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. Last Updated: 07/27/2016

This Collective Will Not Fly

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During his recent televised question-and-answer session, President Vladimir Putin was clearly irritated with the pace of work on a February presidential decree to form a national holding company for aircraft construction. "They are sorting out whose assets are worth more and whose less as at some oriental bazaar," Putin said. "We need to finish discussions and move on to constructive decisions."

It is hardly surprising that after this outburst the wheels of the state machine began to move faster. A few days later, the government commission to integrate the enterprises called for the creation of the Unified Aircraft-Construction Corporation, which brings together most of Russia's aircraft companies, including Tupolev, Ilyushin, Sukhoi, Irkut, the Sokol factory in Nizhny Novgorod and others. The state will have a 75 percent stake in the holding.

To all appearances, Putin sincerely believes the industry can be resurrected through mass collectivization, by herding surviving companies and those that have long been in a coma into a giant aircraft-production communal farm. The last time the government tried something similar, at the end of the 1990s, it couldn't overcome opposition from companies that could not understand why they should send their profits to Moscow in the name of a higher cause.

Now that Putin is behind it, there is no escape. But it remains to be seen if the move will give the aircraft industry much of a boost. Industry and Energy Minister Viktor Khristenko recently told the State Duma that the aircraft industry was in a slump and entirely dependent on foreign sales of military aircraft. The bulk of profits come from sales of the Su-30 fighter to China, India and Vietnam (and next year planes will likely be sold to Venezuela). Some profits also come from sales of Su-34 Fullback fighter-bombers to the Russian armed forces.

But no cooperation is necessary here. The factories are producing planes that were developed in the Soviet era. The companies managed to set up independent production and supply chains for components, but are now being asked to had over their assets in the name of dubious future production projects.

The problem with the Russian aircraft industry is that it has not created a single new aviation technology in 15 years. Given current development rates in aviation, this means that the country's air industry is simply not competitive. "Virtually no work has been done on new aircraft engines for more than 20 years," said Vladimir Skibin, general director of the Central Institute for Aviation Engine Building. "This stretch of time means the loss of a design culture."

The planned holding company does not include electrical engineering or engine-design institutes. Moreover, the plans only include "horizontal integration," so the current management at both efficient and inefficient companies will remain. This is unlikely to help improve efficiency.

Finally, the new holding company will not help to solve the biggest problem facing the aviation industry: the almost total absence of a commercial component. Khristenko said just 85 civilian aircraft, mostly light planes, were produced from 2003 to 2005. For the industry to survive, analysts say, Russia should be producing at least 500 civilian planes per year. It is clear that the aviation industry will be unable to reach the production levels necessary for profitability in the near future.

It is clear that the aircraft industry can only be revitalized through cooperation with the world's leading aircraft builders. The only new civilian aircraft project to reach the pre-production stage -- the Sukhoi Superjet-100 airliner -- is made largely of foreign components. The engines are a Russian-French joint effort. The vibration-control system is Swiss. The fuel system, avionics and chassis are French. The air conditioning system comes from Germany. The pilots' seats are from Britain. The auxiliary power unit, electrical, braking and wheel systems, the interior and the emergency equipment are all from the United States. Yet the government is presently doing everything it can to build a "ring-fence" to prevent foreign involvement in strategic branches of industry.

It is blindingly obvious that the creation of this corporation won't solve the aviation industry's problems. Tying inefficient producers together mechanically will only increase the losses for the country. The officials who promise Putin a mythical "fifth-generation fighter" and "short- and medium-range" civilian airliners will take control of the export incomes of a number of companies. Russia will not get any new planes, but London and Nice are likely to be seeing some newly minted Russian millionaires.

Alexander Golts is deputy editor of the online newspaper Yezhednevny Zhurnal.