The government and its associated agencies, historically suppliers of politically expedient, but unworkable and nonsensical restructuring plans, appear in private at least, to have learned that the future of the industry lies not in splendid crumbling isolation, but in the movement of the industry closer to the global market. These moves have however, run in parallel with a significantly more public policy stance on the part of government, to persuade its domestic constituency that these developments do not amount to fundamental change for the industry, but evolution. Regardless of the government"s stance, the proposed developments for the industry will lead to serious structural changes. Foreign companies, who will provide much of the new capital, will not repeat the sagas of wasted time, money and opportunities of the early and mid nineties. They will expect Russian companies to fulfil commitments and adopt the ways of the global industry with the government and foreign partners looking for a style of management with more in common with Seattle than that of Ulyanovsk .

The recent events at Aviastar have given some indication of how far the government is prepared to go with the passing of de facto control of the plant to a foreign shareholder, against the position of Tupolev the government"s representative, in an effort to cut through the torpor that has dogged the plant over the last four years. The proposed JVs with Boeing and reportedly with EADS, for the development of regional jets, will place Russian aerospace companies in the direct control of foreign managements. It is unlikely that Boeing or EADS will be content to have aircraft developed without a high level of active participation and control. Elsewhere United Technologies continues its slow but determined development in Russia, moves reflected elsewhere by companies such as SNECMA subsidiary Messier Dowty , that recently announced the establishing of a design presence at Nizhni Novgorod based Gidromash.

The pace of these changes is difficult to determine, but they will be driven by the confidence of the corporates in their ability to grasp the low cost and high quality benefits of the Russian industry profitably. The fundamentals of the market that attracted the initial foreign interest in the nineties remain. The economy appears robust and underpinned by increasing oil production; the political environment is both stable and internationally accepted and increasingly business friendly. The claim that “Russia ruined my career" uttered by one US aerospace veteran reflecting on his period in Russia is significantly less likely to be heard today. Risks remain, but there are substantially fewer and the benefits can now be seen.

Leasing the bug bear of any domestic aerospace recovery appears to be slowly being resolved. The award of the government guarantees for major aircraft leasing although probably less important to the overall future of the industry will prime the pump for foreign and domestic investors to support other schemes that will meet the needs of the increasingly consolidating air transport industry. The latter continuing to grow at double digits growth rates both domestically and international, dominated by companies that increasingly look like modern airlines, rather than the remnants of the state transport system they were created from.

For the government"s part, the regime has proved to be disinclined to continue to pour precious resources ad hoc into the remnants of the industry despite the possibility of increased funding. The government despite much noise to the contrary, in reality taking the role of either passivity in the future of certain enterprises or as in the case of TAVIA clearly stating that its future as a fully integrated aircraft producer in the Russian sense is at an end. Equally it has taken a more proactive role in the creation of potentially viable entities such as the Aerospace Equipment Corporation from a number of producers.

Elsewhere, recently proposed changes from the Ministry of Transport and the Ministry of Economics and Trade Development regarding liberalising of the tariff regime also suggest that the government may have started to bite the bullet ahead of WTO accession, that the industry cannot be protected by barriers alone and the country"s need for participation in the global industry and a viable air transport system, outweighs the political agenda of a few regional governors and industry grandees eager to preserve the status quo.

Despite the improving situation within the industry however, Russia and the CIS are not the United States or for that matter the European Union, change will come slowly and it may be a rocky road given that many of the industry"s leaders have yet to realise the changed circumstances. Those responsible for driving through the changes will have to steer a cautious path and avoid as many political waves as possible, but major change will come.