Russia has gone on the offensive against Ukrainian aircraft industry

Russian President Vladimir Putin ordered Prime Minister Dmitry Medvedev to consider no later than August 1, 2013 transition to modernizing foreign-developed aircraft types without asking for the foreign developers’ consent (the document is already freely available online). “I request you to take steps to expedite the introduction of changes to the aviation regulations that would allow for the modernization of foreign aircraft without asking for the type certificate’s holder’s consent,” the presidential instruction to Medvedev reads, dated January 7, 2013.

Director of the Center for Army, Conversion and Disarmament Studies Valentyn Badrak sees this document as a direct attack on the Ukrainian aircraft producers, because Russian-registered foreign-developed aircraft in need of modernization are mostly of Ukrainian origin, having been developed by the Antonov State Company (SC).

Despite Putin refraining from naming specific companies in his instruction, it is well known that Ukraine, which inherited from the Soviet Union a strong scientific and technological basis, has been one of the strategic partners of Russia in aviation business, and the Kremlin has been quite open about its desire to acquire this inheritance. Russians have long dreamt to do on their own lifetime extensions, maintenance and modernization of all Antonov-developed aircraft that are produced and operated in Russia, that is, An-140, An-148, An-158, An-124 and outdated An-24 and An-26 models, the expert says. To accomplish these objectives, Russia may not have enough qualified personnel, so Russian companies would then start to poach Ukrainian engineers with higher wage offers. Therefore, Badrak believes, there is a very real threat that Russia’s hazy aircraft industry policy aims may include degrading Antonov SC’s capabilities, for example, by eliminating its control over the company’s own projects in Russia and sharply reducing bilateral cooperation.

The Antonov SC’s spokesperson told The Day that they had not received any official requests from the Russians. General Director of the joint Russian-Ukrainian venture “United Aircraft Corporation – Antonov” Yurii Grudinin is equally clueless about Russia’s final decision. He refused any comments and referred us to the Antonov SC’s top management. The Day tried to contact the Ukrainian company’s president and general designer Dmytro Kiva, but he was abroad. We have learnt that Kiva is now attending the LAAD-2013 international air show in Rio de Janeiro, Brazil. In particular, the Ukrainian concern is using the event to hold talks with Latin American governments on a deep modernization of their An-32 military transport aircraft, to be done by the Antonov SC.

However, should we assume that Badrak is right and elimination of Ukrainian aircraft manufacturers’ presence in Russia is a real danger, what may be the consequences of it? Strategically, Russia’s offensive against the Ukrainian aircraft industry is unlikely to be limited to the head of state’s stance. In the past, Russia declared its intention to replace two Ukrainian aircraft with their Russian counterparts, An-70 with Il-476, a modernized 40-year-old model, and An-140 with Il-112, which never went beyond the blueprint stage. These plans are still alive, as confirmed by the Russian defense ministry’s recent order for 39 Russian Il-476s. How can it be reconciled with the same department’s plans to buy 70 An-70s? It seems, then, that Russian aircraft manufacturers have redoubled their lobbying efforts lately.

As Russia is protecting local manufacturers and thus driving the Ukrainian aircraft out of the Russian market, it neglects risks inherent to this approach. One of them is locally-developed models often falling short of their Ukrainian counterparts, since developing new aircraft science and technology basis requires considerable time. According to Badrak, even the modernized Il-476 model remains in many ways the same 40-year-old Il-76. When compared with the modern aircraft, such as An-70, its fuel consumption is 1.7 times higher. Due to the small diameter of the cargo hold, it can carry only 70 percent of existing armament systems, as opposed to An-70 with its 98 percent carrying capacity.

Honorary president of the Motor Sich JSC Viacheslav Bohuslaiev commented to The Day on the current talk about Russia modernizing aircraft on its own: “The desire, of course, is there, but everything has its cost ... Development never comes free...”

From a legal standpoint, Russia may develop aircraft independently, as intellectual property enters the public domain over time, an analyst with the Center for Transport Strategies Maksym Arslanov told The Day. “However, I am very much unconvinced that they will be able to benefit from their rights in practice, as all the documentation is here, and Russia has few functioning design bureaus,” he said.

Why is Russia going to take this step? Arslanov believes it has more to do with political pressure than with genuine intentions to produce aircraft on its own. “This is one of the arguments to be used in negotiations on other issues ... They are looking for some concessions, such as Ukraine’s accession to the Customs Union,” the expert suggested.

According to The Day’s high-ranking source in the Air Force of Ukraine, one should not jump to conclusions about further cooperation in the aircraft industry between the two countries. He says that even should the Russians modernize their An-140, they would limit it to the extent authorized by the Ukrainian side, and such cooperation would benefit both countries. Russia’s chances to modernize An-124 are very slim, on the other hand, the source maintains. The aircraft, he said, was developed in the early 1980s. After over 30 years, the market does not need An-124 as it exists now. However, the Antonov Design Bureau’s know-hows are embedded in the design of this aircraft which is still operational. Now, the source continues, independent re-development of these know-hows by the Russian design bureaus will take a dozen years. As for the prospects of cooperation on the An-70 project, he says it is too early for speculations, because no party has officially renounced the intergovernmental agreements, and Russia cannot produce it alone, since it does not possess the required documentation.

Ukraineshould prevent the termination of cooperation with Russia, The Day’s experts agree, because realization of this scenario would mean the loss of a major market for Ukrainian manufactures. “We do deliver fairly small volumes to Latin America, the Middle East and Africa, but Russia remains the main market for new aircraft,” Arslanov said describing markets for Ukrainian aircraft products. He added that European countries had no use for our aircraft, because they were producers themselves and protected their markets as best as they can.

Arslanov is in full agreement with the Aviation Institute Engineering Bureau’s chief engineer Hryhorii Cherepashchuk, who supports the idea of co-producing aircraft in cooperation with Russia. This situation, he added, “should be an incentive to look for new markets. The search for markets is necessary, but all these revolution-stricken countries, such as Egypt, have been lost, because it will be Boeings, not Ans, that would dominate there in the future, so our potential market is being reduced further still,” he says.

“Ukraine is facing a challenge. On the one hand, it needs some serious money to re-arm and bring to strength its armed forces. On the other hand, Russia is pointedly refusing to cooperate with Ukraine on the combat readiness, security and defense industry projects. Russia is now refusing to cooperate on anything, starting with modernization of air defense systems, including missiles and aircraft, continuing with virtually all aviation projects, including the An-70, and finishing with naval repair orders. We will need to find other ways to ensure the country’s defensive capability, which may include cooperating with the West or the emerging Southeast Asia nations on military technologies,” Badrak stressed recently at a press conference.