Thursday, June 1, 2006
Selling in the Land of Sikorsky
Emerging demand for Western-built helicopters spurs certification activities, as well as development of maintenance and training facilities.
The fleet of western-built helicopters is growing here. More than 135 have been imported since the Soviet Union's break-up, most since 2000.
There are several options for registering aircraft in Russia, so official statistics are very sketchy. The one way to get precise data is to take a head count.
To do this, I interviewed the main dealers and representatives of Western manufacturers: Eurocopter Vostok (Eurocopter's Russian-registered subsidiary), Aviamarket (Bell's official representative and Robinson's biggest dealer here), Gals (MD Helicopters' official distributor in Russia and the Commonwealth of Independent States, as well as a Eurocopter dealer), and Ruspromavia, which is focused on sales of used Gazelle 341s. The research shows sales of piston aircraft prevail (72 were delivered), with turbine aircraft slightly behind (66).
In the piston segment, Robinson leads; other manufacturers have hardly gained ground here. The first private Western-built helicopters in Russia were Exec 162Fs and other kit models bought in the mid-1990s. But very quickly local aviation fans shifted their focus to the R44 and R22 and Enstrom's 280FX. Only two Enstroms were brought here; Robinson models became extremely popular. As of March, the number of R44s exceeded 67 units; there are only three R22s.
Three dealers are offering Robinsons here, but the heavyweight player is Moscow-based Aviamarket. It entered the market in 2003 and has delivered 39 R44s and R22s, said Mikhail Yushkov, the firm's marketing director. This year it should deliver 19 more, with the number of Robinsons in Russia topping 100.
The typical customers for piston aircraft are private owners lured by their price and operational characteristics. Local dealers for several years have been trying to persuade Russian commercial operators to buy piston equipment, with little success. Domestic helicopter operators are loyal to Russian-designed turbine aircraft. At the same time, they badly need to modernize aging light helicopter fleets. A cost-effective solution could be a piston helicopter.
Dealers hope a precedent of intensive commercial operations with a Western-built piston aircraft in a tough local climate would help sales. That precedent could be set very soon. In mid-2005, Ufimsky Airlines, based in Ufa, Bashkortostan about 650 mi. east-southeast of Moscow, bought several R44s for commercial operations.
Turbine sales are climbing, too. The leader is Eurocopter--36 of its aircraft are flying in Russia. According to Eurocopter Vostok CEO Jerome Noulens, that firm helped buy 20, while private owners bought 16. This year, the firm plans to deliver six more.
MD Helicopters has 12 aircraft in Russia, said Gals director Evgeny Ermakov. Most were bought used.
Bell has eight of its aircraft in service here. Aviamarket's Yushkov said 15 more new ones are to be delivered this year, with several more bought secondhand. With those sales, Bell would surpass MD.
A significant number of turbine helicopters in Russia are bought on the used market. The reason is delivery times of 8-16 months.
The same is not true for piston equipment, which some dealers order in advance on their own, then sell the delivery slots to Russian customers.
Last year, the real rush for aircraft certification started in Russia. Understanding the rush requires an explanation of aircraft operations here.
Under Russia aviation regulations, there are three options for legally operating a private or corporate aircraft. The least popular is to register as a general aviation operator. Due to unfriendly local aviation laws, the red tape expenditures are unbearable.
The second option is to get an aircraft operator certificate, which requires formally creating your own airline company and operating private- or corporate-owned helicopters under rules for commercial carriers. Some owners put their helicopters under a local airline's aircraft operator certificate under management agreements. This is a rather effective, but costly option--it is traditionally exercised by corporate owners.
Finally, the third way was to put your asset in the registry of the Russian Defense Sports-Technical Organization (ROSTO). This public organization is controlled by the Russian ministry of defense and initially was created to train pilots for the Russian army. (Training was free, but in case of mobilization these pilots can be drafted into the air forces). As it is a military organization, all ROSTO's aircraft are operated as military aviation and are not controlled by Russian civil aviation authorities. That means you could fly legally on a ROSTO-registered aircraft even if it was not certified in Russia. At the same time, there were some severe restrictions. The most inconvenient for corporate owners was a ban on commercial operations.
The ROSTO option was very popular with private owners. As a result, the bulk of private helicopters fly under ROSTO's flag.
In mid-2005, the situation changed dramatically. After several crashes of rotary- and fixed-wing aircraft, ROSTO stopped registration of private-owned aircraft. Now, to operate a helicopter legally, an owner needs to put it in the civil aviation registry.
Here two big issues arise. First, the aircraft must have a type certificate issued by Russia's Interstate Aviation Committee. Second, owners face difficulties in validation of their aircraft's operational history if it previously was under ROSTO registration and rules.
The forced move from the ROSTO to civil aviation registry, combined with growing interest in commercial operations, spurred the certification rush. Last year, Bell gained certification of the 206-B3 and 430 and Eurocopter of the EC145/BK117C2. Local dealers paid for certification of the R22 and R44 Raven 2. This year, Bell plans certification of its 427 and Eurocopter of the EC120, EC130B4, AS350B3, AS365N3 and EC155B1.
Manufacturers also are cementing their presence here by developing maintenance and training facilities.
As a Russian-registered company, Eurocopter Vostok faces fewer obstacles in doing this, said Noulens. By year's end, it plans to open a parts center here and three service centers (in Moscow, St. Petersburg and Tumen in cooperation with local Eurocopter operators). It also plans to open a training center in Moscow or Tumen.
Aviamarket is moving in the same direction, though with more modest steps. In February, it arranged training for a dozen engineering staff members to support Robinsons. This was a breakthrough in that the training was certified by Russian civil aviation authorities. Aviamarket plans to start pilot training under commercial aviation requirements (several flight schools provide pilot training here, but all under ROSTO rules). The first group will get civil aviation pilot licenses shortly, said Yushkov.