Russian Banks See Big Business in Replacement of Soviet-era Airliners

 - September 26, 2011, 7:44 AM
A spike in accidents prompted calls this summer from Russian president Dmitry Medvedev to ground aging Soviet airliners such as the Tupolev Tu-134.

The crash of a chartered Yak-42 regional airliner on September 7 in Yaroslavl, Russia, that left 44 professional hockey players dead has prompted calls from authorities to take additional measures to encourage the country’s airlines to merge into bigger structures and replace aging Soviet airplanes. In fact, Russian President Dmitry Medvedev recently presented a plan to allow aviation authorities to “discontinue the operations of air carriers incapable of ensuring flight safety.”

The Kremlin leader voiced two slogans: “Merge or close down” in regard to airlines and “Get properly equipped or withdraw from service” in relation to Soviet-era airplanes still flying. Medvedev further said the Russian government would “make a hard decision” on renewal of the nation’s airliner fleet. He added that passenger safety, not survival of local manufacturers, should stand as the top priority for his government.

If domestic makers cannot provide safe, modern airplanes in sufficient numbers, Medvedev stressed, then Russia should buy them from elsewhere. He said that despite the expense, he would give the Russian government the “go-ahead” for development of a major fleet renewal program, “which requires big money.”

Kremlin-controlled banks reacted immediately. They said they would support the fleet renewal effort, if the government provides subsidies worth $3.5 billion for the import of Western jets. Vladimir Dmitriev, chairman of state-controlled bank VEB, went as far as to suggest development of a new regional airplane created jointly by Russia and leading aviation nations. He specially mentioned “France and Italy,” or “Canada and Brazil.”

Still, to many observers, the call for urgent measures to replace aged Soviet airplanes seemed a bit odd as most Russian airlines have already renewed their fleets to a large extent. For passenger service, the airlines operate 380 mainline and 61 regional airplanes of foreign origin. In 2008 the number of imported passenger airplanes exceeded that of indigenous types, and this year the airlines operate twice as many Western airplanes as Soviet-built aircraft.

Meanwhile, imported airplanes carry 83 percent of passenger traffic, compared with 6 percent for modern indigenous types and 11 percent for older domestic designs. Although a uniform import customs tax of 20 percent remains in place, already enforced amendments to the general rule exempt airplanes that weigh 90 metric tons or more.