Published: 6/19/1998

This month we are providing some of the views of two leading players in the Russian aerospace.One is the Ministry for Economics for the Russian Federation and the other is Boeing, the US aircraft manufacturer. Dr Aleksandr Knivel, head of aviation department of the Ministry for Economics of the Russian Federation speaks to ConCISe. What happens now to the Russian aviation industry is something which should inevitably take place during the transition from the planned to market-driven economy. The structure of orders for the industry has changed dramatically in the last several years, because military orders dropped and also because of the nature of the market-driven economy itself: our market is now open to foreign manufacturers, whereas our industry tries to find customers on the international markets. These changes required restructuring the Russian aviation industry, the concept for which has been prepared by the Ministry for Economics and by the Government. In brief, this concept calls for uniting the design bureaux with mass production factories into unitary structures, similar to those of the Boeing company or Airbus Industrie. Thus we would have one structure which would design and produce aircraft, as well as undertake the marketing activities, sales and after-sale support. Unfortunately, the current situation is characterised by an unpleasant fact that the international market for aircraft is over-loaded. In this situation the onlyprojects that could survive are those that are fully competitive with the best foreign products, made to the world's highest standards. We do have aircraft like that, such as the Il-96-300 wide-body airliner, which is currently in everyday service on the intercontinental routes over the Atlantic, and the Il-96T freighter, which has recently obtained a Russian airworthiness certificate and is now undergoing certification process with the US Federal Aviation Authorities (FAA). The Il-96M passenger airliner, a further development of the family, is to enter certification tests soon. The Il-96T and -96M are designed and built in close co-operation with the US aviation industry. Also, we have the Tu-204 family and the Il-114 regional aircraft, both being very competitive products, as well as a number of smaller aircraft, like the Il-103, which is now undergoing the certification process with FAA. I believe that these types will sell well on the international markets, but at the same time, we do realise that the number of orders for the Russian aviation industry will never be as great as it used to be in the past. Therefore, the big aviation industry that was built at the time of the Soviet Union is no longer required. The process of restructuring was initiated as a means of saving the most competitive part of the existing aviation industry. Its task has been to help the Russian aviation industry integrate itself into the world's economy, through a series of joint programmes with Boeing, Airbus Industrie and other large aviation companies. It has been an easy option, but we firmly believe our industry will succeed in this process. (GST698.1)(VK) INTERVIEW Tom Schick, executive vice-president and deputy president of Boeing Commercial Airplanes Group. Question. For more than five years Boeing has been involved in a number of joint programmes with Russia. What are the changes in the approaches of the Russians to doing business that you have observed? Russian industry and the government are now more interested in understanding the commercial aspects of aviation business. It is a positive trend, because to be a competitive player on the international market you have to understand this market and how to work in it. I think they have recognised this and are moving towards doing that. There also is a better understanding in the industry that this is like a road that leads to better competitiveness. Do you think the Russian aviation industry will recover from the crisis? I think that the Russian aviation industry has many, many strengths. If you look throughout its history, you will see the dynamic industry that had to change many times and has done so. I agree with those who say that after the transition to the market-driven economy and integration with foreign companies, the Russian aviation industry will be very competitive. Changes are not always easy, but usually it means you get better and you survive. I believe that with the leadership that the industry has today, the Russian aviation industry will survive and be healthy for a long time. But it will not be a smooth ride. Every company, be it an airline or a manufacturer, is faced with the need for change. The economics constantly change, technical requirements change, what customers want from airlines change and technologies change. That is why it is important that we have co-operative efforts. It is beneficial to the Russian aviation industry and, although I cannot speak for the other industries around the world, it is certainly beneficial for the Boeing Company. Does Boeing have plans to acquire the factories in Russia to assemble Boeing aircraft? Boeing is a commercial company, so we try to use our financial resources to the best we can. We intend to go forward with production efforts in Russia, but we have the same expense/revenue problems just like the Russian aviation industry. Today, we are building our aircraft where we are. Moving production lines to other places is very expensive, so it requires much consideration. Before we make a decision we must take into account what would be the impact of moving. But at the same time, we have parts of aircraft being built around the world. We made that decision based on economics, practical and technical reasons. As we work our way up through developing our relations with Russian companies, we will observe the same considerations. But if buying a factory or a part of it for production of something for Boeing aircraft would seem economically feasible, will Boeing do so? My answer to that question is "yes".(GST698.2) (VK)

Article ID: 203