Russian helicopter industry: a global player, Focus Communication
Release Date: 2011-05-30 00:00:00Prepared after a series of exclusive interviews with the Russian and international helicopter industry leaders in May-September 2011, the report features the entire value chain: Russian and international helicopter manufacturers, avionics and engine manufacturers, operators, service companies, suppliers of spare parts and engineering solutions.
As first-hand insights from the foreign players, the report spots comments by Laurence Rigolini of Eurocopter Vostok, Alberto Ponti of AgustaWestland, Sergey Sikorsky of Sikorsky Aircraft Corporation and Martin Gagne of CAE.
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Russian helicopter industry: a global player
Russian helicopter industry: a global player
“The Russian helicopter industry has recently finished its consolidation as a holding”, ran the official announcement by Dmitry Petrov, executive director of Russian Helicopters, at Helirussia 2011. At present, Russian Helicopters controls all Russian helicopter manufacturers, as well as the manufacturers of main aggregates and systems—representing the entire model range of the industry.
Russian Helicopters holding, subsidiary of UIC Oboronprom, a Russian Technologies company, was incorporated in 2007. However, the companies forming it have more than 60 years of history, and have produced some of the most globally successful rotorcraft. Their accomplishments include the Mi-8/17, the Mi-26—global leader in cargo capacity up to 20 tons—and the Mi-35M, the only dual military and transport helicopter in the world. Petrov explains that each helicopter enterprise within Russian Helicopters now acts as a production platform, while the holding oversees sales and market promotion, logistics support, and after-sale servicing.
Andrey Reus, general director of Oboronprom, explains that the production of Russian helicopters increases 20-30% annually—and such speed will allow Russia to gain at least 15% of the world helicopter market by 2015, according to Igor Korotchenko, head of the Center for World Arms Trade Analysis. Korotchenko also projects that the share of Russian Helicopters in the total balance of world deliveries will grow from 11% in 2011 to 17% in 2020.
“We have chosen 9 programs, and within each, we have a dedicated manager responsible for the entire value chain. Like this, we ensure that they control the entire process—from R&D to production and sales—and are focused on results”, Petrov commented in a recent interview with Kommersant.
According to Petrov, industry-wide consolidation has allowed Russian Helicopters to implement a single pricing policy by eliminating competition between manufacturers, to increase production efficiency by creating synergies, and to expand capabilities in development and manufacturing of new products. As a logical continuation of its success in consolidation, Russian Helicopters planned to run an IPO in 2011. However, the IPO never took place.
In his recent interview with Kommersant, Petrov explained, “Russian Helicopters is the first company in the Russian defense industry that decided to go public. Therefore, it was hard for investors to evaluate our singularity: there was no one to compare us with. The main problem was not the lack of demand for our shares, but the fact that they tried to quote us with a large discount to the market price. We decided not to do that: IPO was never an end in itself for us”.
Russian Helicopters dominates the markets of Russia and CIS (in 2010, it had 85% of helicopter sales in this region) and, according to its sources, leads on the booming markets of India and China. It is rapidly increasing its presence in Latin America, Middle East and Africa.
According to the organization, more than 8,500 Russian rotorcraft are operated in more than 100 countries, accounting for 13% of the world helicopter fleet. In 2010, Russian Helicopters itself accounted for about 85% of the Russian helicopter market and 17% of world sales—Russia excluded.
General overview of the Russian helicopter industry, its challenges and trends
According to experts, development of the Russian helicopter market in the mid-term will go along two main trends. Firstly, the operators will face a larger volume of aviation works; hence, they will need to increase the number of new medium helicopters. Secondly, as helicopters are more and more seen as a common means of transport, there is rising demand for light helicopters with 1.5-6 tons of takeoff weight from private and corporate clients. This trend has resulted in a need to approve new standards, rules and regulations that are reflected in international air codes.
“We have managed to correct the Air Code thanks to introducing notification procedures for the use of airspace, which allows increasing the range of helicopter operation. Approval of FARs also allows increasing flight hours up to 30%—a key indicator in aviation—and operating helicopters during nighttime. This is especially important if we aim to increase the use of helicopters in winter", says Mikhail Kazachkov, chairman of Helicopter Industry Association (AVI).
In the meantime, there are positive trends in helicopter production in Russia: according to Petrov, Russian Helicopters has identified 9 production programs, where the top priority is Mi-171 - a modernized version of Mi-8 that currently accounts for about 60% of the sales volume of the organization. “Mi-171 will allow us to prolong our dominant position in the segment of mid-to-heavy helicopters for another 10-15 years. We plan to launch it on the market in 2014 with glass cabin and new avionics”, says Petrov. Interest to Mi-171 on behalf of the operators is there: in August 2011, UTair, one of the largest helicopter operators in the world, initialled the agreement for delivery of 40 Mi-171 with Russian Helicopters. Currently, UTair operates 50 Mi-171.
The Air Code is there; new Russian-made helicopters for the light niche are not. Because of that, the Russian helicopter operators are adding foreign helicopters to their current fleet.
The stress that Russian Helicopters make on Mi-171 - capable to transport up to 37 people, with flight range of 610 km, speed of 250 km/h and 4 t cargo capacity - prove that the Holding is fully aware of the need to diversify its product range due to growing demand for medium helicopters. There are things to show in the light segment as well: during MAKS-2011, Russian Helicopters presented the newest light Mi-34S1, Ka-226Т with EMS module, Ansat and the multipurpose Ka-32А11VS. The Holding is also holding on to the traditionally strong segment of heavy helicopters: MAKS-2011 saw the modernized superheavy Mi-26Т2, combat helicopters Ka-52 Alligator and Mi-28N Night Hunter. These models embody innovative solutions in avionics, lower noise level and lower impact on the environment.
According to Dmitry Petrov, the bulk of growth is expected in the military segment, where Russia is one of the strongest world leaders: the forecasted deliveries of Russian multipurpose military transport helicopters, according to the available order book and direct contracts, will be at least 252 units in 2010-2013.
“We have great market prospects, especially in fighter helicopters. The situation is unique—no other company in the world produces three combat machines developed by two different design bureaus: the Mi-35М, Mi-28N "Night Hunter" and the coaxial Ka-52 "Alligator". Such offer allows us to vary our supplies for different clients and thus regain world leadership in supplies of combat helicopters”, commented Petrov in his interview with Kommersant.
The Russian lead in combat helicopters on its new and traditional markets is a field of opportunities for the spare part suppliers, according to Igor Emelyanov, general director of Aviazapchast—the major independent Russian supplier of spare parts. Namely, the enterprise is closely eyeing the new contracts garnered by Russian Helicopters, such as a recent agreement with the U.S. (on behalf of Rosoboronexport, the sole Russian authority authorized for military exports) to supply Mi-17 combat helicopters for missions in Afghanistan.
Another manifest of serious intentions in this segment is the program of perspective high speed helicopter that was launched in 2011. According to Denis Manturov, deputy minister of industry and trade of Russia—also known as the ‘Father of the new Russian helicopter industry’—the prospective high speed helicopter has serious prospects on the world market.
"This is the second breath for Russian Helicopters", notes the minister. "Some time ago, I promised that the state would give active support to Russian Helicopters for development of the high speed helicopter. We have fulfilled this promise and opened this project in 2011". According to Manturov, US$14Mln is being allocated in 2011 for development of the prospective rotorcraft. Development of the helicopter should receive US$24.5Mln in 2012 and US$87.6Mln in 2013.
The Russian helicopter industry is working to expand the range of markets that buy Russian civil helicopters - not just as a seller but as a partner. According to Russian Helicopters, the European Union is one of the top priorities for the presence of Russian rotorcraft, including possible prospective deliveries and joint Russian-European projects in helicopter design and construction.
“Russian Helicopters and its intellectual and production assets are building up their presence in the international industrial cooperation system,” Petrov said at the 49th International Paris Air Show at Le Bourget. “In this context, cooperation with European partners has always been our priority. Today, we are running several international projects in rotorcraft construction with French companies, including the Ka-226T with a Turbomeca engine—a great example of effective industrial cooperation between Russia and France”. At the same time, Ukraine’s Motor Sich, the major manufacturer of engines for Russian helicopters, remains Russia’s most important partner in engine building.
Finally, organization of maintenance and after-sale servicing is an issue that directly affects the global competitiveness of the Russian industry, and national authorities officially recognize this fact. Players across various segments of the Russian helicopter landscape—manufacturing, repair, avionics and engine building—are working to better their capabilities in this sphere. As the managing company in charge of Russian helicopter manufacturers and repair companies, Russian Helicopters plans to create service centers across their main world markets by2012. Aviazapchast, the largest independent Russian company specialized in supplies of spare parts, is ready to cooperate with the holding in this program across its world markets.
Inside Russia, the issue of developing servicing infrastructure is actively being addressed: the Ulyanovsk Special Economic Zone, based in a future aviation cluster, is creating a “door to Russia” for foreign manufacturers interested in cooperating with the growing domestic market, and a “window to Europe” for Russian manufacturers that can utilize the site to acquire world competences. The unique tax regime and simplified customs procedures in the zone promise to create comfortable conditions for maintenance, repair and overhaul (MRO) companies, as well as manufacturers, in terms of the import of foreign spare parts and aircraft to Russia and export of Russian-made aviation products.
Opportunities for the Western manufacturers
As newly developed and tested Russian light and medium helicopters are not yet in serial production, Russian helicopter operators, who feel the need to buy new rotorcraft, turn to the Western manufacturers such as Eurocopter, AgustaWestland, Bell and Robinson. Moreover, foreign manufacturers realize that the Russian market represents great demand and develop different commercial approaches to ensure their deeper integration into the market. For instance, both Eurocopter and AgustaWestland, the main foreign competitors offering light and medium helicopters in Russia, agree that the country is a long-term strategic partner, very experienced in helicopter construction. These organizations are there to complement the offer that Russia can currently and prospectively make.
“Eurocopter’s share among the Western gas turbine helicopter manufacturers in Russia and CIS is currently up to 70%, which shows that the strategy of Eurocopter has been right. Our strategy on the Russian market is focused on cooperation with the local players as we realize that we cannot develop by just selling helicopters. We have to enter into strategic partnerships, which is instrumental in our goal of keeping up good figures and developing our presence", says Laurence Rigolini, CEO of Eurocopter Vostok.
AgustaWestland (a Finmeccanica company) is the main competitor of Eurocopter in Russia. In 2007, its landing in Russia was supported by the heads of the industry: Denis Manturov, at that time general director of Oboronprom, announced that the domestic industry had identified the AW139, AgustaWestland’s bestselling helicopter, as the ideal helicopter worldwide that did not overlap with the present Russian-made multipurpose medium helicopters with 6-6.5 tons of takeoff weight. In 2008, Russian Helicopters entered into an agreement with AgustaWestland to create a joint venture for assembly of a twin engine AW139 in the Moscow region’s Tomilino. Manturov noted that a favorable historical, economic and political background will facilitate success of its production in Russia.
The Russian experts agree that although the launch of local assembly of AW139 does not yield all the benefits of national production, it is the quickest and most efficient way to get additional experience, and develop the production culture that has always been adapted to production of heavy helicopters”.
According to Dmitry Petrov, today Russian Helicopters takes on feasible challenges. "In the last years, we have reached stable and positive growth dynamics of helicopter production which witnesses more demand for our products all over the world and their better competitiveness”, notes Petrov. “With this objective, Russian Helicopters will diversify its model range towards more light helicopters, modernize the most popular medium and heavy helicopters and develop the newest civil and military helicopters—focusing on orders from traditional state operators and on global demand, where we are looking for new partners across all continents".
Modernization of the Russian helicopter industry: more, newer, better
Modernization of the Russian helicopter industry: more, newer, better
The modernization of the Russian industry is all the more important for helicopter manufacturers now that they are facing an ambitious target: to produce more than 300 helicopters per year by 2012. During a meeting held by Viktor Khristenko, minister of industry and trade of Russia, with the heads of Russian Helicopters companies in February 2011, Khristenko assigned tasks to accomplish expedient reformation of the industry to increase production, improve financials and expand the presence of Russian helicopters on the global market, according to Russian Helicopters. “Today, Russian Helicopters has managed to increase sales of helicopters, continue to develop new rotorcraft, and modernize existing rotorcraft”, noted Dmitry Petrov.
Positive dynamics in the industry over the last 4 years has enabled high efficiency in terms of production. Russian Helicopters continues to overhaul their production facilities, including introduction of new equipment.
At Mil Moscow Helicopter Plant in Tomilino, Russian Helicopters is creating a new scientific and technical facility. Joining two main helicopter design bureaus—Mil and Kamov—in Tomilino will unify different engineering software in a single IT environment. One of the companies offering such solutions is Bee Pitron Group, one of the first in Russia and CIS to start implementation of Western CAD/CAM/CAE systems.
According to Leonid Zilberburg, president of the Bee Pitron Group, “In the last 15-20 years, Russia has lost highly qualified professionals, something that has been very important for us since Day 1. We work with specialized universities that teach CAD/CAM/CAE and choose people for us and our customers. We have confirmed experience in creating engineering centers for different companies such as NPO Kriogenmash. Experience is our strongest competitive advantage against other companies that offer software and solutions”.
Apart from digitalized engineering, modernization, due to growing competition, requires optimization of business processes and cost-cutting. An efficient solution here is IFS Applications - a comprehensive ERP system by IFS, one of the world largest corporate software developers. IFS Applications is an original solution based on separate independent modules that a client can pick and choose. Leonid Viktorov, general director of IFS Russia & CIS, explains how it works: "IFS Applications includes a full ERP system, namely enterprise asset management (EAM), supply chain management, client relations management, MRO and PLM. Our clients can build any combination of the modules that they need - like in a LEGO constructor where IFS has actually borrowed this idea". Apparently, the Russian helicopter industry is interested: Klimov, a leading Russian gas turbine engines developer, has made a decision to implement an interactive aircraft MRO system based on IFS Applications in May 2011.
It doesn’t take a fortuneteller to see the future
1,500 helicopters projected in Russian Helicopters’ order portfolio, as announced by Andrey Reus before Helirussia 2011, necessitate that Russian aviation companies increase output and quality. To solve these tasks efficiently, the essential elements are partners familiar with the needs of the industry and implementing new technologies, and adept at supplying instruments, equipment and service.
One successful overhaul project in the Russian helicopter industry has been accomplished at a Russian Helicopters facility by Haltec—supplier of instruments, equipment and a full range of services aimed at higher productivity, improvement of quality and lower machining costs. Today, Haltec is launching Yamazaki Mazak machine tools at Progress Arsenyev Aviation Company (part of Russian Helicopters). “Our work with the Russian helicopter industry started in 2000 and has been continuous. We have successfully increased the value and efficiency of production, overhauled machining workshops, trained operators for Mazak machine tools at our technological center, and developed and optimized component production, improving manufacturing content four-fold. Thanks to our efforts, the third automatic production line worldwide will be created at a Russian Helicopters facility. This is the privilege of companies that can see their future”, comments Alexander Khramov, general director of Haltec.
Haltec has developed a flexible training system for machine tool operators. “As a result, the gap between acquisition and launch of equipment is brought to a minimum—this is one of our principles”, says Khramov. One of Haltec’s key projects in the helicopter industry is the overhaul of machinery at a Russian Helicopters company that currently operates 22 Yamazaki Mazak machine tools and has ordered another dozen. By the end of 2011, another 32-33 machine tools should be installed; in total, the project envisages 43 machine tools. As an integrator of ready-made solutions for the industry, Haltec helps companies go through purchasing and launching new equipment independently. Apart from equipment, Haltec selects instruments specifically for the client’s components, trains the personnel and provides software (modern CAD/CAM systems by Siemens PLM Software and Tebis AG), and maintains and services the equipment during its lifecycle.
“We were conscious in choosing Yamazaki Mazak as our partner in machining equipment: we share their philosophy”, explains Khramov. “Sir Teruyuki Yamazaki, late head of Yamazaki Mazak, said that they see crisis as nighttime that is followed by daytime. At night, human beings recover their resources and prepare for the next day, for their next achievements. Similarly, Mazak sees crisis as a period when a company’s resources are being prepared for the future ascension that inevitably follows the slump. This approach inspires us. We try to get this concept across to companies that we work with. And our solutions are chosen by companies that care about their future”, concludes Khramov.
Helicopter engines: competing under otherwise equal or better conditions
Modernization and overhaul of facilities for competitive production is one of the key tasks for United Engine Corporation (ODK), an Oboronprom daughter company that unites over 85% of Russian engine building assets for military and civil aviation, space programs, power units, and gas and naval turbines. In June 2011, during the XV Saint-Petersburg International Economic Forum, Andrey Reus, general director of Oboronprom and ODK, and Dmitry Petrov, general director of Russian Helicopters, signed a framework agreement for supplies of Klimov engines for Mil and Kamov helicopters for a period of 10 years (2011-2020).
“Currently, we buy part of our products from Motor Sich, Pratt & Whitney, Rolls Royce, and Turbomeca. We are not tied to a certain developer; moreover, we have no obligation to purchase engines with ODK. We will buy their engines only under otherwise equal or better conditions. A good example is our choice of engine for the new Ka-62. We have analyzed the RD-600V engine produced by ODK and the Ardiden engine by Turbomeca. The French engine won in terms of its parameters, and we signed a long-term contract with Turbomeca—however, this does not exclude the possibility of installing the Russian engine on this helicopter as well. We are open to Russian manufacturers. Our agreement with ODK allows us to better forecast our capabilities in helicopter production, plan our production, and meet the growing demand for Russian helicopters”, Petrov said in his interview with Kommersant.
Dmitry Kolodyazhny, managing director of United Engine Corporation: our competitors are the leading international manufacturers of gas turbines
What is ODK’s position in development and organization of serial production of modern engines? What actions in modernization and overhaul of the production facilities will be required to organize competitive production?
ODK’s main task is to become one of the five world leaders in production of gas turbines by 2020. 40% of our sales should be targeted at the world markets. To implement these plans, ODK is working on new, world-level projects such as creation of a family of engines with 9-18 tons of thrust. This project is critical for both ODK and the Russian machine-building industry as a whole, in terms of keeping and enhancing competences for development of new equipment.
In July 2008, we started working at design of elements and development of critical technologies for the new family of turbofan engines in Perm. At the end of 2010, testing of a unified gas generator started in Perm—just 1.5 years after we started working on this critical element of the engine, a clear success of the industry. We have started preparing our Perm facility for serial production of the new engine: we are retrofitting the workshops, and constructing a new workshop for thermo-protective coating. Besides, the engine is being created in cooperation with all ODK companies. What’s important is that we are supported by state financing. Unless we work at these projects, we won’t be able to compete with Pratt&Whitney, General Electric, Safran, Rolls-Royce. ODK will face these competitors on the world markets.
We also face the task of creating Russian-based production of helicopter engines. ODK implements this project in cooperation with Klimov, Ufa Engine Industrial Association, and Moscow Machinebuilding Enterprise Chernyshev (MMP Chernyshev). Production of engines is expected to fully commence in the end of 2012. Due to the problems with installing a P&W engine on the Mi-38, we decided to install the TV7-117V engine developed by Klimov. The engine is being prepared for test flights at Mil Moscow Helicopter Plant. Engines for both the Mi-8 and Mi-38 have good prospects.
What is ODK’s position in creating the new production base for helicopter engines, and what will be the role of Klimov in it?
In 2009, UIC Oboronprom has approved construction of a new design and production complex with experimental production “Saint-Petersburg Motors” at Klimov’s facility in Shuvalovo. The new complex will concentrate R&D of perspective helicopter engines in Saint-Petersburg under ODK’s flag. To finance this investment project, Vnesheconombank opened a $171.2Mln credit line. The main objective of the project is to increase the share of competitive Russian aviation products on the domestic and global market and modernize the existing Klimov design and production facilities for gas turbine engines. Production of the entire range of serial helicopter engines and development of new engines—such as the engine for a prospective high-speed helicopter—are envisaged at the new facility.
Gas turbines are quite innovative industries. The “Saint-Petersburg Motors” project is aimed at the markets of highly intellectual R&D for engines and components and the markets of helicopter engines that till 2015 will be based on VK-2500 family engine and its modifications. Later on, we plan to expand the model range with prospective helicopter engines under development—the TV7-117V, VK-800, and PDV.
What is ODK’s strategy in developing international cooperation?
An example of good cooperation is our work with SNECMA for development of the SaM-146 engine certified at EASA standards. SaM-146 is in serial production already. We have also agreed with SNECMA to create a center for repair and servicing of the CFM56—the most popular foreign aviation engine in Russia—and the SaM-146. There are also prospects for cooperation with China.
One of the elements of ODK strategy is to form technological competence centers to optimize production and reduce the production cost of end products. In early April 2011, we launched an ODK competence center for production planning at the Saturn Instrumental Plant. ODK has approved the organization of a technological competence center for aluminum and titanium casting at Ufa Engine Industrial Association. In fact, a technological competence center is a serial manufacturing facility whose output exceeds the demand in Russia; hence we are interested in foreign markets. We need an alliance with a strong player. Currently, we are in talks with Avio (Italy) for the creation of aluminum casting in Ufa.
According to Alexander Vatagin, executive director of Klimov, modernization of Klimov’s existing design and production complex for helicopter engines is aimed at “reaching a European level of productivity. We are implementing steps towards technical overhaul, purchasing cutting edge equipment, and changing the methods of production management. This is a particular challenge because it changes production management patterns that have formed in the Russian industry over dozens of years under the Soviet system. Our objective is to integrate the European management system. Currently, we have the largest productivity (per capita) in the Russian industry; however, it is still significantly lower than in Europe or USA. We have little time, and in the new engineering center that is being constructed is expected to start working at a very high level in 2013. We’re studying a similar project implemented in France and we try to take into account all the newest experience and developments. If an old company wants to be successful, it should adapt and implement the best practice. We borrow the best technologies that appear worldwide and have a very good testing base that will allow us to reduce the time of testing through improved organization, technology and equipment. Our task is to implement it and increase our production of new engines”.
Cooperation: seeing the future optimistically
Cooperation: seeing the future optimistically
The Russian helicopter industry is known for its propensity towards cooperation—both internationally and domestically. In this sector, cooperation is especially important in avionics, engines and simulators. On the world stage, Russia has been a longstanding collaborator in engine building with Motor Sich, one of the world leaders in development, production, repair and servicing of gas turbine engines for aircraft and rotorcraft.
Motor Sich is deeply integrated with the Russian aviation industry. “I am convinced that there is no future alternative for Russian-Ukrainian integration from the standpoint of its benefits for the aviation industry. If we look at the West, we’ll see that Airbus unites a few EU countries, and Boeing integrates dozens of U.S. companies. They have come to the practice of the Soviet Union—to integrate deeply specialized companies. Such cooperation is efficient and is an imperative of our era. We need to preserve unique traditions and integrate our resources. To unite our efforts, we need real projects. Motor Sich sees its future optimistically: we have a stable contract portfolio and joint projects with our Russian partners”, states Vyacheslav Boguslaev, general director of the organization. Motor Sich continues to reconstruct and retrofit its main facilities through new equipment, improvement of technology, and investments in increasing the number of machine tools of its own make.
The priority helicopter programs for Motor Sich today concern modification of the TV3-117VМА-SBМ1В engine to re-motorize the “veteran” Mi-8Т, modification of the AI-450М to re-motorize the Mi-2, and finishing works for the modern engine MS-500V for helicopters with takeoff weight of 3.5-6 tons. According to Boguslaev, “We hoped to see this engine on the prospective light helicopter Ansat, produced by Kazan Helicopter Plant, but this project is currently getting no support in Russia. However, I would like to note that the performance characteristics of MS-500V exceed those of a similar engine by Pratt & Whitney”.
The TV3-117VМА-SBМ1В will significantly improve the Mi-8T’s performance in operation, making it indispensable for offshore development programs. Successful state bench tests of this engine finished in June 2011. It might also power the dream of Vyacheslav Boguslaev—to fly over the highest peak in the world, mount Everest—without a single stop during height gain in 2012.
In 2011, Motor Sich signed an agreement with UTair Aviation for the overhaul of the Mi-8МТV-1 and Mi-26 engines in 2012. According to UTair Aviation, the agreement is worth nearly US$20Mln. It also envisages delegating the rights for local repair of helicopter engines to UTair-Engineering. Reportedly, Motor Sich and UTair intend to continue their cooperation in the supply, repair and maintenance of modern helicopter engines.
Tendency towards partnership is manifested in the segment of Russian light helicopters. The Ка-226Т, a light coaxial rotor helicopter equipped with two Arrius 2G1 gas turbine engines by Turbomeca, a Russian VR-226N gearbox and modern avionics, is a unique example of successful international cooperation and a wider range of possibilities for potential customers in terms of maneuvering precision, climbing speed and flight altitude. In May 2011, Russian Helicopters and Turbomeca signed a contract for delivery of the first batch of 40 Ardiden 3G engines for the Russian medium twin Ka-62 (in the frame of a total of 308 engines of this type). This is yet another example of mutually beneficial relations between Russia and France in the rotorcraft industry. “Russian Helicopters is building up its presence in the international industrial cooperation system”, Dmitry Petrov said at the 49th International Paris Air Show at Le Bourget. “In this context, cooperation with European partners has always been our priority. Today, we are running several international projects in rotorcraft construction with French companies, including the Ka-226T with a Turbomeca engine, and the Ka-62. These are a great example of effective industrial cooperation between Russia and France.”
“Development of avionics for the Kа-226Т has been assigned to Aircraft Engineering Concern. The company responsible for executing cooperation within the Concern is the Ulyanovsk Avionics Design Bureau (UADB). Given that the helicopter design bureaus have given us the role of integrators of avionics for the Mi and Ka family helicopters, it is perfectly logical, from my point of view, that we are also involved in development of simulators. The first steps have been made: at Moscow Aviation and Space Show 2011, the alliance of UADB and CSTS Dinamika demonstrated the Ka-226T prototype full flight simulator (FFS)”, said Andrey Tyulin, general director of Aircraft Engineering Concern.
According to CSTS Dinamika, its responsibilities included mathematical modeling of the helicopter dynamics, and the visual system comprising an 8-channel projector and spherical screen complex. Ulyanovsk Avionics Design Bureau supplied cockpit instruments and avionics, the data system, and the cockpit computer complex. The Ka-226T simulator is originally designed to support the development and adjustment of helicopter avionics as well as prototyping the line of flight training devices for the Ka-226 family—offering a wide range of civil and military applications. According to Russian and foreign experts, the Kа-226Т will compete for a significant share of the world market for this class of helicopters, and availability of simulators will tangibly raise their export potential.
In speaking of the key issues in developing cooperation among simulator manufacturers, Alexander Litvinenko, general director of CSTS Dinamika, mentions joint projects with the competitors of CSTS Dinamika; however, he refuses to discuss details. “We are pursuing our cooperation with CAE—the Canadian manufacturer of simulators—and undertake joint developments with both Russian and foreign manufacturers, and we think this is normal”, adds Litvinenko, confirming that cooperation is essential in the development of competitive products.
CAE, “the only ‘pure play’ simulation and training company with a global footprint, is based in Montreal, Canada, and has operations and training centers in more than 20 countries and customers in more than 100 countries”, says Martin Gagné, group president. CAE invests a significant amount on research and development specific to its niche, seeing opportunities to leverage technologies between civil and military markets.
“As a company focused specifically on simulation and training, and a company with a range of experience on rotary-wing aircraft, it seems to me that CAE would be an ideal partner for Russian industry. CAE has a culture of collaboration and partnership, so we can bring the full breadth of our technology and capability to the Russian market by cooperating with local industry”, comments Gagné.
CAE has been very active in this part of the world and sees opportunities to further develop its presence in Eastern Europe. “I see Russia as one of the most important markets in Eastern Europe to establish the right collaboration and partnerships. There is great potential for adoption of world-class simulation and training technologies, and I believe there is a win-win solution for local industry as well as CAE in this market. We will continue to have discussions and dialogue regarding potential business relationships in Russia—a market where we believe CAE can bring value through our expertise, and simulation technologies specifically for rotary-wing platforms. I am looking forward to the upcoming Moscow Aviation and Space Show 2011 to further these collaborations”.
CAE and AgustaWestland’s joint project—the Rotorsim training centre for the AW139—might see new horizons as AgustaWestland is preparing to start assembly of AW139s in Russia. “Whether that means any opportunities for us in Russia remains to be seen”, notes Martin Gagné.
According to Nikolai Lebedev, president of Transas Group, well-established cooperation between Russian helicopter operators and simulator manufacturers is another important competitive asset of the latter against foreign simulators. “We have had a positive experience of cooperation with UTair Aviation, that has brought us real dividends—both in terms of improving safety level and business efficiency. Aviation is a conservative industry that requires a systematic approach to everything, because the price of mistakes here is much higher”.
Transas has created a unique simulation center in Russia for Gazprom Avia, with four D-level simulators in Ostafyevo for all types of Mi-8 helicopters with a possibility to install simulators for the new fleet of Gazprom Avia. The cooperation of Transas and Gazprom Avia is not limited to Mi-8 simulators—Transas also installed its avionics on Eurocopter's EC 135 helicopters ordered by Gazprom Avia.
Eurocopter delivered the first EC 135 for Gazprom Avia in 2010 with Transas avionics, in the frame of a contract for 8 EC135s in passenger version.
“On Eurocopter’s side, this represents an adequate approach to Russian clients and the Russian market that needs both good foreign equipment and participation of companies who comply with the requirements of foreign manufacturers. Transas has all the required Eurocopter and EASA certificates for installation of its avionics. Having achieved this, we now realize that it is possible to work on the basis of principles used by avionics and helicopter manufacturers in Russia, Germany or France. What’s important is that our avionics have been manufactured by a Russian company at Russian facilities. Cooperation with Eurocopter has revealed the entire range of potential for cooperation—both for Transas and the Russian industry as a whole”, comments Lebedev.
Transas’ main competitor in avionics on the Russian market is Aircraft Engineering Concern, that acts as the integrator of avionics for Mi and Ka helicopters. According to Nikolai Lebedev, “There are two types of new players—on old player who takes a new niche when old companies are being restructured, or a player who, like Transas, creates a “rocket out of the blue“, uniting know-how from different areas. Aircraft Engineering Concern emerged on the basis of Russian defense companies, so it has a harder time in the transition toward working with light and medium civil helicopters”.
Nevertheless, Aircraft Engineering Concern has managed to create conditions to consolidate the avionics industry—namely, nearly 40 manufacturers of on-board equipment. The main customers for radio electronics produced under the brand of Aircraft Engineering Concern are United Aircraft Corporation, Russian Helicopters, and Tactical Missiles Corporation (the mentioned holdings account for nearly 70% of the contracts). At the same time, Andrey Tyulin, general director of Aircraft Engineering Concern, stresses that the activity of the company goes beyond contract relations with its customers. Aircraft Engineering Concern plunges deeper in industrial integration working with other players of the sector on new developments such as the new glass cockpit for the Mi-34S1.
Andrey Tyulin, general director of Aircraft Engineering Concern: we have been acknowledged as a full-blooded market player
Aircraft Engineering Concern is a new player on the aviation market. Nevertheless, its customers are the strategic players of the Russian aviation and defense industry. How would you characterize your role for these industries?
Aircraft Engineering Concern can be called a new player from a merely technical point of view. Companies that it integrates are widely popular in the world of aviation as developers and suppliers of avionics for all types of aircraft and helicopters. Suffice it to mention the Moscow Institute of Electromechanics and Automation, Ulyanovsk Avionics Design Bureau, Fazotron-NIIR Corporation, and Ryazan State Instrument-Making Enterprise.
Making Aircraft Engineering Concern a strong global player means to join the potential of all of its companies, to restructure and adapt production assets to the market, and concentrate funds on developing key competences. We have formed 10-year programs of balanced growth and planned activities for all of our companies in R&D, retrofitting, and developing the network and infrastructure of after-sale service. Now, our task for the next stage is to create an innovative product—a new-generation avionics complex by 2014-2015. Accomplishment of this task is under the responsibility of Aircraft Engineering Concern.
How is your policy in developing new equipment formed?
When organizing R&D, we start from the need to create innovative products which requires rigid concentration of all our resources on developing key technologies of navigation, communication and surveillance, safe piloting of highly dynamic and poorly maneuverable objects, etc. An assigned competence center is responsible for each technology, whereas Aircraft Engineering Concern is generally positioned as the integrator. This allows us to present complexes of avionics instead of separate devices and systems.
Mr. Tyulin, what characterizes the activity of Aircraft Engineering Concern in the helicopter segment?
Over the last few years, Aircraft Engineering Concern companies have managed to multiply the supplies of avionics on the local and international markets. Helicopter designers have entrusted us to integrate avionics for Mi and Ka helicopters. Primarily, our developments for the civil market concern the Kа-226Т, Mi-171А2 and Mi-34S1 helicopters. The Kа-226Т is a re-motorized version of the Kа-226 with an Arrius-2G2 engine by Turbomeсa and modern avionics.
In 2009, Kamov produced two prototypes of the Kа-226Т. In 2009-2010, Ka-226T helicopters participated in pre-tender tests for India. As a result of our work with Kamov, the Indian experts praised both the helicopters and their avionics. Currently, we are developing the design documents for this project ahead of the announcement of the tender’s results. Together with Mil Helicopter Plant, Aircraft Engineering Concern participates in the creation of avionics for the prospective helicopters.
In early 2010, our alliance with Russian and foreign companies won the tender announced by Mil Helicopter Plant for development of avionics for the Mi-171А2—the “deep” modernization of the Mi-8. Concerning the Mi-34S1, the most advanced version of the Mi-34, the demand for it in Russia is high above the supply, and foreign players are trying to fill this segment.In the frame of our agreement with Russian Helicopters, we have started todevelop the technical plan of a glass cockpit that allows operators to fly under any meteorological conditions.
How do you see the role of Aircraft Engineering Concern on the aviation market?
Now that an avionics holding has been formed in Russia, the state policy has changed as well. Aircraft Engineering Concern has been acknowledged as a full-blooded market player. We are responsible for cutting-edge scientific and technological developments that are to ensure the high competitiveness of Russian aviation equipment. In this respect, the mission of Aircraft Engineering Concern is to gain leadership in innovative products for avionics on the Russian market and gain competitiveness on the global market.
Foreign manufacturers take the lead in light helicopters: will Russia strike back?
Foreign manufacturers take the lead in light and medium helicopters: will Russia strike back?
Russia, a traditional leader in the niche of heavy transport and combat helicopters, has encountered a strong global trend that is also true for Russia: growing demand for light and medium helicopters. In the medium niche, Russia's international bestseller is Mi-8/17. In order to keep the helicopter in its market niche and improve its characteristics, Russian Helicopters have developed Mi-171, as a modernized version of Mi-8/17, and Ka-32. The prospective projects that will sustain Russian Helicopters' product range in this niche are Mi-171A2 and Ka-62.
In the light segment, things are somewhat more challenging: Russia has to start from scratch as it had never before faced the need to produce light helicopters. “We are behind on the market of light helicopters but we need to understand that new helicopters cannot appear overnight. Creation of new helicopters requires a larger amount of testing than aircraft”, comments Mikhail Kazachkov.
Shift to light helicopters: Russian industry is catching the wave
According to the forecasts of Russian Helicopters, the demand for light (up to 4 tons) helicopters on the Russian market and world market will grow. “Today, light helicopters account for over 70% of the world helicopter fleet. Over the last 5 years, the world fleet of light helicopters has grown 6-fold. The demand of the Russian market is estimated as at least 1,000-1,200 light helicopters”, says Vladimir Babkin, director of the aviation industry department of the Russian ministry of industry and trade.
Experts of Russian Helicopters believe that in the next 11 years, both the volume and the structure of the Russian helicopter fleet is to change drastically. By 2020, light helicopters are to reach 50% in the structure of the Russian helicopter fleet. The Russian helicopter operators, aiming to reduce costs related to operation of heavy helicopters (their current share in the fleet is around 75%), are eyeing lighter models as a more cost-efficient solution. Russian Helicopters aim to get 15% of the Russian light helicopters market—however, it is not clear yet whether the industry will manage to meet the growing demand for light helicopters. Today, Russian Helicopters are ready to offer four models of light helicopters - the Ka-226, Mi-34, Ansat and Aktay light helicopters.
Mi-34S1, a further development of the Mi-34 with an improved М9FV engine, new avionics, and new fuselage elements, might introduce, according to Dmitry Rodin, head of the project “Reconstruction of Mi-34-type helicopter serial production", “serious corrections in the situation on the world market”. Every year, according to Rodin, about 1,000 light helicopters are delivered on the world market, with the R44 by Robinson dominating the segment (according to Kommersant, the Russian business daily, up to 90% of helicopters of this type are owned by private individuals). Rodin is confident that in 3-4 years it will be possible to "push this leader aside". This confidence is encouraged by the technological and financial advantages of the Mi-34S1 against the R44: according to Rodin, the new Mi-34S1 will cost 20% less than the R44 (in its basic configuration, its cost on the Russian and CIS market will be around US$500,000).
Mi-34S1 primarily targets the Russian and CIS market. In the future, Russian Helicopters plans to promote it in Africa, Latin America and Asia, followed by Western Europe and U.S. At Helirussia 2011, Russian Helicopters and UTair Aviation signed an agreement for production and delivery of 10 Mi-34S1 helicopters with an option to increase the amount to 50 units. Delivery is to start in 2012. Allegedly, new UTair helicopters will primarily service the oil and gas sector.
Ka-226 (takeoff weight 3.4 tons), certified and launched in production, has solid orders from state and private customers. The attractiveness of this model is to be enhanced in its new modification—the Ka-226T fitted with Arrius 2G1 engines by Turbomeca.
In Russia, Ka-226 is givenespecial attention by the Federal Security Service of Russia and EMERCOM (the Russian Emergencies Ministry). According to AVI, the investment part of the project envisages production of 50 helicopters per year starting in 2011. "Ka-226Т is a high-potential helicopter. It has recently participated in pre-tender flights in India. We hope for a positive decision on this tender", noted Dmitry Petrov.
Apart from the mentioned R44, a brand new competitors for the new Russian light helicopters is Marenco Swiss Helicopter (MSH) with its Marenco SKYe SH09—the newest helicopter in the category of light single engine rotorcraft that made its Russian debut at Helirussia 2011.
According to Alexander Beketov, CEO of Marenco Rus, “MSH is new on the helicopter market, and we have from the very start envisaged bringing something new in the idea of developing and constructing helicopters as a hi-tech product. We were the first to introduce a fully composite body in the light class; a new rotor head; new shrouded tail rotor; and a large vertical observation window between the two front seats. This is impossible to introduce in existing helicopters. All the available models of light helicopters are more than 20-40 years old, and that is why we see our chance in this segment. In principle, we tried to introduce something new or at least to do it on the peak of today’s engineering in every component of our helicopter that is well-suited for any mission". The Marenco is better in everything but one thing: it is not on the market yet.
Development of light and medium helicopters—opportunities for foreign manufacturers
The witnessed surge in demand for light and medium helicopters, combined with the positive impact of the liberalized Air Code in Russia (that, according to Mikhail Kazachkov, represents "tectonic changes in the mentality of the Russian aviation authorities"), have given green light to the foreign helicopter manufacturers who were quick enough to sense the golden mine that emerged on the Russian market.
As a consequence, the foreign helicopter manufacturers are getting more and more active on the Russian helicopter market. Apart from Eurocopter, AgustaWestland and Bell, already well-established on the Russian market, Sikorsky Aircraft is showing interest towards entry on the Russian market with its multipurpose S76. According to Sergei Sikorsky, “It is still too early to say where our niche in the Russian market will be, but I believe that we will find one. The S76 matches the needs of general transportation, search and rescue, and offshore oil operations. Its main advantage is speed”.
Sergei Sikorsky, son of the legendary Igor Sikorsky, a Russian emigrant who founded Sikorsky Aero Engineering Corporation (now Sikorsky Aircraft Corporation) in the U.S. in 1923, fell in love with helicopters after the first flight with his Father. Since then, Sikorsky Aircraft, inspired by Igor Sikorsky's genius and geared to success by his son, has become one of the world leaders in high speed helicopters. When asked about the advantages of Sikorsky helicopters over other foreign helicopters, Sikorsky says that this question can best be answered by the word “reputation”. “For over fifty years, the American Presidents have flown in Sikorsky helicopters. The Queen of England flies in a Sikorsky helicopter. Many Heads of State around the world fly in Sikorsky helicopters. They are used by the military forces of over fifty governments around the world. Sikorsky products are used and respected around the world, and we are very proud of the reputation that the name “Sikorsky” enjoys around the world”, comments Sergei. The new players will find it hard to squeeze Eurocopter and AgustaWestland, who are the first foreign helicopter manufacturers to enter the Russian market—and are deepening partner relations with the domestic helicopter industry.
While Sikorsky is yet evaluating its possibilities on this market, Bell is feeling quite comfortable in the corporate and VIP segment. According to Alexander Evdokimov, president of Jet Group—the largest Russian aviation broker and dealer of Bell Helicopter and Cessna Aircraft—his clients mostly demand the Bell 407, 430, and 206. “The Bell 407 is a helicopter with history, and it is constantly modernized. There are a few dozen of them operated in Russia. 90% of the Russian customers interested in corporate transport go for this very model”, comments Evdokimov.
Laurence Rigolini, CEO of Eurocopter Vostok: to be always in the Russian sky
Mrs. Rigolini, you have been with Eurocopter for more than 20 years, and became the CEO of Eurocopter Vostok at a turning point back in 2010. Moreover, 2010 was marked with the recovery of Russia’s economy and of its helicopter market. How do you see your mission as the CEO of the first foreign helicopter manufacturer on Russian soil?
My mission is to further develop the footprint of Eurocopter in Russia. From the moment we made our landing here, we knew that Russia has long-lasting experience and traditions in the aircraft and helicopter industry. After several years in the market, we have proven that this experience can be used for the mutual benefit of Eurocopter and its Russian customers.
As we’re now approaching the end of 2011, it is the right time to mention a few good results of the year: we have successfully certified and introduced AS350 B3e in commercial operations. In general, the number of commercial operators increased. Now, Eurocopter helicopters are chosen by well-known Russian operators: UTair, Gazprom Avia, Yamal, Turukhan-Avia, Abakan-Avia, Nordavia, Aerogeophysica. So, you can see that the Russian commercial operators consider Eurocopter helicopters to be their real workhorses.
Similarly, we have developed a partnership with Gazprom Avia, another key player that operates Eurocopter helicopters and has a maintenance center for the EC120 based at Ostafievo airport.
When entering the Russian market, foreign companies choose different strategies such as teaming up with state holdings and authorities - or partnerships with independent market players. How can you characterize the strategy of Eurocopter in the Russian market given that Russia has its national products and brands with long histories and experience?
Eurocopter’s share among the Western helicopter manufacturers in Russia and the CIS is currently up to 70%, which shows that the strategy of Eurocopter up to now has been right. Our strategy on the Russian market is focused on cooperation with the local players as we realize that we cannot develop by just selling helicopters. We have to enter into strategic partnerships, which is key for our goal of keeping up good figures and developing our presence. One of the steps in our integration with the local industry was our partnership with Transas, a key avionics player in Russia, for the installation of their avionics on the EC135s delivered to Gazprom Avia. The EC135 with Transas avionics is now certified in Russia and Europe and we intend to continue developing our partnership with Transas and other key Russian players.
Another good example of our cooperation with local players is our partnership with UTair, one of the largest helicopter operators in the world. UTair has developed into a true partner after being simply our customer at the beginning. Eurocopter Vostok and UTair have opened a certified maintenance center for Ecureuil, our light helicopter range. This maintenance center is open to any customer in Russia who owns an Ecureuil and wants to have it repaired at UTair. The next step was achieved in May 2011, when UTair was certified as the first training center for Ecureuil family helicopters, which officially entitles UTair pilots and engineers to offer trainings in Russia. Now, with this new training center in Tyumen, pilots and mechanics have more flexibility in choosing course dates with Russian teachers approved by Eurocopter test pilots.
Mrs. Rigolini, you have underlined the importance of your partnerships with major Russian operators such as UTair and Gazprom Avia. At the same time, many operators in Russia are much smaller, and it is difficult for them to afford more than one or two helicopters in their fleet. Is Eurocopter interested in pursuing relations with small, just as busy, operators?
I like this question very much because I have spent almost 20 years in sales in many countries. 85% of Eurocopter operators have less than 5 aircraft. We are very reactive in helping them with their concerns because proximity to our customers is very important, and this is by the way another strength of Eurocopter. We have 27 subsidiaries around the world located in various countries. In Russia, our subsidiary Eurocopter Vostok has been developing a network of service stations - we have 14 centers approved by the Russian civil authorities across the country. We organize these maintenance centers so that we can offer most of our customers proximity to specialists all of which are trained and approved by our staff. Big customers are important to us, but that does not mean that we forget the smaller customers and their need to keep their aircraft in the air.
Helicopters as a mean of transport are still a relatively new concept in Russia. Is it something that you see as a challenge for Eurocopter’s business in Russia?
Helicopters may well be seen as a luxury good in other countries but, in Russia, they are a must, especially if you want to develop the country. Russia is the territory for helicopters—it is huge, and the road and railway infrastructure is difficult to develop because of the size of the country. One of the best, if not the only way to reach some remote points is by helicopter. Here, Eurocopter brings a good solution with its broad product range—from the very small EC120, the single engine Ecureuil family, to the medium weight twin engine Super Puma family with a 25-passenger capacity. Another strength of Eurocopter is that its helicopters are multipurpose, covering the VIP segment, utility, EMS and so on.
Mrs. Rigolini, you have mentioned the diversity of your products as the strength of Eurocopter. What helicopter models do you believe will be the bestsellers in Russia?
I think there is no unique answer. For different missions—aerial work, O&G, law enforcement, EMS—Eurocopter offers one or several products that are well suited to these tasks.
I would say that for utility or aerial work, the Ecureuil definitively has no competitor. The single engine AS350 B3 set the world record for highest takeoff and landing when it landed on Mount Everest in 2005, an important benchmark in aviation history. The pilots call it a ‘champagne cork’ because of its lifting power, very simple and very reliable equipment.
For EMS missions, the EC145 - qualified and certified for use anywhere in the world, however strict the regulations are - is dependable, efficient, quiet, powerful, comfortable and safe. And, its trump card is the biggest and best cabin of any helicopter in its class.
When it comes to oil and gas missions, we have several products depending on where the oil platform is: it could be EC135 chosen by Gazprom Avia with Transas equipment; it could be the EC145; it could be the Dauphin family – for instance, the very quick, fast and stable EC155 that can take up to 14 people on board. We also have the EC175 (with a 16-passenger capacity) with state-of-the–art technology.
It’s worth mentioning an important common feature throughout our product range—a very good man-machine interface that performs all the analysis work for the pilot. The pilot can therefore focus on safety—one of the most important concerns for Eurocopter.
Finally, our objective is to introduce another model to the Russian market – the EC225, a very reliable and very cost-effective helicopter in terms of maintenance. With up to a 25-passenger capacity, it can go as far as 200 nautical miles offshore, making it the ‘enfant cheri’ of the major world oil and gas operators.
It’s truly fascinating to have 20 years of experience in the helicopter business. Is selling helicopters something special?
I think that the helicopter world is a world of passion. People working on the production line are passionate; the pilot is passionate, and the owner is passionate, too. Moreover, our work with customers is also about passion and empathy. If you take the time to listen to them and understand their needs, you just want to meet their requirements as best as you can. It is magic!
Foreign manufacturers - 2
AgustaWestland is another foreign player who was one of the first to land its helicopters in Russia. Currently, its bestsellers in Russia are light helicopters; in this segment, AgustaWestland offers the AW109 Power and Grand—rotorcraft that have made AgustaWestland the leader in corporate and VIP transport in this category of helicopters (with a nearly 70% share). With a range of highly technological helicopters appointed for use in the light weight category, AgustaWestland, according to its representatives, sees good opportunities for business development in a few segments of the Russian market: offshore flights, medical evacuation, search and rescue missions, and VIP transport. To sustain its confident steps on the Russian soil, the company is planning to offer a full range of services for support of its helicopters in partnership with UTair: "AgustaWestland has excellent relations with UTair, and will in future rely on their servicing facilities to develop the servicing network", says Alberto Ponti, head of region Russia and Ukraine, AgustaWestland.
A key point in AgustaWestland's strategy in Russia is to provide the right asset that would compete neither with the local products nor with those of other foreign players. This smart approach was also reflected in the introduction of AW139 on the Russian market.
The story runs that in 2007, Denis Manturov, who at that time was general director of Oboronprom, announced that the Russian industry identified the AW139, AgustaWestland’s bestselling helicopter, as the ideal helicopter worldwide that did not overlap with present Russian-made helicopters. Manturov felt that it would introduce a new technology that would enrich local helicopter abilities.
That step, according to Alberto Ponti, “helped to transfer our relations with Russia from pure commercial cooperation to industrial cooperation. Thanks to an excellent track record, both politically and industrially, Russia and Italy had very good chances for deeper industrial cooperation”.
In 2008, Russian Helicopters entered into an agreement with AgustaWestland to create a joint venture for assembly of twin engine AW139s in Russia. In June 2010, Manturov and Giuseppe Orsi, CEO of AgustaWestland, laid a memory capsule in the foundation of the new facility for assembly of AW139 in Moscow’s Tomilino region. According to Manturov, US$57.5Mln will be invested in the Russian-Italian project that will breakeven in 8 years, with a capacity of producing 24 helicopters per year. Production is to increase stage wise: from 5 units produced in 2011 to 20 units produced in 2015. According to Russian Helicopters, the project aims to meet the demand for civil helicopters in Russia and CIS, and also for sales through AgustaWestland’s international network. In the course of preparation for its assembly, the AW139 was certified in Russia.
In August 2011, UTair Aviation confirmed a planned order of 20 AW139s: during MAKS-2011, Russian Helicopters and AgustaWestland signed a Memorandum of Understanding for a planned order of 20 AW139 helicopters to be assembled in Russia. Earlier, AgustaWestland and Russian Helicopters announced the establishment of HeliVert, a joint venture which will assemble and deliver to UTair Aviation a batch of AW139 helicopters from Tomilino.
Alberto Ponti, head of region Russia and Ukraine, AgustaWestland: to swim with all other players in the sector, you cannot close up against the market
Mr. Ponti, how did the ambitions of AgustaWestland and the needs of the Russian industry find common ground?
AgustaWestland was interested in enhancing its cooperation with a strong partner representing the Russian helicopter industry, and Russia was interested to fulfill the ambition of completing its helicopter range. Traditionally specialized in development of mid-to-heavy helicopters, Russia aimed at solving the lack of lighter helicopters, with no analogs for AW139 in mass production by Russian Helicopters. The strategy stemmed from these requirements led Russian Helicopters and AgustaWestland to establish HeliVert, a joint venture that plans to produce no less than fifteen AW139 helicopters per year in Russia at a new facility in Tomilino. The assembly facility is expected to achieve operational readiness by 2011 yearend. We have finalized the framework of our partnership signing the ruling documents of our Joint Venture in Paris Le Bourget, June 21st 2011.
Which models form AgustaWestland’s product range operated in Russia and what are their advantages?
Currently, there are four civil AgustaWestland helicopters flying in Russia: AW119 Koala, AW109 Power, Grand and AW139. The AW119 is quite successful as a single engine helicopter thanks to its great performance and redundancy of safety devices which I think was well-appreciated by the Russian market. AW119 Koala was developed on the basis of the twin-engine AW109 Power, which means that its safety system is typical of a twin-engine helicopter. Except for a single engine and a fixed landing gear, it has all the features of a twin-engine helicopter which gives it higher level of safety, large cabin and excellent performance.
The Grand light twin offers a larger cabin than the one of the AW109 Power and is fitted with an all new avionicsand more powerful engines. We are now undergoing certification of the GrandNew – the evolution of the Grand featuring the very latest generation navigation avionics. We hope to log sale of the first GrandNew in Russia soon and deliver it in 2012 to have our entire product range present here.
The all-weather AW139, the best-selling medium twin helicopter, has been certified and delivered to the first Russian customer. It has brilliant prospects in Russia for offshore operations that are increasing with the discoveries of new offshore areas.
As I mentioned, AgustaWestland has always been a leader in VIP transport market worldwide, and we are ready to grow further in this market in Russia as well. GTK Rossiya has selected the AW139 to fly under the Russian flag. For VIP transport, GTK Rossiya is our top level partner in terms of efficiency, maintenance and strong cooperation.
Our strategy in promoting our helicopters in Russia, whether for medical transport, offshore operations or VIP transport, is to provide the right asset that does not overlap with the local products because we move to segments where we do not compete with Russia as our industrial partner.
Is there a specific strategy in place to promote your helicopters in the mentioned segments?
The challenge in entering this market is to win appreciation on the field, so our strategy is to generate confidence. We have a product that is worldwide successful and recognized by the local industry. We managed to keep stable sales in the Russian market even during challenging times, and now our ambition is to convince the market that we are able to not only design the best helicopters but also to support our customers with a developed servicing infrastructure.
The strategy of the Russian industry is to team with us. As a very successful helicopter manufacturer globally, we realize that offshore operators certainly can be our strategic partners on the Russian market where helicopters are an unavoidable asset for oil and gas missions. AgustaWestland has good relations with UTair, and might in future rely on their servicing facilities to develop the servicing network. We are also teaming up with a small network of heliclubs.
We are open to build the service network together with big operators in the presence of top-skilled AgustaWestland personnel. For training, AgustaWestland provides dedicated training packages for pilots in Italy –always a tailored solution for every customer.
I would also like to point out that one of the challenges in penetrating the Russian market is to introduce a new concept of maintenance that grants year-round availability, with a daily light “care” and time to time maintenance activity. The challenge is to let all operators enter into a new way of operating which requires upfront an investment but results into considerable savings in the life cycle costs.
Servicing: the law of respecting your customer
Servicing: the law of respecting your customer
In the struggle to increase their competitiveness, European helicopter manufacturers have made a transition from just selling helicopters to selling their “lifecycle,” says Konstantin Makienko, deputy director of the Center for Strategy and Technology Analysis. The largest helicopter corporations have managed to build such a strong after-sale support system for their products that, in fact, today they can sell not just hardware but flight hours that include all expenses for MRO, spare parts and training. After-sale support is what gives all the major European helicopter corporations 20 - 25% of their revenues.
The efforts of Russian helicopter operators who develop maintenance infrastructure for foreign rotorcraft are showing that the Western approach to servicing works. Aerosouz, the official dealer and official service center for Robinson and AgustaWestland, and a trendy helicopter club, is an expert in servicing and making the customer happy - provided that the customer is as passionate about helicopters as the owner.
According to Alexander Klimchuk, president of Aerosouz, “Russian laws require certified companies to execute immediate and regular servicing of aviation equipment due to rigid safety requirements. To be able to even touch a helicopter of a certain class, you need to buy loads of equipment for this class, get permissions, train at least 6 engineers and go through a lot of red tape. This is extremely costly and not popular because the results are too remote. We go for it because we do not want quick money—we want comfort for our customers”.
Klimchuk, totally passionate about helicopters, confesses that he felt like a ”traitor” for the 12 years that he was ”plainly making money”, and that his dream is to construct his own helicopter: ”It is on my agenda to start production of helicopters. I want to create a commercial project focused on the market”. This is not something extraordinary for people from aviation: the common word that both Russian and foreign industry players—such as Laurence Rigolini from Eurocopter, Sergey Mikheev, the legendary designer of Kamov, and Mikhail Kazachkov from AVI—use when they talk about aviation is “passion”.
Following the development of a very important aspect of helicopter market - after-sale support - Russian Helicopters have created a system of integrated logistic support for domestic helicopters in May 2011. According to Artur Shtankov, director for after-sale support of Helicopter Service Company, part of Russian Helicopters, using the new system will enable a transition from uncontrolled service to a modern maintenance system based on integrated logistic support. Creating this system is critical to form a united environment within the global after-sale support system of Russian Helicopters. According to Russian Helicopters corporate message at Defense Services Asia 2010 in Kuala-Lumpur (Malaysia), the existing service infrastructure corresponds to Russian Helicopters’ sales geography.
Russian Helicopters started concrete moves to open new service centers in 2009, when the joint venture International Rotorcraft Services appeared for after-sale support of Russian helicopters in the United Arab Emirates. In early February 2011, Russian Helicopters announced opening a new center in Greater Noida in India to service Russian civil helicopters. “The new service center opened at Integrated Helicopter Services Pvt. Ltd. will produce maintenance of the Indian helicopter fleet of Russian make", said S.B.Prasher, general director of Integrated Helicopter Services Pvt. Ltd. In the future, this center will allow operators to repair aggregates including engines and avionics. There are also plans to create a logistics center at the location to provide spare parts for Indian operators of Russian helicopters and a training center for pilots.
One of the serious issues that hinder development of a high quality service system for Russian helicopters in Russia and abroad is the practice of ‘grey’ competition on the Russian market for supplies of fake spare parts. According to Igor Emelyanov, general director of Aviazapchast, “One of our big achievements in overcoming the ‘grey’ mediators is the contract between Rosoboronexport and the Pentagon for supplies of Mi-17s to Afghanistan. The U.S. government acts as the client in this agreement—for the first time ever in the history of our relations. This testifies to the fact that we are moving in the right direction. I would like to point out that Aviazapchast is interested in being part of this project”.
Igor Emelyanov, general director of Aviazapchast: our task is to deliver top performance and watch for new contracts
Over almost 45 years of its history, Aviazapchast has accumulated unique experience in the entire range of after-sale support for Russian aircraft operated in many countries. Its partners include more than 250 aviation organizations in Russia and the CIS. Today, the main task of Aviazapchast is to enter new markets and expand its cooperation with Russian Helicopters.
Aviazapchast is committed to revive good traditions in servicing Russian aircraft overseas. How do your activities look today, in terms of supplies of equipment and MRO for helicopters? Has it proven to be a realistic objective to revive Soviet traditions in maintenance of Russian-made aircraft?
The Soviet experience was extremely successful, but today, under the market economy, the clients and suppliers arrange their agreements independently. The former structure of servicing worked well to provide high quality in the supply and operation of our aircraft. We have not reached this level again, and this is something we need to aspire to. Today, any client is primarily interested in the cost of after-sale support of an aircraft during 25-30 years. Hence, it is important that the seller of this aircraft can explain and show how the machine will be serviced during its entire lifecycle—correspondingly, we need technical centers, simulators, training methods. We need to catch up with the world leaders, and this is the seller’s job.
Foreign helicopter manufacturers, such as AgustaWestland, are looking for servicing solutions in Russia.
Aviazapchast is interested in any kind of cooperation with AgustaWestland, but not everything depends on us. AgustaWestland is now facing the task of setting up its production in Russia. If they are independent in taking decisions, we are ready to work with them.
What are the current priority export markets for Aviazapchast?
Our priority export markets are India, China, Africa and the Middle East: regions where Russian aircraft traditionally operate, and, hopefully, will always operate. Aviazapchast has rep offices in India, Algeria and France. Today, India is our main customer.
How advanced is the conquista of the Chinese market?
If we consider it necessary, we will open our rep office in China. Additionally, we plan to return to the Latin American market. Our job is to perform well under our current contracts and find new ones.
Are there any challenges that hurdle your entry on Latin American market?
In Latin America, operators are used to buy spare parts "from the shelf". In order to play under these rules as a supplier, we are obliged to have our own warehouse there, and we are ready to invest in it so that we can deliver the required spare parts upon a phone call, as the people in Latin America are used to. No Russian company today provides this kind of service—probably, we will be the first. In any case, we won’t be competitive if we won’t deliver quickly.
Has Aviazapchast ever been invited to integrate into larger structures?
We have received quite a few offers to integrate over the last years, right in this meeting room. Someone quite respectable, who was giving me this offer, now admits that I was right to decline it. On our business gifts, we already write “45 years”, because we are nearly there, and hope to live up to this anniversary. We won’t integrate anywhere and we hope that we won’t be integrated anywhere by force, although there have been attempts to do it. What we want is to remain free in taking our decisions. Our value—that I always stand up for—is our independence. We are a tool. We work for the interests of our country and our industry, and we are ready to hear any advice on how we can improve our work.
According to Boris Nekrasov, president of NEBO-Service (part of Aviation Partners Group, a largest international supplier in avionics), in Russia a supplier of spare parts is always more than just a supplier - your knowledge should be enough to fully assist your clients with any technical concerns. "We try to address such concerns. One of our principles is to ask the client what equipment he or she needs and what approximate price he or she is ready to pay. Answers like “The cheaper - the better” are not accepted”.
The credo of NEBO-Service is to be where its clients are. Nekrasov gives an example from the sphere of aircraft - which is graphic to show their approach to helicopters. "Some time ago, we delivered all foreign equipment for a batch of 23 Il-103 aircraft purchased by the Air Forces of South Korea to replace T-41D Mescalero training aircraft. NEBO-Service took on the responsibility of replacing components 24 hours after we were asked to do so—and we succeeded".
Does NEBO-Service see opportunities in cooperation with the foreign helicopter manufacturers who plan to localize production in Russia? "If they use the equipment that we supply - why not?", answers Nekrasov. "Firstly, the helicopter plant will benefit because we always have 1 spare unit of equipment. Secondly, the manufacturer knows that if some particular equipment fails, they can put it on my table and say: “Change it”. And, in most cases, we do that. This is not even the law of protecting consumer rights—this is the law of respecting your customer”.
MRO: the Saint-Petersburg cluster
The only Russian company that repairs aircraft and maintains them during their lifecycle is Saint-Petersburg Aviation Repair Company (Sparc). In 1999, Sparc was the first in Russia to guarantee full TBO.In 2006, itopened a center for maintenance of the Mi-17 and a training center in Mexico that got Sparc a national award named "Golden Idea" for its contribution in increasing competitiveness of military products. Sparc is in charge of maintenance and repair of the Mi-8, Mi-8МТ, Mi-8МTV, Mi-17, and Ka-32. Thanks to using new generation control systems constructed and produced by NPO Sparc—Sparc’s dedicated scientific and production company created by Yuri Borisov, president of Sparc—their quality of helicopter repair and servicing increased significantly. NPO Sparc also develops and implements innovative technologies for repair of aircraft. Sparc’s exclusive control systems enjoy great demand in Russia and other countries.
One of the suppliers of control systems for Sparc is Tek Know, a Saint-Petersburg company that has been on the market of metrological equipment, testing equipment and non-destructive control systems since 1995. Alexey Elin, deputy director of Tek Know, stresses that their clients are interested in getting a larger value chain “than just hammer and nails: they need a wall to use them”. An example of Tek Know’s own developments is a metrological stand—a turnkey solution for the required range of pressure and measurement error.
Tek Know shows how a supplier of control equipment can created added value: the customer is offered calibration, service, selection of software and equipment, guarantee of quality and, most importantly, after-sale support. “Not all distributors can service the supplied equipment in Russia. Metrological equipment that we supply in Russia and the means of its calibration are located at the Air Metrology and Certification Center—the basic metrology service of Russian civil aviation and the civil aviation register. Any device that is used on an aircraft must be included in this register. This is an independent company that helps us so that we can service our equipment in Russia. While any company can calibrate the equipment, very few companies can make it operational again. Air Metrology and Certification Center is one of the companies that can do that. This is often an important advantage when it comes to the client making his choice”, explains Elin.
The issue of engine maintenance is one of the top priorities for United Engine Corporation, which incorporates 80% of Russian engine builders. One of the consequences of too few repair facilities is that “Russia is losing dozens of millions of US$ because of illegal service”, says Konstantin Makienko. Some Russian companies make independent attempts to set up efficient interaction with their partners. For instance, the Saint-Petersburg-based Klimov—the only Russian developer of helicopter engines—is developing its own production cooperation for serial production of engines, and does after-sale service of its developments including all kinds of MRO for engines of all modifications.
Klimov engines account for over 90% of Russian helicopter engines and are operated in 80 countries. In May 2011, Klimov implemented IFS Applications for after-sale servicing of engines in order to increase efficiency of working with its counterparts and save time in terms of servicing and repair of products. “Implementation of IFS Applications for after-sale servicing of our products is to meet the requirements towards quality of servicing in Russia and internationally”, said Alexander Vatagin, executive director of Klimov.
In Russian aviation and defense sectors, IFS module-based solutions are used by VEGA Concern, United Aircraft Corporation, and NPO Saturn. According to Leonid Viktorov, general director of IFS Russia & CIS, “It has been acknowledged on the state level that after-sale service is not developed in Russia, because this issue is not given enough consideration. For our industry, this is a strong mental upheaval—to learn to love your client”.
Ulyanovsk Special Economic Zone: door to Russia and window to Europe
Ulyanovsk Special Economic Zone: door to Russia and window to Europe
According to Denis Baryshnikov, head of the Special Economic Zone (SEZ) "Ulyanovsk-Vostochny", Russian aviation is facing a challenging task—to return to the glory days of 40 years ago. “Over the last 20 years, we have lost time, and now it is difficult to regain our position without the competences of world leaders". Ulyanovsk, a city 893 km east of Moscow, center of the new aviation cluster located in the heart of Russia’s economic activity, has created an investment instrument to develop cooperation with the world leaders, enhance the local competences and open new type of business in aviation. “Ulyanovsk-Vostochny” is a universal economic environment that we have created for foreign manufacturers and foreign companies interested in sales of their aircraft and components, or in other types of cooperation with Russia. In the aviation business, Ulyanovsk-Vostochny is a door to a high growth market for foreign business, and a window to Europe for Russian manufacturers who can borrow world competences with this platform”, comments Baryshnikov.
SEZ Ulyanovsk-Vostochny is part of the Special Economic Zones (SEZ), a daughter structure of the Ministry of economic development of Russia, funded 70% federally and 30% regionally. In 2008, the Russian ministry of economic development had identified Ulyanovsk SEZ as the cluster that will specialize in aviation - given that Ulyanovsk region is the historic Russian territory of aviation with well-established manufacturing, avionics companies, design bureaus, cargo airlines, universities, an aviation college and two A class airports. About 40 million people—over 45% of Russian population—live within 1,000 km of Ulyanovsk.
SEZ Ulyanovsk-Vostochny, according to Baryshnikov, summarizes the experience of creating special economic zones in Russia giving the investors conditions that allow saving up to 30% of investments and costs. To give a breakdown of the economics, Baryshnikov mentions the advantages. The first and foremost is that in Ulyanovsk-Vostochny, general infrastructure—roads, railroads and all utilities—are provided by the state and the region. Secondly, price of land in Ulyanovsk-Vostochny is 70 times lower as compared to the Moscow airports. Ulyanovsk-Vostochny offers fiscal discounts—no property tax, no land tax, no transport tax, lower profit tax (15.5% for residents), and the option of locating and using foreign goods (equipment, raw, components, construction materials) without paying duties and VAT. Tax breaks provided by the Ulyanovsk region last 10 years. Abolishment of custom duties creates optimal conditions for international companies—both importers and exporters of Russian aircraft.
The three main activities of Ulyanovsk-Vostochny are MRO, production and logistics. For the helicopter industry, MRO is the segment that most interests the potential residents thanks to the favorable conditions in organization of servicing and import/export of foreign and Russian spare parts.
Under the conditions provided by the SEZ in MRO, the foreign spare parts need no customs clearance, so that the residents and their clients can get them in 24 hours (for complex products)—30-40 times less than the current market practice. “We offer this to export-oriented operators who deal with large amounts of foreign spare parts or export Russian spare parts so that the operators need not make stocks where their helicopters operate”, comments Baryshnikov.
The capabilities of SEZ Ulyanovsk-Vostochny open potential for maintenance of products exported by Russian Helicopters and United Engine Corporation (both part of Oboronprom). During the 49th Paris Air Show in Le Bourget, Vildan Zinnurov, deputy governor of the Ulyanovsk region, Nikolai Nikiforov, governor assistant in the Ulyanovsk region, and Denis Baryshnikov met with Oboronprom to discuss creation of an exchange fund for aircraft components in SEZ Ulyanovsk-Vostochny to facilitate maintenance of products exported by Oboronprom companies. According to Baryshnikov, Oboronprom was also introduced to the possibilities of using SEZ Ulyanovsk-Vostochny for production projects of Russian Helicopters.
The concept of Ulyanovsk-Vostochny is to create a one-stop-solution for all types of aircraft. The principle is a supermarket that provides a maximum level of service for each operator. “At this moment, large operators are interested in organizing service stations in Ulyanovsk thanks to the favorable conditions for repair companies and MRO centers. Namely, we are discussing the possibility to create a maintenance center for Motor Sich engines (Motor Sich is the Ukrainian manufacturer of engines for most helicopters produced and operated in Russia – Editor’s Notes). Currently, the customs barirers hinder the supplies of spare parts for repair of Motor Sich engines. The regime of a free customs zone can solve these problems”, adds Baryshnikov.
Ulyanovsk-Vostochny will also fight for the segment of service centers for foreign helicopter manufacturers. Available service centers are crucial for the competitiveness of helicopter manufacturers on their markets of presence, especially for the Western manufacturers whose philosophy is to sell flight hours and not just machines, that is why for them, local helicopter operators are more than just clients - they are valuable partners. But, Baryshnikov disagrees that operators are the best partners in opening new service centers. “Service is not a professional focus for operators, while we in SEZ Ulyanovsk-Vostochny can offer narrow competences in creating service centers”, explains Baryshnikov.
Helicopter operation in Russia: prospects and challenges
Helicopter operation in Russia: prospects and challenges
The foreign helicopter manufacturers—the well-established Eurocopter, AgustaWestland, Sikorsky and Robinson, the new Marenco Swisshelicopter, and the private helicopter clubs that are bringing helicopters closer to the Russian customers—promote a common idea that is still relatively new for Russia: a helicopter is a perfectly normal means of transport. To exemplify this, Alexander Beketov from Marenco Rus mentions that the cost of taking a taxi from Nice to Monaco is comparable with that of taking a Eurocopter for the same route. Unfortunately, it is not yet so easy to hire a Eurocopter taxi from Moscow to Saint-Petersburg. On top of that, the Moscow sky remains closed for helicopters.
The Russian aviation authorities, municipal authorities and regional authorities are showing readiness to promote helicopter transport. Changes to the Air Code, adopted in November 2010, have liberalized Flight Regulations. Yuri Luzhkov, ex-Mayor of Moscow, voiced an initiative back in 2007 to build heliports around Moscow. On July 11, 2011, Sergei Morozov, governor of the Ulyanovsk region, announced the approval of amendments in the regional transport tax regulations that uplift the transport tax for owners of light and extralight aircraft. Moreover, development of the aviation market in Russia has triggered the development of aviation insurance services.
Nevertheless, there are still negative factors that need to be improved, and a good word that describes one of these factors is ‘mentality’–namely, “changing the attitude of the private and corporate owners of aircraft”, says Nikolai Galushin, deputy general director of Ingosstrakh, one of the leaders on the Russian insurance market (rated A++ by ExpertRA).
“The problem is that in Russia, insurance is treated as an item of expenditure", says Galushin. To explain how insurance works as a tool that leverages risks, he gives the following example: "If a helicopter is insured for US$7Mln, this amount remains constant in your insurance contract. In case of damage or loss of a helicopter, you do not have to look for another US$7Mln to buy a new aircraft. Like this, we can see insurance as a tool of leveraging the possible fluctuations of unsecured expenses that takes aviation risks out of your system. This is a solution”.
Galushin also points out that while the majority of airplanes are bought via leasing contracts, quality of insurance of privately owned helicopter fleet is determined by owners or operators who, in Russia, pay closer attention to insurance of the aircraft as such, and tend to ignore liability insurance that is regulated by the Air Code. Changes in the Air Code that occurred a few years ago increase the limits of liability insurance to US$68K. But, in terms of the Constitution of Russia, a private owner of aircraft cannot be forced to insure his or her transport.
“What we need is a system to control compliance with aircraft operation regulations—more precisely, what we need to control is not the fact of making an insurance contract but the fact of doing regular maintenance and letting qualified pilots steer the aircraft“, concludes Galushin. In speaking of the development of the insurance market in light of Russian Helicopters’ program of increasing rotorcraft production, Galushin highlights a few areas with good potential such as test flights with new rotorcraft. “Such risks need to be insured. The Russian aviation statistics abides in accidents with aircraft during test flights that led to their irreparable loss”.
What are the prospects of changing the existing mentality? “Let the market put everything in its place”, says Galushin. “By all means, the helicopter industry will be even more consolidated—there will be less players who will compete for better quality, better safety and better service. Fight for the client will change the insurance. Large operators with developed service centers will choose strong partners in insurance, and the market will clear itself of the occasional players”.
Boris Nekrasov also witnesses positive changes in mentality: “People are spending more for helicopters with top notch equipment, and this is not just to show off—people are starting to value their life and their safety. At exhibitions held in the U.S., I meet a lot of Russian visitors who want to know more about avionics that improve safety and comfort of piloting, and who want to install this equipment”.
Another aspect related to operation of helicopters in Russia that needs improvement in terms of mentality is client-operator relationship: "the clients do not realize that to have a helicopter available to fly anytime to the place of accident or fire, you need to reserve the helicopter with the operator or authority responsible for firefighting well in advance", comments Mikhail Kazachkov. As a sad Russian joke says, "book your place in intensive care 6 months before losing pulse".
Trends in development of helicopter operators: focusing on safety and quality
To keep up the pulse of helicopter works in construction, oil and gas, forestry, firefighting and other missions both in Russia and abroad, the largest commercial operators in Russia—UTair Aviation, PANH Helicopters, Aero-Kamov, Gazprom Avia and Vertical-T—struggle to show constant commitment to quality and professionalism.
According to experts, the Russian helicopter operators will face a larger volume of aviation works; hence, they will need to increase the number of new medium helicopters in ageing fleets, replacing the older machines with newer models - the Mi-8/17, Ka-32 and new Mi-38. Secondly, the Russian operators will need more light helicopters with 1.5-6 tons takeoff weight.
Today, the main workhorse of the Russian helicopter operators is the Mi-8 (Mi-17 in export version) produced in the Soviet Union. Mi-8/17 family accounts for nearly 70% of the rotorcraft operated in Russia involved in 60% of works.
In general, according to Russian Helicopters, the average age of medium helicopters operated in Russia is more than 25 years. Evidently, they will need to be replaced in the nearest future—good news for Eurocopter and AgustaWestland, partners of the Russian helicopter industry. At the same time, according to Oleg Panteleev, editor-in-chief of Aviaport, the maximum amount of aggregate flight hours registered on the Mi-8 helicopters is over 25,000 hours and over 55 take-offs and landings: most Mi-8s, apart from the modernized modifications and Mi-17 family helicopters, are not even close to the limit of their lifecycle. Yes, it is too early to forget about the workhorse.
From the viewpoint of the Russian operators, rotorcraft of Russian make are more predictable and more familiar. Besides, it costs less to train pilots in Russia than abroad. In oil and gas missions, Russian medium helicopters are still rivaling their foreign analogs. At the same time, according to Andrey Kozlovsky, general director of PANH HELICOPTERS, the largest operator in the south of Russia, “it is still unclear when production of new helicopters will start and what their final characteristics and price will be”.
In terms of the missions, the major part of civil helicopters in Russia are involved in works for the oil and gas sector, forestry and construction. According to Alexey Menitsky, general director of Aero-Kamov—the only Russian operator certified for 24/7 operation of rotorcraft with external sling in the cities—helicopter operators in Russia are segmented in terms of geographic regions. Operators based in Vladivostok tend to work in the Far East of Russia, in China and in Malaysia; Krasnodar-based PANH HELICOPTERS and Sochi-based Aero-Kamov operate in the south of Russia; and UTair—one of the five leading Russian carriers with the largest helicopter fleet worldwide—works with the oil and gas industry in Western Siberia. In 2007, UTair won Rosneft’s tender for helicopter works at Vancor field. Gradual development of the offshore fields in Russia resulted in a surge of demand for helicopter transport, which convinced the core operators to add foreign helicopters to their fleet of Russian make (mainly the Kа-26, Mi-2, Mi-8, Mi-8АМТ and Mi-171A). Gazprom Avia, a subsidiary of Gazprom, ordered eight ЕС135 helicopters with Eurocopter, receiving the first EС135 in 2010 with Transas avionics.
“Expansion of the Gazprom Avia fleet with the EC135 and installation of Russian avionics has allowed us to adapt this reliable and efficient helicopter to Gazprom Avia’s missions. We plan to expand our strategic cooperation through training services for pilots and engineers, as a logical step in continuing our project of a maintenance center in Ostafyevo airport for Eurocopter”, said Andrey Ovcharenko, general director of Gazprom Avia (since 2006, Eurocopter has a fully certified maintenance center in Ostafyevo).
UTair and Eurocopter exemplify successful coopereration between helicopter manufacturers and operators that can go deeper than just selling and buying helicopters. In 2008, the companies agreed to open a certified maintenance center for Eurocopter in Russia. This step was followed in 2009 with agreement to create a certified training center for Eurocopter pilots and engineers signed by Eurocopter and UTair in August 2009. In 2011, Eurocopter officially certified the training center located in Tyumen, heart of one of the richest Russia's oil producing regions, to carry out training programs for Russians in the Russian language.
“This marks another important step in UTair-Eurocopter partnership,” Eurocopter Vostok’s general director Laurence Rigolini said. “In Eurocopter’s philosophy of being close to its customers, we have created a technical support center to provide reliable support for the Eurocopter fleet in Russia, owned both by UTair and other customers, and an academy for pilots and technicians in Russia, which enables us to further develop our offer for services in this dynamic region of the world”.
In September 2011, UTair’s training center completed training of the first three groups of pilots for the AS350 and AS355—Eurocopter’s most demanded models operated by UTair since 2006 for a wide range of missions - from VIP-transport and servicing oil and gas industry to medevac missions. In September 2010, Eurocopter and UTair signed agreement for delivery of 20 Ecureuil helicopters - AS350 B3 и AS355 NP. Delivery is planned to take place from mid-2011 to early 2013.
UTair is also the launching partner for Eurocopter’s EC175 helicopters. In March 2011, UTair's general director Andrey Martirosov and Dr. Lutz Bertling, president & CEO of Eurocopter, signed a firm contract, extending their long-term strategic partnership. The contract envisages supplies of 15 ЕС175s in 2013-2014.
The twin-engine EC175 incorporates a mix of proven and innovative technologies for excellent performance and reliability in a full range of missions, including oil and gas operations, search and rescue, emergency medical transport, and business aviation. Depending on its configuration, the EC175 can accommodate up to 16 passengers.
While UTair is the largest operator for the Russian oil and gas industry, a large number of smaller operators plays a very important role in oil and gas missions in Russia. PANH Helicopters - winner of the tender for helicopter support of Blue Stream for construction and operation of a gas pipeline from Russia to Turkey - provides a good example.
“This is one of the serious projects where we could bid directly because the competition on the Russian side was from the southern companies only, and we are the only operator in the south of Russia who can offer to sustain both the Russian and the Turkish part of the project. During the talks, we were explaining to our clients the difference between the Mi-8MTV and Ka-32. They realized that we can actually do the job. We promptly formed our station in Turkey and hired a reliable Turkish company because our business model envisages availability of a local aviation company that provides the fuel, the helideck, accommodation and transport for our staff”, explains Andrey Kozlovsky.
After oil and gas missions, the other important source of revenue for the Russian operators are contracts with the UN on the medium Mi-8 and the heavy Mi-26 that are characteristic for their large cargo capacity and capability to operate in challenging climates—qualities that are also appreciated by foreign operators. “While Russian operators historically use Russian helicopters, foreign operators have realized that in some segments it is impossible to survive without Russian helicopters: the Mi-8 and Ka-32 participate in all programs of the UN. In challenging environments, foreign helicopters cannot compete with heavy Russian helicopters”, comments Mikhail Kazachkov.
According to Alexey Menitsky, general director of Aero-Kamov, “Historically, the demand on foreign missions is mainly for the Mi-8, which is ideal for transport of humanitarian cargo and food. The Mi-8—easily transformable in the passenger modification accommodating up to 27 people—participates in all the announced international tenders”.
Foreign operations are an important business for Russian operators. Qualification of Russian pilots in firefighting is very highly valued abroad. According to Vladimir Skurikhin, general director of Vertical-Т—a helicopter operator with 150 pilots and 26 helicopters based in Tver—the company started with missions for EMERCOM (Russian ministry for accidents, natural disasters and their liquidation – Editor’s Notes); now, about 80% of its operations are outside of Russia. Due to the importance of international missions, Russian operators adjust their fleet in order to obtain foreign certification. For instance, PANH Helicopters orders avionics according to operation requirements in Europe. Andrey Kozlovsky even says that compliance with foreign certification is the cornerstone for competitiveness of the Russian operators abroad: “The Western manufacturers know how to build their business and try to protect helicopter service markets across different continents. For the operators, this is definitely a certain setback”.
In construction works - another important segment of works for the Russian operators - the largest epicenter of activity in Russia is currently Sochi—capital of the Winter Olympics 2014. Preparation for the Olympics and construction of pistes, hotels, and residential infrastructure is impossible without helicopter support. This is why the main work front for Aero-Kamov – the only Russian helicopter operator certified for 24h transport of cargo on external sling in the cities - is concentrated around construction of Olympic sites. “Our work front here will last till 2014. After that, we will start operations for development of the Caucasus region within the state program”, says Menitsky. The basic fleet of Aero-Kamov is formed with Ka-32 helicopters that serve at their best in construction in mountain terrains. Thanks to coaxial rotors and no tail rotor, the Ка-32 has a smaller steering angle, which means that during construction this helicopter can hover and rotate statically. “The Ka-32 is quite specific, and only four operators in Russia use it: UTair, PANH Helicopters, Aero-Kamov and EMERCOM”, comments Menitsky.
According to Andrey Kozlovsky, “One of the advantages of PANH Helicopters is that we are virtually an hour away from the region that is preparing for the 2014 Olympics, that’s why my presentation was called ‘Krasnodar—another gate to Olympic games’. Recently, I saw an ad in Sheremetyevo airport saying ‘Sheremetyevo—gate to Olympic games’, but, let me disagree, Sochi is actually the gate to Olympic games”.
Sochi is not only about the Olympics: development of the local infrastructure attracts tourists and triggers development of the neighboring war-stricken Caucasus. In June 2010, at the World Economic Forum in Saint-Petersburg, President Dmitry Medvedev expressed his support to the presented Program for development of tourism in Northern Caucasus: "Unless we create a strong tourism cluster in the Caucasus, you can just say that we have lost time".
According to Andrey Kozlovsky, the booming tourism industry in Sochi—the home area for Aero-Kamov and PANH Helicopters—is turning the heads of Russian operators to the comfortable light helicopters made in Europe. According to Menitsky, Aero-Kamov, with its good reputation in tourism, is considering offers to buy 3-4 Eurocopter or AgustaWestland helicopters to transport 8-10 people at a time for local tourist transport in Abkhazia and the Caucasian natural reserve. The availability of Aero-Kamov’s mobile linear station in Solokh-Aul (Sochi region) makes this task easier.
PANH Helicopters plans to start with the A109 class—“this 4-5-seat helicopter is enough to cover the initial B2C segment that we hope to get”, says Kozlovsky. PANH Helicopters has announced its readiness to create a maintenance center for foreign helicopters at its Krasnodar base and has started to buy foreign equipment, as Kozlovsky announced at HELI-EXPO 2011 in the U.S. Development of B2C segment is a new activity for PANH Helicopters. “The few who can afford this, have bought their own small helicopters but not all of them understand that making helicopters more available to the public is more complicated and interesting. On the eve of the Olympics, the idea of buying a helicopter occurs to everyone, whereas we, a company present in this region, see this in a more critical way”.
Experts are discussing possible consolidation in the operator market in Russia: smaller operators find it harder to survive, which makes them interested in contracts with larger players. Such cooperation was used by large operators in the oil and gas sector when they needed more fleet.
Here, Andrey Kozlovsky points out the issue of controlling and training the subcontractors: “Firstly, the responsibility is very high. It is very hard to control all the micro-operators that you take on. Secondly, the pilots and engineers. Will the human resources stand up to the level of the helicopters?” Kozlovsky thinks that whatever model the Russian market takes—the American model with a diversity of operators or the Russian model with a few big “monsters”—the essential point is to maintain proper flight safety and improve the quality of service to the customer.
Competition is a trigger of improvement—and the Russian aviation industry, after almost 20 years of distress, acknowledges that. The entire value chain of the Russian helicopter industry, one of the world leaders in military helicopters, has undergone changes, and is now learning to cooperate with foreign players and develop its own competitive edge, especially in civil helicopters. Foreign helicopter players hold Russian competence in helicopter construction in very high esteem, but their arrival has revealed areas where Russia needs to develop—and areas where Russia can and must cooperate. The Russian helicopter industry is acting as a global player—and it is a global player with a new face. Whether its needs, promises and ambitions will be fulfilled, remains to be seen.