimov and the Assistant to the President of the Republic of Tatarstan on Aviation Ravil Zaripov arrived, who during the three-hour meeting did not utter a word.

All the while the hall was filled to capacity; the head of “AeroComposite” Anatoly Gydanski, RH Deputy Director General Vadim Ligai with a friend, the head of the project company “Kazan GiproNIIAviaprom” Boris Tikhomirov and many other VIP guests sat discreetly.

“Pension Reform” for Helicopters: scrapped after 25 years

The increased interest at the plenary was provided not by the presence of the first in line of the industry of the helicopter industry, but on the eve of a fierce debate between producers and operators on the possibility of introducing a ban on the operation of Mi-8T helicopters older than 25 years in Russia. This idea put the whole helicopter market “on edge”. The debates happened the day before, during the conference at the KVZ. The largest operators, including the “UTair” airline, are categorically against it, citing as an argument the high cost and imperfection of new helicopters. They are outraged at the age of the write-off of the equipment, according to them, the service life of these machines reaches 40 years.

“Within the holding, Russian helicopter manufacturers do not compete with each other, so over the past 5 years the cost of a transport helicopter has increased from 300 to 500 million rubles [Trans. Note: 4,533,400 to 7,585,651 USD]. This is an unaffordable price for operators whose customers require the cost containment of the tariff for an hour of flight. The introduction of a ban on helicopters older than 25 years will lead to the bankruptcy of carriers”, said the Deputy General Director of PANH Oleg Khudolenko. The neutral position is taken by the head of UTair airline Andrei Martirosov. In his opinion, restrictions should not be imposed by “non-commissioned officer methods, to prohibit and not to let go”, and the equipment should be decommissioned “organically”.

60 Percent of the Helicopter fleet is Older than 35 Years

The head of RH Andreï Boginsky, it seems, does not believe in natural death “age” of old Soviet choppers that went to the airlines after the collapse of the Soviet Union almost for free. “Trade-in, is, by and large, a discount for the operator, and the state understands that carriers should be supported”, he told reporters around him. According to him, now the country operates 2,788 helicopters, of which, 64 percent are listed in the civil registry. “These are Soviet and Russian-made helicopters, and yes, their lifespan is 40 years,” he agreed. “But 34 percent of helicopters are older than 25 years and another 60 percent are older than 35 years.” Thus, almost 90 percent of the Russian helicopter market can be banned.

Technological backwardness is RH’s head main argument in favour of updating the market. “Compare with the Southeast Asia and the Asia-Pacific region fleet, there the average age of the helicopter is 18-20 years (in Japan, for example). The average age of our fleet is 28 years. Among the countries that have their own aviation industry, we have the oldest fleet of civilian helicopters.” According to him, the mechanism of trade-in is now being developed. “Ravil Rashidovich (Ravil Khakimov, Director of the Department of Aviation Industry of the Ministry of Industry and Trade) said that the Ministry of Industry and Trade has found such an opportunity within its allocations, which the state allocates to the industry.” “And who will get the old technology? You?”, Boginsky was asked to clarify. “No, not us,” he said, but it is clear that the old equipment will be bought and evaluated. Then it will be necessary to decide what to do next: either recycle, or modernize and send to the markets of Third World countries.” The main link in the trade-in system, will be, naturally, leasing companies. “If the operator will offer an old car, we will connect it with the STLC (State Transport Leasing Company) or with another leasing company as an element of financial support for operational or financial leasing”, said the head of RH.

“The Mi-8T helicopters are the greatest in the helicopter industry, but their energy capacity does not meet modern criteria. In Europe, the oldest helicopter recently turned 50 years old and it flies, no one forbids it”, Andreï Martirosov retorted to the correspondence. “I know nothing about trade-in in the helicopter industry in the world.”

Why do they “cut” the 25-year-olds

What pushed RH to such radical measures? As resulted from Andreï Boginsky’s report, given at the plenary session, the producers face three challenges.

First, it is a sharp reduction in the state defense orders for the supply of helicopters. “The state armament programme, which started in 2011, has recently ended. Another began, until 2027. And if we look at the differences, then, of course, the volume of orders of the Ministry of Defense for the purchase of helicopters is significantly reduced.” What can the holding say? “These are two possibilities, increasing of both civilian and military export, and the development of the domestic market.”

According to Boginsky, the production of civilian helicopters for the domestic market is growing many-fold: if earlier in the year four or six helicopters were produced, then by the end of 2017, more than 60 units of equipment were commissioned. “With the support of the state, more than 60 machines were delivered. This year, more than 70 machines. The ace is that it is an air ambulance programme”, he said. Immediately, the head of RH urged to extend the air ambulance programme, which expires in February 2020. Now it involves 34 regions out of 80. “The programme proved its effectiveness: more than 6 thousand flights were made, 8,363 patients were saved, including 1,678 children”, Boginsky pointed out. In total 60 Ansat helicopters were delivered through the STLC in the last 2 years. “We ask the government to extend the air ambulance programme,” he said. The government is currently subsidizing the reduction of interest rates for the purchase of Ansats.

“Attack” on the Federal Air Transport Agency

Second, quite predictably, the challenge is that Russian manufacturers of civilian technologies are not welcome in foreign markets. “So far, the holding has developed in the direction of the supply of military equipment. The main customers are the Russian Defense Ministry and military agencies of China, India, Algeria, Egypt and other countries, mainly in Southeast Asia. And everything would be fine, we would rest on our laurels, but, fortunately, everything is changing, and we need to move in the civilian direction”, Boginsky bravely admitted. According to him, “Russian Helicopters” are experiencing enormous pressure in this direction in foreign markets. “They don’t want to see us there”, he said bluntly.

Turning to the problem of certification of new aircraft, Boginsky struck with sharp criticism the Federal Air Transport Agency. “Every flight, for example, the Mi-38 in providing testing certification costs us an amount of no less than 4 million rubles [Trans. Note: $59,650 USD]. And that includes preparation, fuel and transportation. In total, this programme is designed for 1,000 flights. Let’s work together to develop a programme with which it would be possible to prove the validity of our structure and the Design Bureau, because foreign design bureaus have such a capability!” Later, after Martirosov’s speech, Aleksandr Neradko silently got up from the chair in the improvised presidium and left the hall without explanation.

“Aleksandr Vasilyevich left, Boris Aleshin chuckled. I thought, he a little later… To boot, [Neradko left] and there is no one from the Ministry of Transport. On second thought, the issues that are raised [here] are addressed primarily to them.” In his opinion, the main solution to the aging helicopter fleet could be the restoration of the Soviet grid (within the borders of Russia) for commercial helicopter flights. “I think this amount will not be very significant – in the region of several billion a year,” Aleshin threw another original idea.

As Minnikhanov brought down Aleshin from the mountain in a Hummer

“I listen to the speakers and it seems that one is responsible for the buttons, the second, for the sleeves, the third, for the tucks, and who will collect…who? Therefore, of course, there should be an appeal to the Ministry of Transport,” Aleshin said. In conclusion, he remembered how in Tatarstan they take care of the aviation business. “In the past years, the current president [of Tatarstan] called me straight: he took me in a sports KAMAZ, showed me the first ski resort, and when I was going down the mountain in the Hummer, I thought it was my last trip in my life. For this reason, every time sitting down with him in the helicopter, I felt very tense, but always knew that it would end well,” Aleshin summed up his speech, wishing everyone to “keep one’s head up high”.

Yesterday, RH in the framework of the current contract with STLC, transferred two Ansat helicopters with medical modules to the customer. The machines will be operated by the Russian Helicopter Systems (RHS). The solemn ceremony of the transfer of one of the helicopters was held at the KVZ with the participation of Andreï Boginsky, General Director of the RVS Alexei Zaitsev and the head of the Air Transport Directorate of the STLC Andreï Berdnikov. The transferred Ansats became the sixth and seventh helicopters of this type, delivered by the STLC in 2018 in accordance with the signed contract. By the end of the year, the leasing company will receive five more Ansats, which will be involved in the implementation of the priority project for the development of medical evacuation in Russia.

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