Andrey Kozlovskiy, PANH Helicopters
Release Date: 2011-09-02Andrey Kozlovskiy: Krasnodar is the other gate to Olympic games
Andrey Kozlovskiy, director general of PANH Helicopters, has been interviewed by Russianavia.net for a report on the Russian helicopter industry as a global player, to share his vision of the development of PANH Helicopters as one of the strongest operators in the south of Russia, of the challenges that operators encounter on the Russian market and the prospects of expanding the fleet with light helicopters of foreign make.
Mr. Kozlovskiy, PANH Helicopters, unlike other operators, is also a scientific and production company. Could you start with the history of your company, the development of its scientific competences and its current priorities?
It is commonly known that PANH in Russia is not so much of a proper name but an entire subindustry – aviation for the national economy. In early 1990ies, we realized that our scientific component needs to remain our priority and our competitive edge. We do the tasks that a normal helicopter operator cannot take or is not authorized or qualified enough to take: we are licensed for testing of aircraft, we have qualified test pilots. This is the potential that we keep and finance. And in general, it is productive.
What are these specific tasks entrusted to PANH Helicopters and who are your clients?
Concerning the unusual tasks that we perform, I would firstly like to mention unique construction works using our signature system of azimuthal orientation of cargo on external sling which is imperative for certain construction works. The clients for this type of works are mainly telecommunication companies (for instance, we took part in erection of Shabolovskaya TV tower), and companies from big industries such as oil and gas or construction. Concerning our production and scientific component, we produce lift-type systems for fertilization in agriculture, we work with the state authorities like EMERCOM (Ministry of the Russian Federation for Civil Defense, Emergency Management and Natural Disasters Response – Editor’s Note) for development of new rescue equipment, we participate in testing of firefighting equipment.
It’s not surprising that Mikhail Kazachkov, chairman of Helicopter Industry Association of Russia, says that aviation is art of minimalism and helicopters are the twice the art of minimalism! A lot, if not everything, depends on the fleet. How can you characterize the fleet of PANH Helicopters?
Our fleet is based on mid-to-heavy helicopters. Three Mi-26 and Ka-32 are our workhorses because they are indispensable in the mountains for transport and construction; we also operate the universal Mi-8 and Mi-8MTV. In total, we have more than 30 helicopters in Russia and abroad.
In 2009, when we first met Sergey Mikheev, general constructor of Kamov, he explained us the technical advantages of Ka helicopters in the mountains.
Exactly, because Ka-32 has no tail rotor and a smaller main rotor, it can be used for missions that are impossible to make with Mi-8MTV class helicopters. This is why Ka-32 is now so demanded for 2014 Olympics construction in Sochi. The volumes are growing and the time flies. We are there, in Sochi, since the very beginning, and we are not the only operator working there. Basically, we try to diversify our works and their quantity.
PANH Helicopters is the largest operator in the south of Russia. Do you feel the local competition?
The only segment where we are yet to try ourselves is B2C. The few who can afford private transport have bought tiny helicopters, large companies have their own corporate aviation, and there is also the segment of helicopter services for state authorities. But to make helicopters available for the public on a wider scale is a more challenging and exciting mission. On the eve of Winter Olympics 2014, the idea of buying a helicopter has become quite popular. Sochi is a place where you can fly for your own pleasure and where you can make money, and everyone understands it. But, our experience in this region gives us a more critical look at this.
Unsurprisingly, Helirussia 2011 gathered a lot of Sochi hoteliers. Some of them were curious about the pre-production model of the new SKYe SH09 by Marenco Swiss Helicopter.
At this moment, we only operate Russian-made fleet. Russian helicopters are more understandable and it is cheaper to re-train pilots in Russia than abroad. At the same time, we realize that we need to consider lighter and more comfortable Western-made helicopters like AgustaWestland. The class of AW109 and AW139 are not produced in Russia but they are necessary for new missions that we will start to do earlier than we will know the exact time for the start of serial production of new Russian light helicopters, their price and their technical characteristics.
Why specifically AgustaWestland?
AgustaWestland is starting production of AW139 in Russia. For instance, operation of the Polish V-3 Sokol has unveiled a whole range of issues: replacement or repair of aggregates takes too much time because of the customs and delivery. The fact that AgustaWestland will assemble its helicopters in Russia is extremely important in terms of warranty and post-warranty operation of helicopters.
AgustaWestland also plans to create maintenance centers…
We understand that Western equipment is present on the Russian market and that everything will depend on the position of AgustaWestland, including local production of AW139, and on the position of Eurocopter. We closely follow the movements of all the Western manufacturers and keep contact with them. Moreover, we are ready to consider creating a MRO center for AgustaWestland and any other Western manufacturers on the basis of our own stations. We are making certain steps in this strategic direction. To develop a MRO center in a certain region, you need to have at least 3-5 helicopters operating there. We have started to purchase foreign equipment and tools to service Western helicopters.
What would be the niche for operation of AW139?
We regard AW139 strategically : everything depends on when it will start to be produced in Russia and whether we will have good conditions to operate and maintain it. Currently, I think that we could start from AW109 class – a 4-5 seat helicopter that is enough to provide the initial B2C segment that we hope to get. To evaluate it better, we have started to monitor the market in the south of Russia where we mainly operate. As soon as we are done with this analysis, it might turn out that AW139 is exactly what we need. Everything depends on whether we’ll be able to enter a wider B2C segment where most of the money come from.
When you buy a helicopter, how is its on-board equipment configured?
We contract avionics adjusted to international missions according to the Western certification requirements. What I want to say is that AgustaWestland in Europe is different from AgustaWestland in America or AgustaWestland in Russia. AgustaWestland in the Russian configuration can be registered in Europe but have no authorization for permanent missions in Europe. The Western manufacturers build their business very carefully and try to protect the market of helicopter services on different continents from crossover competition. Of course, this is a hurdle for the operators!
Mr. Kozlovskiy, you have mentioned the importance of complying with the foreign requirements for international missions. What is the geography of your works in Russia and internationally?
As early as five years ago, we put a strategic objective – to reduce the seasonality of our works. I link this to geography because, in general, our summer works are quite stable, but winter is a chill-out time. To reduce the effect of different seasons, we are looking at more year-round markets where the Russian helicopters can operate. Europe is hard to enter with Russian fleet because of certification and it would be difficult to estimate the volume. We are registered with WFP United Nations. They do not depend on seasons: if something happens, they announce a new tender. For about three years, we have been doing peacemaking missions in Afghanistan for cargo delivery. It’s a long time since this market is occupied with operators from ex-Soviet countries. What’s interesting is that the Americans like our helicopters, especially Mi-8МTV. I can’t imagine how they would cope in Afghanistan without this helicopter.
Talking about the entry on a foreign market, we do this in partnerships only. To be a full-fledged market player, you need to organize a subsidiary, register in this or that country, which is not always economically feasible. There are always partners, and now they are all “Russian-speaking”.
What helped PANH Helicopters win the tender for helicopter support of Blue Stream?
Yes, this was an exciting project. This is one of the serious tenders where we could participate directly, because part of it was on the Russian territory with competitors coming from the south of Russia only where we’re the strongest and the only who could also offer to do the Turkish part of the project. Besides, we could quickly prepare the documents for the tender – I personally handed over our document kit, still warm after printing, in Milan. During the followed talks, we were explaining the difference between Mi-8МTV and Ka-32. They realized that we could actually do the job. We told them clearly: gentlemen, you will soon be tired of flying to Russia. It took us no time to form a station in Turkey and find a good Turkish partner.
Who are your clients in the oil & gas sector?
Normally, the final customer – Lukoil or Rosneft – announce the tenders but it is very challenging to participate there without a local company that has the infrastructure and fuel. Hence, our business model envisages a local aviation company that provides fuel, helicopter platforms, and accommodation and transport for our people. The same stands for complex missions where we are serviced by friendly regional operators. They understand that they win when they service us, otherwise we will move to a neighbor region. We will waste time and money to fly and they will lose their client. As a rule, there is no competition on this level. In general, aviation as an industry is typical for mutual support. If you competitor has a broken spare part and you have a new one, you always help. This is the rule in the aviation community.
What is the role of using simulators and pilot training for PANH Helicopters?
Because we don’t have our own training center for the moment, we either train our pilots at a training center in Rostov or at Sparc’s training center in Saint-Petersburg. We are coming to the conclusion that experienced pilots and engineers are retiring quicker than we find young professionals. That is why we cooperate with Taganrog Technological Institute to get new engineers and with Saint-Petersburg Civil Aviation Academy for basic training of the pilots. We also have our own infrastructure to create a training center for basic preparation followed by practice under our supervision provided that this is more cost-efficient than to outsource this service.
Again, as I said, our strategic goals envisage reduction of seasonality and operation of European helicopters. To make these steps, we plan to train our pilots, engineers, and develop maintenance stations that can service foreign helicopters. We constantly monitor what European helicopters are available and where. Finding money is a purely technical question: banks love us thanks to our good credit history.
We are ready to create a maintenance center at our base in Krasnodar, and I have shared this with both Eurocopter and AgustaWestland. My presentation at HELI EXPO in the U.S. ran: “Krasnodar - another gate to Olympic games” because one of our advantages is that we’re in an hour’s reach from Sochi. Today, on my way from Sheremetyevo, I saw an ad saying “Sheremetyevo – gate to Olympic games”. But wait – the primary gate to the Olympics is Sochi!
Many experts talk about possible consolidation that expects the operator market. Smaller operators need more efforts to survive, and they might start working as subcontractors with larger players. If this is actually the case, who would you like to remain – a large operator or a contractor?
The responsibility is too high. When you take on micro-operators with 2-3 helicopters, it is very difficult to supervise them. If, for instance, the owners give us their fleet and we train our people, include the new fleet in our operator’s certificate, and operate and service it independently, this could be an option. But will the pilots and engineers be good enough for the new equipment? You need to raise your pilot, train him, and see him gain his flight hours until he becomes a full-fledged commercial pilot.
Also, I agree that two or three big “monsters” is not what we need. If we look at the American experience, they have tons of companies and even more helicopters! Russia is more used to monopolies. This is understandable: monopoly is the most wanted model in business, but I prefer the Western model. Let there be many operators with high flight safety and constantly improving level of client service.
In this case, the role of partnerships and cooperation that you have talked about becomes very important…
We try to be a good partner. In our region, we do have competitors – Aero-Kamov in Sochi, Vertical-T, we used to have Gazprom here as well… This can be seen both as competition and as partnerships.
Mr. Kozlovskiy, your final word for the international players of the Russian helicopter industry?
Business is not only about profit and happiness of stakeholders – it’s also about happy employees. Seven years ago, we announced that our priority was to construct a new hangar, whatever it takes. Now that we have it, it is never too cold or wet or windy. If you ensure that your employees are satisfied, it multiplies the chances of your client feeling satisfied. Aircraft without people are just a pile of metal. And, we always try to be open to people to meet their needs and keep them interested.