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Friday, February 1, 2008

Eye on Russia: Hints of Change

Elizaveta Kazachkova

PRODUCTS | AIRFRAMES

When one envisions Russia, an image of a helicopter must come to mind. If it is not the first thing that does, a helicopter certainly is in the top 10, straight after "vast land" and "bad roads."

Deteriorating regional airport infrastructure, which impedes airplane operations within 600 km (325 nm) of Moscow – exactly where the growing number of industrial assets is placed — just add detail to the picture. Russia has greater demand for private and corporate air travel than countries with less demand but greater growth in those sectors. Still, the helicopter sales boom predicted by industry experts and hyped by the mass media is yet to come.

Alexander Yevdokimov, director of the company Jet Transfer, which was named Bell Helicopter’s official dealer for the Russian market in 2007, says the helicopter market "much resembles the situation in the airplane segment of business aviation back in 2001." There are very few commercial operators offering services, mostly due to a highly unfavorable regulatory environment. On the other hand, it is clear the demand is there, as well as the money to give it a boost. So once the barriers are removed, the market will see fast growth. "I would see no less then a dozen operators, who could easily add several helicopters to their business jet fleets", Yevdokimov says.

I offer a number of observations of recent changes and let you, the readers, decide for yourselves whether the Russian helicopter market is on the brink of a major change.

Certification of rotorcraft to Russian (Interstate Aviation Committee, or IAC) standards, is evidence of airframers’ interest in this part of the world, and in itself is an unambiguous indication of growing demand. The process, which started as early as 1999, is now going at full throttle, with major helicopter producers (AgustaWestland, Bell, Eurocopter, and Robinson) pursuing certification of most or all of their product ranges. "Although four Bell models received their IAC certificates a few years ago, we have initiated the certification process for two more rotorcraft types, including Bell 412EP," says Yevdokimov. With the oil and gas sector remaining the largest customer for helicopter sellers, Bell’s dealer hopes to find its niche on this market.

Gazpromavia, the aviation department of the natural gas monopolist Gazprom, at present operates a fleet of some 90 helicopters, just one of which is Western-produced (a Eurocopter EC120B). It is looking for rotorcraft to service its operations in the Shtockman field, 550 km (300 nm) off the Kola Peninsula in the Barents Sea. Gazpromavia Deputy Director Alexander Krugov has said Eurocopter’s EC225 Super Puma is the most viable candidate for fleet expansion. The choice of aircraft for offshore operations is partly dictated by the foreign project partners, which insist on using Western-built aircraft for the project.

Gazpromavia opened a Eurocopter service station at its base at Ostafyevo, near Moscow, in 2007 — the first Russian maintenance center for Western-built helicopters. Bell and AgustaWestland also declared their intentions to open service facilities in Russia to support their growing fleets. This may be viewed as nothing but another sign of the "approaching boom." While such measures are vital for local customers, their return -on-investment period is difficult to predict. According to Jet Transfer, Bell’s fleet in Russia at the end of 2007 did not exceed 15 machines. AgustaWestland reports around 10 aircraft in the region.

Legislation presents a major obstacle to market development, in several aspects: high import taxes, a "permission-based" air traffic control system, and regulations in terms of aircraft ownership and operations. The last two have been addressed in the new edition of the Air Code, due to come in force in 2008.

For the first time ever, it has become legal for Russian citizens to own private aircraft. Before changes were made to the Air Code, there were three equally uneasy ways of operating a private helicopter here: either create an airline, put your aircraft on the operating certificate of an existing operator (hoping nothing will happen to it), or fly it under general aviation regulations (GA having in the last decade survived the turmoil of half-measures and dubious compromises). When the changes become effective, it will be easier to purchase and register a helicopter. However, many issues associated with the operation and maintenance of private aircraft remain complicated.

The second major change for helicopter operators is the much anticipated shift from permission-based ATC to the practice common in most of the world of just filing a flight plan immediately prior to flight. Even now, Russian operators have to file their flight plans 24 hr in advance. "This is non-sense! says Sergey Voronezhev, flight director of Moscow-based MosCopterLine. "For an hour-long flight, I have to ask for a permission a day in advance — and they may not grant me one". His hopes are high that with the shift of control over airspace from military to civil authorities the situation will finally change.

The last but not least sign of life on the Russian market is the first dedicated rotorcraft show, Heli-Russia, planned for May 2008. Major helicopter firms are expected to participate. In 2007, the annual business aviation exhibition JetExpo featured a number of helicopters and proved the value of such venues for rotorcraft sellers.

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