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Thursday, May 1, 2008

Industry Reunion

Elizaveta Kazachkova

PRODUCTS | AIRFRAMES

Looking back at 2007, one can’t help being impressed by the scale of events aimed at shaping the future of the Russian helicopter industry. After consolidating all design and manufacturing assets under Helicopters of Russia holding, the Industry and Energy Ministry came up with a program outlining production development for the next seven years. According to it, Russia should hold no less than 15 percent of the global helicopter market (both civil and military) by 2015. To achieve this, the ambitious plan implies, the state and private investors should be ready to raise 140 billion rubles (about $5.7 billion). This shows the scale of efforts and time required to reintegrate Russian producers and operators into the global helicopter market, where they once belonged.

A main role of the Helicopter Industry Assn is that of a facilitator. There is indeed much that needs facilitation.

"Last year showed whether the Helicopter Industry Assn would have a reason for being," said Mikhail Kazachkov, chairman of the newly created organization. "The companies that became first members proved that such community initiative is in great demand, and that we would have a busy agenda".

One of the main roles the new player gets is that of a facilitator in the tangled relationships between manufacturers, operators, and their customers — and there is indeed much that needs facilitation. During the hard times, the manufacturers grew accustomed to loading all their expenses on the operators, who had to pay for every single change done to their machine – be it lifetime extension (which for most "small-series" models has to be done annually), service bulletins, or aftermarket support. This psychology has to go, Kazachkov asserted, but it won’t change in a fortnight.

Another mission of the association is to convince customers, many of which are state structures, that helicopter operations cost more than what they are used to paying. Said the chairman, "The idea we are trying to convey is that by underpaying the operators, customers take the money away from the industry. That means the operators cannot renew their fleets, the manufacturers are left without work, and so on".

To foster this dialog, the association is organizing HeliRussia, the first dedicated rotary-wing exhibition in Russia ever. Having received its blessing from the Industry Ministry, it will feature about 100 exhibiting companies, including all major Russian production sites.

"We have come to understand that such exhibitions are one of the ways for a country to promote international cooperation, which in today’s world is absolutely required for helicopter production", said Kazachkov.

Use of helicopters as means of private transport is becoming increasingly popular. Though general-aviation regulations are still lacking, improving conditions attract new owners, and the market potential is starting to appeal to Western manufacturers. For many of them, HeliRussia means exposure to potential buyers of the lighter end of their model range.

"Although it is not easy for once-independent companies to play as a team, consolidation and nationalization serve this industry well," Kazachov said. "It removes the unnecessary competition between two major design bureaus, which now don’t have to fight each other to win orders from state-run organizations." Former private owners failed to invest any significant amount, which led to manufacturers shifting their production focus from helicopter parts to what-not to survive, he said. "Today, all these facilities are loaded with work. However, we all realize that in such a complex and hi-tech industry as helicopter production, there is no quick-fix way to overcome the sad results of a two-decade gap. It will not happen over a couple of years."

Joint programs with Western manufacturers could provide the necessary short cut to a brighter future, he admitted. Such talks are under way with almost all major rotary-wing firms, he said, with AgustaWestland’s AW319 the first candidate for assembly in Russia. The country will also further promote its leading positions in the medium-to-heavy sector. An example of this strategy is certification of Kamov’s Ka-32 to European Aviation Safety Agency standards.

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