Russia relies on domestic aircraft production – Economy

The prospects for Russian airlines and the aircraft industry were beyond bleak. Since the beginning of 2022, airlines have no longer been allowed to fly to many of their destinations abroad. The leasing contracts for a large part of the fleet, consisting largely of Boeing and Airbus aircraft, were terminated without notice. Western suppliers cannot send components for new machines or spare parts for old ones to Russia. Airbus and Boeing had to stop communicating with their Russian customers. All in all, it seemed a pretty good recipe for slowing down the industry.

The sanctions imposed by the West on Russia over the war in Ukraine were intended to hit aviation, one of the country’s key economic sectors. But more than a year after the start of the war, a large part of the Russian civilian aircraft fleet is still flying. At the same time, Russia is trying at great expense to revive the domestic industry so that more and more Western machines can be replaced by Russian ones in the next few years. By around 2030, the transformation should be so advanced that the industry is independent of the West. Until then, improvise.

It’s like traveling back in time to Soviet times. At that time, Russian airlines mainly flew domestically and to friendly countries. The machines they used were technically outdated and inefficient, the state-owned industry built the jets with the support of billions in subsidies and without Western technology. The collapse of the Soviet Union was also the end of an era, as domestic airlines quickly discovered how much more economical and reliable the Airbus and Boeing models were than those of Tupolev or Ilyushin. Since the airlines were extremely cash-strapped in the early 1990s, they usually financed the new fleets through leasing deals, which until recently was the dominant financial tool in the Russian aviation sector.

After the leasing companies terminated the contracts without notice, the Russian government forbade the domestic airlines to return the machines and had the fleet, which had previously been registered mainly in Bermuda and Ireland, transferred to Russia, a state-ordered theft of more than 500, so to speak airplanes. According to Russian information, the actual owners were able to confiscate fewer than 100 machines – the leasing companies had to book billions in special depreciation. In any case, the machines are worthless on the international market because flight movements, repairs and maintenance can no longer be traced.

Speaking of maintenance: Actually, the majority of the Russian fleet should have been grounded long ago, because the flow of spare parts deliveries to the country should have dried up with the embargo. But according to estimates, around 1,000 of the around 1,200 machines in total are still flying. Apparently there are still enough ways to bring spare parts into the country via third countries that disregard the embargo. And if it really doesn’t go any further, machines are put on the ground and cannibalized.

The Tupolev Tu-214 is also to be built again

The exercise is tedious and can be risky if necessary repairs are delayed. Above all, however, it cannot be continued in the current scope in the long term, especially since the fleet alone is to be gradually renewed due to age. This is where the state-owned United Aircraft Corporation (UAC) comes into play, which has since absorbed a large part of the Russian aviation industry. According to the government, UAC is to deliver more than 1,000 new aircraft to domestic airlines by 2030. UAC builds – theoretically – two models that are reasonably international standard – the short and medium-haul aircraft MC-21 and the regional aircraft super jet.

In theory, because both were developed at a time when Russia still wanted and was allowed to cooperate a lot with the West. Now need both at the MC-21 as well as at super jet First of all, all Western components – engines, parts of the cockpit electronics or landing gear – are replaced by Russian ones. This usually takes several years. UAC now even has its own stake in the super jetproject, in which the Italian aviation group Leonardo is also involved, was sold to an investor from the United Arab Emirates. Final assembly is also to take place in Dubai in the future. Buyers should only be found in Russia or friendly countries. Apart from the sanctions that prevent aircraft exports from Russia: Russian industry has by no means designed its production capacities for such quantities of new aircraft. In order to bridge the time, the industry should even go back to the old Tupolev Tu-214 build, which dates back to Soviet times and since then actually only existed as a program on paper.

In order to somehow achieve all this, Russia is pumping huge amounts of subsidies into the industry: more than two billion US dollars went to the airlines just to compensate for additional costs and failures in 2022, four billion dollars are to be given to leased aircraft buy, more than three billion dollars for deals with Russian leasing companies and banks and around five billion dollars for the restart of domestic aircraft construction.