Viktor Neshkov, V/O "Aviaexport" PLC
Release Date: 2008-12-12
Aviaexport was historically the only company entitled to export Russian aircraft. However, during the last few years, Russian aviation products have not been very stable on the aviation market, so how do you assess the potential of Russian aircraft exports and the potential of Aviaexport itself?Let’s start with taking a historic prospective. V/O Aviaexport (External Economic Association) was created in 1961 on the basis of Avtoexport at a time when Russia started mass supplies of aviation equipment abroad and a special company was created as an export trade monopoly which supplied all aircraft and helicopters, on-board equipment and spare parts for civil aviation. It remained so till 1988 when Perestroika started and our Association moved from the Ministry of Foreign Trade to the Ministry of Aviation Industry. In five years, during the privatization process, we became a joint stock company with its employees as shareholders. Currently about 10% of the staff are shareholders of the Company alongside legal entities including United Aircraft Corporation (UAC) that holds 15%. In 1990, market relations were introduced and the monopoly ceased to exist, but, we did not change the name or the product range. We remain a full-service civil aviation company involved in a broad range of operations: from supplies of new aircraft and helicopters to servicing and maintenance.
Today aircraft and helicopters are two different types of commodities in terms of sales and development: sales of helicopters tend to be more dynamic in Russia than sales of civil aircraft. Do you, as the manager of Aviaexport, draw a line between the two segments and what are your targets in both directions?
I think it is clear that we are discussing two monopolistic structures - UAC and Oboronprom. The main current project of Aviaexport is the Tu-204 which is equipped with Rolls-Royce engines. The project has been running since 1996; we initiated it, found investors and customers. The first customer and investor for these aircraft was Mr Kamel the President of "Sirocco Aerospace International" company from Egypt. It was a joint effort of Kamel, Aviaexport, the manufacturer and the design bureau to supply this aircraft to China and certify it in full conformity with European standards.
From the client perspective, what is the main difference between dealing with leasing companies or purchasing aircraft from Aviaexport?
A leasing company has its own assets, shareholders, investors, banks and money; its policy is buying and further lease of aircraft. We have always been engaged in export activities and did leasing in the Soviet times on the basis of state budget. We moved away from leasing when there was no more state support and now we sale directly ready-made aircraft taking into account the considerations of our customers, which on the other hand should pay the full price for the aircraft they acquired.
Under such scenario, it seems that air companies that you deal with have to be much more solid in terms of operation and finance. If we regard the Russian market, there are probably one or two companies that can buy aircraft under such scheme. As for the overseas market, which are the financially solid companies willing to buy Russian aircraft?
As there are no new models, our main project is the long-term project with China. Currently our main target is technical support for planes and helicopters: we have supplied about 6,000 of aircraft and helicopters over the world. Our current customers for aircraft and helicopters are India, China and over 50 other countries. We supply spare parts, train specialists and provide maintenance and overhaul.
Before the first delivery of the Tu-204 to Air China, there were few concerns about the supply of the Tu-204-120CE due to the unclear position of Mr Kamel, Air China and the Russian party. How the situation was solved and on what principles is your relation with Mr Kamel based?
According to the law, Russian companies can buy planes with foreign engines but they have to pay levies and dues that almost double the price of the aircraft. When the project started, Mr. Kamel organized his own company, which successfully does leasing of his own planes in Egypt and Europe. China was the main export customer of Russia and, using our experience with the support of the Russian and Chinese government, we signed a contract for exporting five planes with Rolls-Royce engines. Under such condition we have successfully found a scheme where our customers could enjoy a Russian made plane with a foreign engine.
That means that progress of the situation has opened the horizon for Aviaexport to sell more Tu-204 to China?
Yes, Tu-204 is the newest aircraft that meets all international requirements, so it was taken to China. Eventually the aircraft resulted to be the only Russian Aircraft to be certified in Europe.
This is the first Tu-204 aircraft that Air China Cargo has taken but the prospect is to sell 4-5 more in the coming years. Taking into account that Russian after-sales are sometimes considered ‘poor’, will you assure the organization of after-sales program to be sorted out with Russian cooperation?
The issue of ‘poor’ after-sale servicing comes from our Western competitors since the Soviet times. This aircraft has been manufactured and is serviced according to the Western standards of technical support. Therefore it (the plane) should not face in the future any of the common problems that Soviet aircraft maintenance faced in the past.
You have mentioned that the Indian market will also be important. Will you focus on Tu-204 or plan other models?
Currently there are no more new models except Tu-204-120 and apart from those in projects - MS-21, SSJ-100. In these projects Aviaexport could act as customer's consultant.
Are you not offset by an ambiguous image of Russian planes abroad as compared with Airbus and Boeing?
I disagree that the image is negative. Quality of the planes corresponds to the Western standards; price is close to that of Boeing, for example. The matter is that some companies economize on the interior - material used for the seats, meals, minimum servicing. If the aircraft is filled up, you can get the same as Boeing for a smaller price.
As far as Tu-204 cargo aircraft is concerned, what will be the message for your colleagues in China?
I believe that the main purpose of the aircraft will be achieved: to get a good and inexpensive cargo aircraft; I hope that eventually passenger planes will also appear on its basis. In Europe Tu-204 cargo aircraft flies in the TNT system that is almost the same as for passenger aviation - all flights are tied to a strict schedule. Accordingly, the plane has prospects in China for passenger aviation also.
Will you try to enhance relations with Air China or look for other companies?
Air China Cargo was appointed by the Chinese government to buy the planes, but in China there are some companies (including private) who are also waiting for such planes.
Relations between Russia and China have evolved a lot from a common ideology before to strong commercial relations today after the opening up of both economies to the world. How does it help companies like Aviaexport to find their niche in this market?
Although Russian planes are not and should not be the only option on the market, the point is to keep our niche in China that has been traditionally connected with Russia.
The relations have always been good; there was a time when we were the only company involved in operation support and repair of Soviet made aircraft and helicopters delivered to China. When the relations were restored in the 70s, we supplied a lot of planes. Currently China is more oriented on Western equipment but some companies still want to fly Russian planes, so that means that the niche will remain. China is a very business-oriented partner who has taught us a lot and the fact that the plane was certified is to a large extent their merit. The aircraft was 100% customized for Chinese clients.
As you know there are new emerging players in the field of aircraft design and production, and China is one of them. What would be your advice, after dedicating your life to the aviation industry, for your colleagues in China that are currently working in their own aviation program?
There is no need to teach our Chinese colleagues and friends: they have started licensed production a long time ago and now they are cooperating with Boeing and Airbus. We also offer each other joint production: it’s obvious that an aircraft is something that should be manufactured and invested together to make it useful. I’m sure they’ll fly their own planes and I won’t be surprised if one day we’ll be selling Chinese aircraft to Russia! If it turns out to be feasible for us and our clients - why not?
Mr. Neshkov thanks a lot for talking to RussianAvia.net!
On behalf of Aviaexport I would like to congratulate you and our Chinese friends on the coming New Year and wish sound health, happiness, well-being and prosperity.
| Company: | V/O "Aviaexport" PLC |
| Position: | General Director |
| Country: | Russian Federation |