Aviainvestors will provide Siberian carriers with funding for fleet renovation and upgrade

Published: 5/17/2000

Following the efforts of the governors of a number of Siberia's regions in the summer of last year, the Siberian Regional Association has decided to create a Siberian aviation leasing company called Aviainvestors, with the objective of providing carriers in the region with funding for renovation and upgrade of their fleets. The move by the association has received the support of all the governors of the region. Currently, according to the association, only 10-15% of the regions' helicopters are flying. With overhaul costs of 2.5m rubles for an Mi-8 and replacement costs of 85m rubles for a new helicopter, given current financing conditions the situation is likely to remain that way for the foreseeable future. The plan is for the lease company to acquire the helicopters, renovate and lease them back to the operators. The organisation will also be responsible, according to a report in regional newspaper Yakutia, for the administration of functions such as the provision of fire-fighting services. A number of regions in Russian have sought to intervene in the aviation sector, particularly in those regions with particularly depleted air transport capacity and the highest dependence on air transport. The fact remains, however, that leasing solutions require funding and currently little is available at rates that would make it viable on a commercial basis. It is also interesting to note that one of the biggest contributors to the poor cash flow of the regional operators is the failure of both federal and regional government to pay for flights and subsidies in a timely fashion if at all. If the structure of leasing to operators is to pay, then government payments will have to be made. In the reports of this particular scheme no mention is made of funding, although earlier reports did say the ambition was for the company to own 40-50 aircraft to restore air transport in the region over 2-3 years. The fact that the plan appears to have little more detail after almost a year suggests that the leasing scheme's lack of funds may mean it will have a relatively minor impact on the sector's major problems. It is encouraging to notice that the same 15% appears to be still flying ten months on.

Article ID: 1779