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. Last Updated: 07/27/2016

Firms Taxi for Takeoff in Race to Create New Jet

For MTDemand for the planned 75-seat jet designed by the consortium of Sukhoi, Boeing, Ilyushin and Yakovlev is seen at 650 units.
The drive to create a new Russian short-range commercial jet is gathering momentum, with domestic manufacturers slugging it out in a bid to win a government tender as part of the country's regional jet program.

By the end of the year, the government will name which aircraft will, by the end of the decade, fill the underdeveloped niche currently occupied by the aging and obsolete Tu-134, Yak-42 and An-24.

Meanwhile Base Element, in conjunction with Sukhoi fighter-jet maker Irkut, is bidding for bankrupt German regional jet maker Fairchild Dornier in an attempt to get a head start on the competition and position itself as a market player.

But while local aircraft manufacturers busily pitch their ideas, domestic carriers say they need regional jets now, and are increasingly looking for solutions abroad. "We needed these aircraft yesterday," said Aeroflot's director of fleet planning, Sergei Koltovich. "It would be nice to have them tomorrow."

The Russian Aviation and Space Agency, or Rosaviakosmos, met last week with three aircraft companies -- Sukhoi, Tupolev and Myasishchev -- and took their proposals on the development of a regional aircraft, promising to identify the winner by the end of the year.

Although short on details, the proposals in general are for 50- to 95-seat aircraft with a range of 2,000 kilometers to 4,000 kilometers. These jets would be competitive with analogous foreign craft -- which carry an average price tag of $25 million -- both in terms of quality and price.

The creation of a new domestic regional jet is part of the government's program for civil aviation until 2015. Originally, development of such a plane was slated to begin in 2006, with mass production following in 2015. But according to Vladimir Stroshinsky, deputy head of research and development at Rosaviakosmos, the timing has been shifted in response to growing demand from domestic carriers and the need to develop a regional network. The proposed regional jet is scheduled to take off in 2006 and enter mass production at the end of the decade.

The program allots financing of 3.8 billion rubles ($120 million) over 10 years, 1.4 billion rubles of which will be covered by the budget, with the rest coming from other sources.

Sukhoi -- better known for its fighter jets -- is participating in the tender in a consortium with Boeing Co., Ilyushin and Yakovlev. The group has proposed a family of regional jets seating 60, 75 and 95 passengers, with the final technical characteristics expected to be decided on by the end of the year.

The group puts worldwide demand for the 75-seaters at around 650 aircraft, 340 of them to be sold abroad. It wants the government to cover 10 percent of the estimated $560 million development costs.

Tupolev estimates its research and development spending at $215 million, largely due to the fact that its Tu-414 is derived from previously completed design work on the 50-seater Tu-324, said Anatoly Polyakov, deputy designer for the program.

Tupolev is looking for 6 percent to 10 percent to be covered by the state. But Polyakov said Tupolev is not pinning much hope on state financing -- development of the Tu-324 remains stalled due to the government's continued failure to provide promised funding.

Polyakov said that Tupolev's estimate of the domestic market for regional aircraft until 2015 stands at 140. Its jet will retail at $14.5 million on the domestic market and $16 million abroad.

At Myasishchev, Boris Morkovkin, head of the 72-seat M-60 program, said his company's proposed craft exists only as an idea that dates back to the Soviet era. He said Myasishchev needs the state to cover 40 percent of its estimated $270 million development costs.

All manufacturers agreed that government approval was the key to luring investors, but insisted that they would pursue the projects regardless who wins.

Irkut and BasEl also turned to Rosaviakosmos with a view to participate in the tender, Irkut president Alexei Fyodorov said last week, but added that taking part in the tender was not crucial.

"The tender that was announced is for an aircraft yet to be developed. As for Fairchild Dornier, they practically have the aircraft ready," Fyodorov said. "We do not expect to receive budget financing to develop the craft. We will position ourselves as players on the market. We will talk to Aeroflot and other companies."

Irkut and BasEl plan to take over Fairchild Dornier as a whole, including its Airbus component-manufacturing, maintenance and regional aircraft divisions. The company already has a 32-seater model, the 328 JET, and is working on the 70-seater 728 JET, which is still at the prototype stage.

"We are looking with interest at regional aircraft that already exist and those [at the design stage]," said Aeroflot's Koltovich. "There are a certain number of routes that Aeroflot could operate if these aircraft were available in the required numbers."

Koltovich said that in the next five years Aeroflot could take 20 to 30 regional jets seating 50 to 90 passengers, but local manufacturers have yet to deliver. Aeroflot is facing a choice of either losing the market now covered by Tu-134s or using aircraft with excess capacity, he said.

Koltovich said the Fairchild Dornier concept seemed to be one of the best options, but if the aircraft were produced abroad, prohibitive customs duties would be a problem.

Aeroflot and other carriers are in frequent contact with Western manufacturers such as Canada's Bombardier and Brazil's Embraer, but import duties and value added tax, which together inflate the price of aircraft by 40 percent, remain an obstacle that the government is unwilling to lift.

Sergei Uchevatov, marketing director at Sibaviatrans -- a carrier working mainly in the Krasnoyarsk region that operates An-24s and would like to have at least seven new regional craft -- said he favored the Sukhoi concept.

"I have always been on the side of Sukhoi. I liked their approach when they invited us, airlines from various regions, and asked what we wanted to have," he said.