Denis Baryshnikov, Ulyanovsk SEZ - СЭЗ "Ульяновск-Восточный"
Release Date: 2009-07-09
What is the role of Volga Tekhnoport?Volga Tekhnoport was created by UAC and Ulyanovsk regional administration (owning 50% and 50% respectively) to develop Ulyanovsk Centralny (UC) airport and Ulyanovsk Vostochny (UV) airport. After the Ulyanovsk region won the tender for the creation of a free economic zone (FEZ), Volga Tekhnoport was mainly focused on its development. Our role is to seek for investor, initiate negotiations and help them locate their business or their production facilities in UV.
We have not yet taken up airport management. Hence, there’s not enough business volume to justify that Volga Tekhnoport would take over the management. What we need is to gather a large number of investors in the framework of airport activity or in the FEZ.
As for UC, it is now transferred from federal to regional property to be further transferred to Volga Tekhnoport. The same should happen later, with management to be transferred from Aviastar-SP to Volga Tekhnoport.
Will the potential residents also invest in the infrastructure?
The current investors are the Federal Agency “Russian Special Economic Zones” (RosOEZ) and Ulyanovsk region, 70% and 30% respectively. The other investors depend on the future residents of the free economic zone.
What will the airport specialize in?
Transport and logistics are part of the activities of the special economic zone, therefore Ulyanovsk Vostochny will develop cargo servicing as an auxiliary activity, as soon as we have operators who bring their aircraft here for maintenance and production of spare parts.
Does this mean that this airport is not planned and designed as a cargo terminal?
This is related to the tender for special economic port zones where three bids were chosen: a bid for a port zone in Sovetskaya Gavan (Khabarovsk region) and two aviation bidders – Krasnoyarsk and Ulyanovsk. Krasnoyarsk will take up cargo servicing and Ulyanovsk – technical servicing and spare parts production for Russian and foreign aircraft manufacturers.
Lufthansa Cargo and AirBridgeCargo have moved their facilities to Krasnoyarsk…
Lufthansa Cargo and AirBridgeCargo are specializing on developing transport and logistic infrastructure whereas Ulyanovsk is developing aviation production because it has facilities and hangars for wide-body aircraft that are only available there. It caters for the Aviastar-SP plant and an underloaded airport with a runway for almost all types of aircraft. The resident airlines are Volga-Dnepr and Polet.
Volga-Dnepr is restructuring its business departments, and all the engineering and aviation services will be provided by the newly created Volga-Dnepr Techniques that will service planes and foreign equipment. Volga-Dnepr Techniques is a network project of Volga-Dnepr, with facilities based in the United Arab Emirates, Leipzig, Ulyanovsk and a linear station in Moscow. It’s a network of specialized companies dispersed in Russia, Europe and Asia that will enter the international market of maintenance and will service the entire fleet of Volga-Dnepr.
Alexey Isaikin, CEO of Volga-Dnepr, mentioned during a recent aviation conference in Moscow that the volume of business shrank in 4Q of 2008 and 1Q of 2009. Are you in any way affected by the fall of activities of Volga-Dnepr?
Our activities related to the FEZ, design and construction of infrastructure are not affected as they had already been budgeted at federal and regional levels. The main investments in the Zone are planned to start in 2011 and actually since the beginning of this economic crisis we’ve mainly been dealing with intellectual and time-consuming activities, negotiations with the potential operators and residents, designing of the zone. Construction of the first facilities will start in 2010.
The crisis impacted the organization of the SEZ. Before, RosOEZ was attracting new residents to the existing Zones due to lack of investments. Now the investors are supposed to come under a new legislation that does not include state investments. Volga Tekhnoport and UAC are preparing documents for the Ministry of Economic Development.
Will those be Russian or foreign companies?
The general concept of SEZ is targeted at forming conditions for foreign investments and further exports of products or services abroad. We are here to attract both Russian and foreign companies.
In the case of foreign companies, we’re mainly interested in avionics and spare part suppliers for Russia. About 70% of aviation components for the new Sukhoi SuperJet were produced in cooperation with the European and American manufacturers. UAC is interested in local production of those spare parts. As a rule, companies either produce under contracts with UAC, or set up subsidiaries or joint ventures with the Russian spare part manufacturers in the SEZ. The SEZ provides tax and customs privileges. We provide maximum tax privileges, administrative privileges and infrastructure privileges (such as free utilities).
Investments are also required to develop the infrastructure…
Ulyanovsk Centralny was managed by Ulyanovsk region. We’ll propose different public-private partnerships (PPPs) to reconstruct it. In general, it is expected that UC will be a domestic airport and if we construct a united airport terminal, the airport will acquire an international status like UV. Today, it is not yet reasonable because international flights will become cost-efficient when the passenger flow grows at least two-fold. It has doubled over 2 years - from 50,000 to 100,000 passengers. Five years ago, Volga-Dnepr was the only airline based in UV; a year later Polet joined, and now UTair joined as well. Currently, large investment projects with foreign capital and flow of businessmen are coming to Ulyanovsk, which gives prospects for a stable demand for aviation services.
What attracted the foreign companies?
The attractive investment legislation of the local government and a system of investor support: project groups guiding the investor and supporting the start-up of the project, privileges for property tax and if the investor has created new jobs in the region, free public utilities at the facilities.
For a long time businessmen were not coming here, so there are still a lot of unoccupied infrastructure and sites. Another important factor is a low cost of life meaning affordable workforce.
What are your responsibilities regarding these projects?
I’m the Director for project financing in Volga-Dnepr where I’m responsible for start-up projects like special economic zones, and an independent manager in Volga Tekhnoport that was created as the pioneer resident of the SEZ to deal with aircraft servicing.
Initially, we started our activities with improvement of the two airports that became a project of a special economic zone, and now the task is to form Zhukovsky-Ulyanovsk aviation cluster. We’re developing a strategic program for UAC and Zhukovsky, to form residents of SEZ and types of business around the region to increase the investment attractiveness in the SEZ. We not only attract business but also construct aviation training centres, facilitate cooperation of the SEZ with UAC, Aviastar-SP and the leading foreign and Russian companies. Basically, what we do is to create favorable conditions for aviation projects in the SEZ and in Ulyanovsk and Ulyanovsk region in general. We clearly understand that if we create the conditions for production that fit the production line of UAC, international suppliers and partners of UAC will be interested.
UAC wants to take up the production concept of Airbus: a lot of narrow-specialized enterprises that produce for the whole industry. It can help to avoid excessive production costs that hinder mass-scale production. We offer the SEZ as the ground for development of narrow-specialized production.
Is Volga-Dnepr an important partner for Volga Tekhnoport?
Yes, because Volga Tekhnoport, like any pioneer resident, ses the business environment. In fact, currently there is no maintenance market in Russia while Russian fleet will be fully replaced with foreign analogs in the next 10 years. There’s not a single maintenance centre to overhaul foreign planes in Russia, so Russian operators have to fly to foreign maintenance centres. Import of services costs about 1 billion US dollars - our operators are losing this profit! We estimates that import of services will grow to 4-5 billion US dollars in five years.
The Russian market offers plenty of opportunities, and leaders such as Lufthansa Technik AG or Israel Aviation Industry will surely follow and invest in Russia if Volga Tekhnoport proves successful. But until Volga-Dnepr Technique doesn’t prove its efficiency in Ulyanovsk for quality servicing of its own planes, none of these players will enter the Russian market.
This is not the first case of a Russian company is trying…
Apart from Aeroflot that has maintenance centres in Moscow, Volga-Dnepr Technique is the only operator genuinly forming a business model to be developed on the market.
What would be your final message to the international audience?
The Special Economic Zone is especially designed for companies interested in efficient cooperation with UAC and for the production of spare parts or components for UAC’s programs. We are ready to provide all the administrative and infrastructural advantages and organize cooperation with the Russian manufacturers, provide the business models and help to set up joint production centres in Russia.
| Company: | Ulyanovsk SEZ - СЭЗ "Ульяновск-Восточный" |
| Position: | Head of Branch |
| Country: | Russian Federation |