Victor Soubbotin, Sukhoi Civil Aircraft - «Гражданские самолеты Сухого»
Release Date: 2008-09-10
Sukhoi Superjet 100, rebirth of the Russian aviation industry or just one more aircraft in the market?The launch of Sukhoi Superjet 100, Suhkhoi Civil Aircraft's major project, has resonated throughout the international aviation market. We counted on Alenia Aeronautica as a partner to bring their input in major vital competences as customer services handling and vast sales and marketing experience.
We involved second-to-none aerospace front-runners (Boeing offering extensive consulting support throughout the project realization, Snecma being a propulsion system supplier and risk-sharing partner) and the best part and component suppliers (Liebherr Messier Dowty, Ipeco, Honeywell, Parker, Goodrich, B/E Aerospace, INTERTECHNIQUE/ZODIAC, etc.), and we clearly understood the landscape of global aviation business to remain flexible enough, to react rapidly to changing trends and to accomplish our market objectives.
Boeing has acted as external consultant for SSJ100: how does this impact the R&D work?
Boeing's impact was not so much on our R&D operations. Sukhoi has a very strong engineering expertise. To be competitive worldwide we needed to apply this expertise in a commercially effective way. What Boeing really did is put us on the right track having reshaped our concept of aircraft program structure.
Sukhoi Superjet 100 is the first project being implemented with vast international involvement. When globalization makes competition tougher and tougher an aircraft industry player should take the best solutions from the world aerospace leaders to make a product which will bring value for customers. We had to learn the 'abc' of an international success story and Boeing was the right choice as a consulting partner.
Customer management, production effectiveness essentials, cost driven engineering, customer engineering, the clues for better customer support service provisioning these were the lessons we learned from Boeing. In Russia the Sukhoi Superjet 100 program has pioneered the reform of the aerospace business to be able to offer the best product and speak the same language with both partners and customers.
Although Russia has amassed considerable experience in the successful use of advanced construction materials (titanium, alloys, composites) very little is found in the SSJ100. Why? Will this trend continue in the long-term?
At this stage this is due to a simple certification risk assessment and additional R&D costs. Sukhoi is a new player in the commercial aircraft market and the SSJ100 is a new product to be certified under local and international standards. It is much easier and quicker to certify traditional materials. When a manufacturer has profound engineering expertise, weight reduction and fuel effectiveness can be achieved not only through the extensive use of composite materials. In the SSJ100 we combined second-to-none aerodynamics solutions (wing profile, etc.) with a brand new propulsion system which ensures competitive advantages to the product both in fuel consumption and maintenance costs.
In the future when the product will find its firm place in the market we'll increase the percentage of composites thus making the aircraft more effective than it is.
Engines are the weakest link in Russian aircraft construction because of their high fuel consumption: how has this been taken into consideration?
It was. And the problem was not only in high fuel consumption.
Maintenance costs, high level of noise and emissions did not respond to present customer needs. We managed to find the solution in 2003. SaM146 is a product of PowerJet - the joint venture of Snecma (France), which has profound CFM56 experience, and Russian NPO Saturn. The engine has very good performance characteristics, some of them already confirmed at testing; 10% less fuel consumption and significant margin in noise and emissions 10-15 EPNdB in relation to ICAO CAEP IV specifications. And, what is very important, owing to its modular design SaM146 it has 20% reduction in parts thus bringing significant maintenance-cost savings for airlines.
SCAC's production is located in Komsomolsk-on-Amur, Novosibirsk and Voronezh, far from SCAC headquarters and current European partners. Could this be a concern for your future development strategy?
It is true that Sukhoi Civil Aircraft has several production facilities. These are Komsomolsk-, Novosibirsk- and Voronezh-based branches with various scopes of activity and responsibility. At first glance the logistics seems quite complicated but with the modern global cooperation schemes it shouldn't present a huge problem. We have managed to build a well-tuned logistics management as components come not only from different locations in Russia. As you might know we get the aircraft systems from France, the US, Great Britain, Germany, Canada and other countries. Speaking of customers for the moment we plan to organize two delivery centers: one in Komsomolsk and one in Italy in Venice in the territory of Superjet International the joint venture of Sukhoi and Alenia Aeronautica.
Sukhoi SuperJet 100 competes in its category with An-148, Embraer E-Jet; Bombardier Cseries (CRJs): Aside from lower price, which has always characterized Russian made aircraft, where do you see the competitive advantages?
Lower acquisition price is not the main advantage, and it has never been. As the SSJ100 project brought together superior aerospace companies and partners, who have a big 'stake' in the worldwide aviation market, it was constantly fed with breadth and depth of up-to-the-minute, credible, authoritative and comprehensive information on market trends.
We offer better cost of ownership; 10% savings on operational costs, significant decrease in fuel consumption achieved due to the perfect combination of aerodynamic solutions and a modern engine.
We offer a completely new platform optimized for the 100-seat segment. The aircraft merges regional efficiency with mainline capabilities. Enhanced take-off and landing performance, all-weather operations, and increased range capabilities make SSJ100 a real route developer. And this is very important to the airlines as in today's tough economic environment they need to be more flexible in fleet and crew planning. With unsurpassed level of comfort airlines will easily meet growing passengers' demands. So we've got a set of advantages in our pocket to offer our customers.
In fact, the big number of new players willing to jump into the 100-segment competition indicates there is growing demand. Mind that the economic situation in the developed markets is not the best one. It's a signal to the market that this demand is specific: the demand for new solutions which were not available in the existing products. And it is the right time to fit in.
Does the fact that in 2006 Russia delivered only eight aircraft in total - the number that Airbus delivered in a week - could eventually play down on the image of Sukhoi Superjet 100?
At a first glance it seems scary when you see Airbus celebrating its 5000th aircraft delivery. Here again we get back to risk assessment. Thinking of possible reputation risks we conducted a poll among airlines which confirmed that Sukhoi doesn't carry the burden of Russia's poor commercial airplanes industry reputation. Sukhoi is a sign of good engineering potential. Even in the 90s Sukhoi managed to survive through successful export of Su aircraft and services to China and India. The company has always carried the reputation of a successful business: it's in the top 50 of the best World Aerospace companies rated by Defense News.
It's evident that the commercial airplanes segment of the Russian industry did not cope with the overall recession of the 90s. But it's too early to conduct the autopsy. Mind that in the 80s 26% of the total world fleet in the segment of over 30 passengers consisted of Soviet-made aircraft. At the end of the 80s decade the Soviet Union produced and delivered around 150 aircraft. The industrial crisis of the 90s led to collapse and only a strong company could take the burden of the industry revival. Sukhoi was strong enough to start and wise enough to see the weak points. We grew to be internationally oriented. We took the best solutions from the world industry and delegated customer support provisioning as well as marketing and sales in the mature markets to our joint venture with Alenia Aeronautical SuperJet International - as Alenia has time-proven record with its ATR program. Now we've got 98 orders for SSJ100 which is not bad at all. I'm sure the program will be a success.
The Russian government stated that it wishes Russian made aircraft to capture 10 to 12% of the world's market by 2024. Today the share is 1%.....What shall be the role of SSJ in this regard?
6,100 units is the estimated demand for this type of aircraft to be sold across the 20-year span. More specifically, the outlook for the Sukhoi Superjet 100 totals 1,040 aircraft, which is 17% of the world's regional jet market. Furthermore, if business, cargo, and other special versions of the SSJ100 appear, SuperJet International, a Sukhoi and Alenia joint venture, will be able to substantially boost sales of the aircraft.
How do you define your current commercialization strategy?
The overall strategy goal is to make the SSJ100 marketable worldwide. This is the upper step of the marketing and sales ladder.
The first step was to get the international airlines' community involved in the process of product making. In 2003 SCAC established the Airline Advisory Board that revealed great interest in the SSJ100 aircraft. The Airline Advisory Board is still the best tool to track potential and existing customer needs and requirements.
The second step is the local market Russia & CIS. It's a starting point for the product reputation and track-record build-up. As now the leading Russian carriers have extensive experience in operating the western well-established products, the SSJ100 success-story at home can become a signal to the rest of the market and, I'm sure, the airplane will get new orders worldwide. Even now apart from 63 Russia & CIS orders, we've got 35 in Europe.
Europe is step number three. We've got solid European partnerships. Alenia Aeronautica is our future shareholder. Besides, Sukhoi and Alenia have created a joint venture SuperJet International which handles product marketing and sales in the developed markets and overall customer support of the whole SSJ100 fleet. Alenia will also provide assistance in European certification. The scope of our partnership is an unprecedented case in Russian-European cooperation. Moreover, Snecma, a French engine manufacturer, is also our risk-sharing partner.
Large European involvement can bring additional credibility to the program and bring new orders.
Step number four is India, China and South East Asia, whose economies are now growing much faster than those of the developed markets. A Growing economy is a booster to passenger traffic growth. We are already working with the airlines in India, Indonesia, Malaysia and some other Asian countries. China is a bit more complicated for an active sales campaign as there is a local ARJ 21 project under way. Nevertheless, we think the Chinese market is one of the most promising. Russia has long-term traditions of industrial cooperation with China so there may be a good chance of bringing the SSJ100 into the Chinese market. Mind that China is now facing the growth of regional carriers. Only in 2006-2007 seven new airlines appeared in the market. Plus, the government puts much effort into airport construction expecting to launch 60 new airports by 2010.
Then comes the US market, whose capacity may achieve 2410 aircraft up to 2027 for the 60-120 seats segment. But we'll come to the US market, I believe, not earlier than 2010 when SSJ100 has proven operational track-record and the US economy recovers from the present recession. It's not a secret that the US market is dominated by Embraer and Bombardier. And competition there is going to be very tough.
For a company, where the major part of its shareholders comes from the sphere of defense and military, how challenging has been to adapt to the requisites of commercial airlines and to win their trust?
It's a common practice in the industry and it doesn't depend so much on shareholders. It's rather a question of one's corporate strategy. The market demand for commercial airplanes can't be compared with that for the military aircraft. The military market is rigid and highly dependent on political implications. So it's quite normal to diversify when you see a perspective market niche. Take Boeign. They had turned their face to the commercial airplanes segment being a manufacturer of military products.
By the way, speaking of shareholders, very soon Sukhoi Civil Aircraft Company (SCAC) will have a Western shareholder. Alenia Aeronautica will acquire 25%+1 share at SCAC. In June 2007 Sukhoi and Alenia signed the General Agreement according to which the deal will be completed. Now we are getting through the necessary proceedings to have the deal closed.
How are user service systems (after-sales) - which have always been considered a weak point in Russian aircraft products - being organized?
Customer services are SuperJet International area of activity. The SuperJet International SpA was founded in 2007, with headquarters in Italy, by Alenia Aeronautica and Sukhoi Company to deliver SSJ100's customers aftersales services and fleet support. This package of services includes, but is not limited, to: spare parts supplies, engineering support, trainings, technical publications, flight operations support, maintainability and reliability analysis; on-site support; account management, etc.
These services will be available 24/7 365 days a year via a user-friendly web-portal, by phone or e-mail. SJI is also entitled to offer a Super Care Plan featuring a flight-hour calculation of costs.
Regarding the aircraft maintenance facilities, they represent a significant allocation of resources and independent SJI-authorized service centers that will offer non-stop aftersales support services. SJI's training centers will be located both in Moscow and Venice. The Venice center has already been provided with the training equipment and has training classes ready to accommodate the first training teams. The first training courses for internal staff started earlier this year. As for the Moscow training centers, SCAC is currently considering and assessing the potential of Sukhoi's facilities located in the city of Zhukovsky. They will be used to address the trainings needs of Russian and CIS customers.
SJI is planning to establish two spare parts distribution centers one in Moscow (early 2009) and the other in Central Europe (early 2010). Additional centers will be scattered worldwide and will be managed by a leading international logistics provider. Today SJI is selecting this provider who will further manage SJI's global warehouse network and offer a full set of logistics services (transportation and customs clearance).
Last but not least, the Moscow warehouse will be ready in 2009 and will start providing Aeroflot, the first SSJ100 customer, with spare parts no later than 2 months prior to its delivery.
Do you believe the Sukhoi Superjet 100 family product could interest Chinese airliners? Why?
The economy of China demonstrates a sparkling performance. Its GDP is growing at the fastest clip, and equals 7% today. The population is becoming more mobile, which increases the role of passenger traffic, including the air transport segment. According to SCAC's estimates, 60-120-seat aircraft will prevail in the Chinese market by the year 2027. Their share will total 80% of the national air transportation segment, making China one of the most lucrative markets for regional jet producers.
When will SCAC recoup its 1.4Bln USD investment, and how many aircraft do you need to sell for that?
To recoup this investment, we need to sell 350 aircraft within the next 5 years. So far, the current solid order portfolio has reached 98 jets, and we are quite persistent to further sustain this sweeping drive for success in the global regional aircraft market.
The Sukhoi Superjet 100 is an aircraft merging regional efficiency with mainline comfort. It surely fits in the 100-seat platform smartly combining the factors and capabilities that are hardly combined in reality. The new Russian jet is a super efficient plane created by a super alliance blending the competences of the top-flight aviation suppliers of components and systems; a comfortable aircraft able to satisfy the demands of both Russian and international operators.
When shall we see the first Sukhoi Superjet 100 being flown by commercial airlines?
Today the Sukhoi Superjet 100 aircraft, powered by 2 SaM146 engines, has scored over 40 hours in-flight. We are planning to obtain type certification in mid 2009, while the first deliveries are scheduled for the 3rd quarter of 2009.
After such hard work, when looking back, what was the most difficult obstacle your team and yourself had to overcome?
To build up a completely new business infrastructure in parallel with the product that was the most challenging task. Having almost a dozen different countries on our team, first we had to merge different cultures to make this team work. Effective supplier management, cost-driven engineering, airplane marketing and sales, customer engineering and support, investor relations this is a long list of new activities we had to master. I would say, we had to reshape the traditional perception of commercial aircraft-making in Russia. Actually we explained to people that the SSJ100 program is to become a well-tuned business in order not to become another expensive engineering experiment that would lead to nothing. New business meant new competences that we had to acquire for the sake of further success. At the same time we had to introduce new engineering technologies and to renovate production facilities. We've been growing with the program, absorbing the ways and behaviors of the global aerospace community. But it was really hard to make this new business work as a single network of interlinked processes.
What advice would you like to share with your colleagues and competitors in China about pursuing the ambitions of such highflying aviation programs?
As the world is moving towards a more global economy, air travel is expected to grow significantly. Today's top regional jet producers are very positive about the global demand for this type of aircraft. So, there are many good reasons for optimism. Still further, numerous low cost carriers opening in some regions China included - stimulate extra demand.
With this demand shifting upward 60-120-seaters, a company driven by the idea to create a new regional aircraft, should first of all remember that global cooperation is the pillar of success.
While regional aircrafts are expected to dominate the market during the next 10 years and beyond, sophisticated knowledge, strong market feel, in-depth aviation know-how and skills are required to produce a regional 'wannabe'. This can be achieved through a cohesive cooperation network, a network which will bring together top-ranked companies coming from mature aviation markets.
We believe that making a successful jump into the niche of a new regional jet, which will be able to take over many routes flown by more expensive large aircraft, will surely enhance the synergy, spur innovations and offer solid ground for international networking.
One man cannot make a team, but one man can be a crucial ingredient on a team, thus try encouraging individual commitment to group effort and try making your cross-cultural team work as a single whole.
| Company: | Sukhoi Civil Aircraft - «Гражданские самолеты Сухого» |
| Position: | Member of the Board |
| Country: | Russian Federation |