Russian Aviation at the Crossroads – Blind Alley or Bright Future?

Should the Putin government continue its imperialistic policy of creating a Moscow-controlled Eurasian Empire as a successor of the demised Soviet Union the consequences appear to be quite clear: Russia will further fall behind economically and rely increasingly on “friends” like Syria, Venezuela, Cuba, Iran and some other pariah states of this kind. Intelligent sanctions imposed by the west will surely impact strategically vital parts of the Russian industry like mining, aviation and the country’s financial sector, but will this suffice to force Putin to change course? Presumably not, unless these external thumbscrews are complemented by growing internal protests and resistance against the Kremlin’s isolationistic course. What’s mostly needed to prevent Russia from ending in a dead end street is a political rift between the country’s civil society, its leading business managers and the Putin regime.

Vladimir Putin, once internationally respected, meanwhile labeled a pariah by many governments and the media  /  source: The Presidential Press and Information Office.
Vladimir Putin, once internationally respected, meanwhile labeled a pariah by many governments and the media / source: The Presidential Press and Information Office.

A commentary by the editorial team of CargoForwarder Global.

Those were the days when the west believed in a new Russia. Germany sold Moscow billions in high technology equipment and supplies, even a military training school. France builds warships capable of supporting the type of warfare the Russian military is actually waging now on his neighbors and even insisting they are capable of arctic operations which Paris insists it will deliver this year. Italy sells Russia armored land vehicles and the UK technology that can be used in missiles.
 

 

Military buildup.
As the Russian military still suffers technology deficiencies the west has obligingly agreed to fix this for them, with contracts being signed before the Crimea annexation had started. The Russian civilian aviation sector is the same, where every attempt at building civilian aircraft that can be commercially viable has failed, and done so in a spectacular fashion. The fact is without outside help, Russia is in no position to compete on the world stage and that includes what is important to us - aviation. And without European money paid for oil and gas the Kremlin regime is vulnerable domestically.

 

What about the Russian airlines?
What is Aeroflot, AirBridge, Transaero, Utair, S7 without Boeing and Airbus and traffic rights granted by foreign countries?

Where will it be without Pratt & Whitney, GE, Rolls-Royce technology?

What will happen to the existing programs in Russia, without Antonov who hold all the keys to most of the past programs through Kiev-based Antonov Design Bureau?

The Russian military is adamant, no military aircraft built by them will ever have a western component they cannot control; this was one of the reasons cited for Russia’s refusal to further cooperate in the next generation AN-124 program. Without military support this program is effectively dead, no matter what the publicity says otherwise.

Sukhoi-built Superjet 100, stuffed with western avionic, is facing an uncertain future  /  source: Sukhoi
Sukhoi-built Superjet 100, stuffed with western avionic, is facing an uncertain future / source: Sukhoi

What will become of the Ukrainian supply of aviation parts, components and existing technology that Russia still needs if some sort of immediate change of direction of Russia is not forthcoming. Two scenarios are possible, one where Russia accepts Ukrainian independence, stops all aggression and returns the Crimea forgoing its imperial ambitions, the other where it does not. In light of the continued build-up of Russian forces at the Ukraine border and the flow of arms to the insurgents continuing despite Putin now being labeled a pariah by the world’s governments and press, the former seems unlikely.

 

There is no doubt that Ukraine must have immediate and substantial aid if it is to survive, its people must have jobs and the economy has to be rebuilt. In effect we need the type of support given to it that Europe and Japan received after the Second World War. Not aid that will be squandered or wasted on corrupt officials or spent on an arms build-up. It must come in the form of helping rebuild the economy, creating jobs, and what better place to start than the aviation sector.

Action plan for Ukraine’s aviation industry is needed.
Boeing and Pratt & Whitney pour massive amounts of money into Russia for the aviation sector, as does GE. Why not switch this to the Ukraine, should the Kremlin continue the aggressions? The next replacement for the Militaries of the world of the C5A and C17, why not produce that in the Ukraine who have all the knowledge gained with the AN-124 program? Built with a combination of Ukrainian and western know-how and technology, using the best components available globally, surely the U.S. and other governments could support this. All the talk of a global commercial need for up to 100 new AN-124s that we heard of from Russia, surely an independent and pro western Antonov Airlines would automatically get those contracts as the old Russian supply of AN-124 will never be commercially competitive against this, and Antonov airlines could be designated as sole source supplier for NATO, the U.S. Military command and other nations that like to step in.

U.S. suppliers contributed key components to Tupolev’s Tu-204SM  /  source: Tupolev
U.S. suppliers contributed key components to Tupolev’s Tu-204SM / source: Tupolev

Does this mean the breakup of Ruslan and SALIS? This cannot be excluded any longer, unless Russia changes course and fast. When things settle down and the Ukrainian government starts rebuilding its economy, this JV between Volga Dnepr and Antonov will surely come under scrutiny.

What about Aeroflot, Transaero and mostly AirBridge Cargo, a cargo airline 100% dependent of the west? As per the recent press reports, Ben Radstaak, chief of Air Cargo Netherlands, said the Dutch were a pragmatic people. “We’ll keep flying on ABC as long as it is allowed to continue flying and is not hit by any sanctions. Before that happens, some EU countries will have to stop supplying arms first. I have not yet noticed any sentiment to start avoiding Russian carriers.” See also our report on Air Cargo Netherlands in today’s CFG issue.

Money beats morality
So even though almost 200 of his countrymen died due to the current Russian instigated conflict in the Ukraine, even the Dutch remain “pragmatic”, which says a lot. It seems that money and jobs now come before morality and conscience, this is the world we live in today. This is an area outside of the Ukrainian government’s control, and most likely we will see business as usual for Russia.

 

The Crimea has been quietly dropped from discussion, as has Georgia and in a few months so will the atrocity of what happened to MH17. So for aviation, not much will change for Russian airlines, as sanctions will continue only when convenient. Targeting Russian airlines will mean retaliatory responses like closing trans-Siberian routes that would be seen as terrible news for European airlines.

But would it?
We put taxes on aviation for everything like the ecology, airport improvement, navigation fees, and on and on. If we have to fly around Russia until common sense returns, is it not worth it? Are airlines and the public that immune to what is going on that we would not accept this? Only time will tell and once the secrets of MH17 have been revealed, once the debris field is examined in full and we do not need the cooperation of the same people who shot it down on the ground to do that, Europe will have to decide.

It could be a game changer. Aeroflot and the Volga Dnepr Group would suffer most but we have a feeling that would only be temporary. The only way Putin will stop this global madness is if the people and industries in Russia feel the effects of a world that are not willing to take this anymore. Only when he loses his popularity from companies, Oligarchs who support him, and the general populations in Russia will it stop. He will be in power, or control, of Russia for decades to come in one form or another, that is obvious. If Europe does not impose sanctions now, ones that hurt the overall economy not just targeted individuals or corporations, he will continue. A FIFA world cup in Russia? A grand prix in Russia? These are the embarrassments that will hurt his prestige and not harm ordinary citizens at all.

Russian provider Transas and U.S. aerospace company Rockwell Collins cooperate in building airborne navigation systems  / source: Transas
Russian provider Transas and U.S. aerospace company Rockwell Collins cooperate in building airborne navigation systems / source: Transas

Is this break already starting?
The German magazine, Spiegel, reports today that the German counter espionage department (BND) is stating that Putin is starting to face massive opposition from his so called Oligarch friends who are fearing large losses in their empires if and when sanctions start to bite.
It seems that the Kremlin hardliners and the economic bosses are plying for Putin’s favor. One side in order to keep up military pressure and the other, to do all possible that sanctions don’t hit.
If this is the case, then it’s a fifty-fifty chance of who comes out on top.

Bright future.
There is a very bright future for Russia in aviation, especially in the cargo transporter sector, if the corruption and imperial ambitions of one man and his supporters could be stopped, hopefully through common sense. Russia has it all, just look at what China has done in the past twenty years without that abundance of natural resources, the same could happen there. It takes foreign trust and investment, an open economy, a curb on corruption, and spending money on infrastructure not arms and ammunition and military build-up.

Just think of what Ukrainian, Russian and western companies could do in building the next generation aircraft, combining the expertise and experience of all parties. Every attempt so far, be it converting A320’s into freighters, rebuilding the AN-124, producing civilian aircraft and many others have failed, and Russia has no one but themselves to blame.

As far as sanctions are concerned, if not now, then when will we say enough?

John Mc Donagh / Heiner Siegmund

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