Despite what has been a very strong performance from the Russian aerospace sector at the recent MAKS-2500 air show; the industry continues to be dogged by its problems of old. The problems perhaps best illustrated by the recent grounding of the Il-96-300 following the discovery of faults with the aircraft's braking system.

The aircraft's suspension embodies many of the issues that have beset the sector over the past 10 years . As it has struggled to find its passage between the obstacles of perennial Russian political intrigue and influence, an industry that continues to produce a poor quality product that reflects outdated work practises, many years of under investment and a lack of political will to fundamentally restructure the industry.

Since entering service almost 12 years ago, the Il-96-300 has left a litany of complaints from its operators about almost every aspect of its performance. Aeroflot having developed such a loathing for the aircraft, it has mounted an almost 7 year campaign of opposition to ordering additional new aircraft in offset for its duty free Western imports. Since the collapse of the project to produce a highbred version of the aircraft powered by Western engines and equipped with Western avionics. Aeroflot's principle objections have been that Ilyushin and VASO, along with engine producer Perm, could simply not supply an aircraft equal to those of Western origin in the carrier's fleet. The airline's poor experiences with its earlier Il-96-300s, largely attributable to the aircraft's PS-90 engines, having led to very low levels of utilisation and according to the carrier, considerable expense to fix in the absence of comprehensive after sales support. Although the performance of the PS-90 has improved of late giving higher levels of utilization to carriers, due to the reported assistance of Perm shareholder P&W.

Aeroflot's concerns about the aircraft appear to have been almost entirely borne out by events surrounding the failure of a component in the braking system of the relatively recently delivered Presidential aircraft while on a state visit to Finland. The failure, embarrassingly leaving the President to be carried home on a back up aircraft, blamed on a contractor producing a valve for the aircraft's braking system . The contractor failing to produce the part to specification, according to VASO and then failing to correct the problem when it had been made aware of it by VASO. The producer responding to operators complaints, but apparently unable to excercise control over its own suppliers, as the fault does not appear to have been rectified.

While an interesting insight into the Byzantine workings of a Russian industry, which is both under employed and under financed, and apparently unresponsive to complaints from its customers. The incident in itself was not seen by many within the industry as grounds for the attention grabbing grounding on August 22nd or the subsequent investigation revealing a further 28 faults. The faults, although undoubtedly of concern, apparently did not place the aircraft at risk and were in line with many of the previously documented faults of the Il-96. The grounding however, has had the effect of further lowering the credibility of the already struggling aircraft program while reinforcing the view of VASO's poor manufacturing and engineering capabilities. An outcome the authorities must have been aware of.

The authorities thertefore awareness of the outcome of its actions, appear to have a political agenda. While VASO is seen as a poorly performing facility that lacks competitive engineering skills and is a potential victim of any industry restructuring, it has not been a problem in the past, despite the trail of shortcomings in the manufacture of the Il-96, so why now? The answer would appear to lie not with VASO, but its manager Ilyushin Finance and its general director Alexander Rubtsov.

Rubtsov having fought a long and hard battle to get tax exempt Russian carriers Aeroflot and Transaero to take up their commitments to purchase Russian aircraft. Has deftly fought with Aeroflot in particular,to get the carrier to take the aircraft. To his credit in the last few months he has succeeded, through a combination of political lobbying and behind the scenes arm-twisting, to finally get a commitment to take 6 aircraft.

The discovery of relatively minor problem on the aircraft however, has offered Aeroflot and others, irritated by duty barriers, the opportunity to mount something of a counter attack and claim again with some justification, that the Il-96-300 is a poor quality aircraft and that Russia's leading airline should not be being forced to take it out of misguided concepts of nationalism. The airline gaining added leverage by its recent expressions of commitment to the Russian led RRJ as demonstrations of its support of the domestic industry.

Whether Aeroflot's complaints will make any difference, only time will show, but it has yet again sown doubt around Aeroflot's Il-96-300 deal and the Il-96-300 itself, when Aeroflot had been previously lobbied to a stand still by IFC. It also comes at a time when the credibility of IFC is under severe scrutiny following the announcement of a criminal investigation by the General Prosecutor's Office into IFC's sale of equity in itself to the state. The investigation suggesting that somehow Rubtsov had misdirected the funds in addition to overcharging the state. A charge that is being generally dismissed, but has none the less had led to the non-government equity in IFC being held by the authorities pending an investigation. A move that Rubtsov quite rightly argues is unlikely to endear IFC led projects to investors, both domestic and international.

IFC's controlling shareholder National Reserve Bank, or perhaps more correctly its controlling shareholder Alexander Lebedev, have also been in conflict with Government despite his more general political support for President Putin as a State Duma Deputy. Lebedev's specific point of conflict with the state being its proposed controlling role in the restructuring of the industry as a single unified producer, a role that Lebedev argues is more likely to kill the industry through starving it of investment, than ultimately save it. The vehemence of Lebedev's objections to the levels of state control proposed by Government, having led him to threaten over the last few months to go ahead in parallel with a private version of the state engineered structure. A threat that is unlikely to have gained him many allies within a Government , judging by its actions elsewhere, clearly irritated by private sector challenges to its power. Particularly when the challenge comes from a party that in theory through VASO's production of the An-148, could pose a threat to the state's anointed aerospace program the RRJ, by competing for limited orders within Russia.

While it is difficult to make a substantive case that IFC has been the victim of an orchestrated conspiracy. It would appear that the case of the faulty brakes on the Il-96-300 has allowed the company's opponents the opportunity to dish out a bit of payback for what is seen as previous wrongs, with the outside chance that in the case of Aeroflot, that they might even get of the hook on taking the Il-96-300s. A punishment all the easier to inflict when the normally politically astute IFC has, for once,has found itself on the wrong side of the political fence.

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