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Analyst: International Partnerships Are Key To Russian Aviation Success

Strategic Alliances Needed To Make Country Competitive

For an industry long absent from the international arena, Russian aircraft manufacturers generated a surprising amount of interest at Farnborough this year. Although Western companies like Airbus and Boeing dominate the narrow-body and wide-body category, Embraer and Bombardier the regional jet category, and Bombardier and ATR the turbo-prop category, things are slowly shifting. Because the Airbus A320 aircraft family and Boeing 737 family are still on the fence about whether to adopt the clean sheet narrow body model, newcomers have a rare opportunity to optimize on market interest in the production of such aircraft, according to Frost & Sullivan. With the right strategic partnerships with western manufacturers, Russian aircraft are more likely to succeed on the international arena.

"There is a need for greater efficiency in aircraft, given the volatility of fuel prices, strong competition in the airline sector for lower operating costs, and environmental pressures," says Frost & Sullivan's Commercial Aviation Consulting Analyst, Max Sukkhasantikul in a new article entitled Frost & Sullivan: The Russian Aircraft Industry Comes of Age. "Russia has produced strong competing aircraft to the narrow body products of Airbus and Boeing at a time when both companies need to decide whether to re-engine narrow body aircraft or produce a clean sheet design."

Currently, the only Russian manufacturers offering potential for greater foreign market interest are Sukhoi and Irkut. Sukhoi, a new player in the commercial aircraft market, presently leads the way in Russian aircraft sales, with more than 100 orders and potential orders for the SuperJet product. Similarly, Irkut is looking to enter the market with the MC-21, an aircraft comparable to the Airbus A320 and Boeing 737 families, but is still yet to see further international market penetration.

"The key difference between Sukhoi and other Russian aircraft manufacturers is strong support and partnership from major western suppliers, such as Italy's Finmeccanica," says Sukkhasantikul. "Finmeccanica holds an equity stake in Sukhoi through its subsidiary Alenia Aeronautica, through which SuperJet was co-developed. This partnership offers vast strategic value. Not only is Alenia Aeronautica a western entity, it is also a major aerospace company, supplying structures to a number of aircraft types such as the Boeing 787. This is exactly the type of support Russian aircraft manufacturers need to develop a strong reputation for commercial aircraft beyond its local markets."  Sukhoi has also established a partnership with Snecma, a major French aerospace and defence engine supplier that is co-developing the powerplant for Sukhoi with the SaM146 engine.

Sukkhasantikul contends that the advantages of Western-Russian partnerships are mutual. Western manufacturers will profit from Russia's aerospace engineering excellence and the expansion of market access, whilst their Russian partners leverage the support, technology, and reputation of Western aerospace companies to promote success outside the home market. For Russia, strong Western support is critical to secure global market acceptance. Should Russian manufacturers gain such support, Russian aircraft will become more accessible in the international market.

However, he says, it is not only the reputation and market perception of Russian aircraft that present complications for the industry. Companies like Irkut have to grapple with logistical bottlenecks, as they strive to produce commercial aircraft that will meet international standards. This is because most Russian aircraft manufacturers, including Sukhoi, were traditionally military aircraft producers with little commercial aircraft experience.

FMI: www.frost.com

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