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. Last Updated: 07/27/2016

Cabinet Approves $5Bln to Kick-Start Civil Aviation

The government on Thursday approved a $5 billion, 14-year federal program to jump-start the stagnant civil aviation industry and make it a serious competitor on the international market.

Analysts, however, were skeptical the program would ever take off, given the history of federal programs shelved due to lack of finances.

Yury Koptev, head of the Russian Aviation and Space Agency, or Rosaviakosmos, which authored the plan, said it would be discussed in further detail when President Vladimir Putin meets with top aviation-industry executives and officials in September or October, Interfax reported.

Funding for the program is expected to reach 150 billion rubles ($5.1 billion), of which only one-fifth will be covered by the budget.

The program calls for running domestic enterprises at capacity to meet demand both at home and abroad, upgrading airlines' passenger and cargo fleets, and researching and developing a new generation of civil aircraft.

The first stage of the program, ending in 2005, calls for a technical upgrade of older airplanes to bring them in line with new European standards on noise and emission levels, as well as navigation. The second, 10-year stage, is devoted to producing entirely new craft.

The industry will continue to produce top civil models like the Il-96 long-range liner, the mid-range Tu-204, Tu-214 and Tu-234, and the shorter-range Tu-334.

The plan envisions that sales of domestic aircraft at home and abroad over the next 14 years should reach $33 billion, with 20 billion rubles in tax revenues going to the budget each year.

The initiative will help cut outflow from around $50 billion by slashing purchases of foreign-made aircraft.

Neither the government nor Rosaviakosmos would provide more details Thursday. Aerospace officials earlier estimated as many as 1,600 new aircraft would be needed to replace the country's old guard, but industry watchers said 150 to 300 aircraft would satiate domestic demand.

Yelena Sakhnova, analyst with the Aton brokerage, expressed skepticism that the program would get anywhere near the amount of financing planned.

"The aviation industry does not get priority in the budget, and the search for outside resources usually yields zero results," Sakhnova said.